v3.26.1
ncome Taxes
 3 Months Ended
Mar. 31, 2026
Income Tax Disclosure [Abstract]  
ncome Taxes

Note 6. Income Taxes

 

There was no income tax expense reflected in the results of operations for the quarter ended March 31, 2026 [and 2025] and the year ended December 31, 2025, due to the recording of a full valuation allowance since it is more likely than not that that the realization of the net deferred tax assets would not be realized. The valuation allowance at March 31, 2026 and December 31, 2025 were $565,600 and 551,000, respectively.

 

As of March 31, 2026 and December 31, 2025, the Company had federal net operating loss carry forwards of $874,000 and $804,000, respectively, and state net operating loss carryforwards of $3,145,000 and $3,176,000, respectively, which may be used to offset future taxable income. The remaining federal NOL's will not expire but will be limited to 80% of taxable income. The Pennsylvania NOL's began to expire in 2024, with $1,307,000 expiring by 2032. The remaining Pennsylvania NOL's expire in 20 years and the Florida NOL's will not expire.

 

The tax effects of temporary differences which give rise to deferred tax assets (liabilities) are summarized as follows:

        
   March 31, 2026   December 31, 2025 
         
Deferred tax assets/(liabilities)          
Net operating loss carryforward  $424,200   $412,600 
R&D Credits   85,900    80,300 
Stock-based compensation   2,100    — 
Operating lease assets   2,000    2,200 
Capitalize research & development costs   48,800    53,600 
Depreciation & amortization   2,600    2,300 
Total deferred tax assets   565,600    551,000 
Valuation allowance   (565,600)   (551,000)
Net  $—   $— 

 

For the quarter ended March 31, 2026, the net increase in valuation allowance was $14,600.

  

Reconciliation of the statutory federal income tax to the Company's effective tax:

                
   March 31, 2026   December 31, 2025 
   Amount   %   Amount   % 
U.S. Federal statutory tax rate   (13,100)   21.00    (32,500)   21.00 
State and local income tax, net of federal income tax effect                    
    Pennsylvania state modifications   (7,100)   11.40    (33,200)   21.40 
    Pennsylvania income tax   (4,700)   7.50    (11,800)   7.63 
    State valuation adjustment   (4,100)   6.60    —    — 
    Pennsylvania net operating loss expiration   15,800    (25.30)   —    — 
    Other   100    (0.10)   (2,300)   1.38 
Tax credits   (5,600)   8.90    (39,000)   25.20 
Changes in valuation allowance   18,500    (29.70)   (160,400)   103.59 
Nontaxable or nondeductible items                    
    Return to provision adjustments   —    —    19,000    (12.29)
    Expiration of net operating losses   —    —    260,000    (167.91)
    Other   200    (0.30)   —      
                     
Provision for income taxes   —    —    —    — 

 

Internal Revenue Code Section 382 limits the ability to utilize net operating losses if a 50% change in ownership occurs over a three-year period. Such limitation of the net operating losses may have occurred, but we have not analyzed it at this time as the deferred tax asset is fully reserved.

 

The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations. The Company did not recognize any interest or penalties during 2026 related to unrecognized tax benefits.

 

Tax years ending December 31, 2022 and thereafter remain open to examination for federal income tax purposes and by other major taxing jurisdictions to which the Company is subject.