v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Taxes [Abstract]  
INCOME TAXES

NOTE 11 — INCOME TAXES

 

The Company accounts for income taxes under ASC 740 - Income Taxes (“ASC 740”), which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributed to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes.

 

Significant components of the Company’s deferred tax assets as of December 31, 2025 and 2024 are summarized below.

 

   December 31,
2025		   December 31,
2024		 
Deferred Tax Assets (Liabilities):        
Net operating losses carried forward  $4,312,919   $2,389,968 
Interest expense   485,932    74,887 
Share-based compensation   328,695    556,410 
Change in fair value of warrant liability   (5,988)   (412)
Total deferred tax assets (liabilities):   5,120,829    3,020,853 
Less valuation allowance   (5,120,829)   (3,020,853)
Net deferred tax asset (liability)  $
-
   $
-
 

 

The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The Company assessed the need for a valuation allowance against its net deferred tax assets and determined a full valuation allowance is required since the Company has no history of generating taxable income. As of December 31. 2025 and 2024, the Company’s deferred tax asset was $5,120,829 and $3,020,853, and increase of approximately $2,100,000 as of December 31, 2025 compared to December 31, 2024.

 

The following table reconciles the income tax benefit (expense) at the statutory rates to income tax benefit (expense) at the Company’s effective tax rate.

 

   December 31,
2025		   December 31,
2024		 
         
Net income (loss) before taxes   (10,551,674)  $(6,150,372)
Statutory tax rate   21%   21%
Expected income tax due (recovery)   (2,215,252)  $(1,291,578)
Permanent differences and other   1,973    240 
Net operating loss (tax effected)   2,213,878   $1,291,338 
Income tax provision  $
-
   $
-
 

 

The following is a reconciliation from the Company’s statuary rate to the effective tax rate reported in the financial statements:

 

Item  2025
Amount		   2025
Percent		   2024
Amount		   2024
Percent		 
Federal statutory tax benefit   (2,215,852)   21.00%   (1,291,578)   21.0%
State tax benefit, net of federal   
-
    0.00%   
-
    0.0%
Non-Deductible or Non-Taxable Items   1,973    0.00%   240    0.0%
Change in valuation allowance   2,213,878    -21.0%   1,291,338    -21.0%
Total tax expense   
-
    0.0%   
-
    0.0%

 

The 2017 Act reduces the corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017. For net operating losses arising after December 31, 2017, the 2017 Act limits a taxpayer’s ability to utilize net operating losses carryforwards to 80% of taxable income. In addition, net operating losses arising after 2017 can be carried forward indefinitely, but carryback is generally prohibited. Net operating losses generated in tax years beginning before January 1, 2018 will not be subject to the taxable income limitation. The 2017 Act would generally eliminate the carryback of all net operating losses arising in a tax year ending after 2017 and instead would permit all such net operating losses to be carried forward indefinitely. 

The Company’s ability to utilize net operating loss carryforwards will depend on its ability to generate adequate future taxable income. Future utilization of the net operating loss carry forwards is subject to certain limitations under Section 382 of the Internal Revenue Code. As of December 31, 2025, the Company had federal and state net operating loss carryforwards available to offset future taxable income in the amounts of approximately $4,313,000 and $2,390,000, respectively, which do not expire.

 

As of December 31, 2025, the Company is in arrears on filing its statutory corporate income tax returns and the amounts presented above are based on estimates. The actual losses available could differ from these estimates.

 

The Company is subject to franchise tax filing requirements in the State of Delaware.