v3.26.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2025
INCOME TAXES  
INCOME TAXES

NOTE 10 – INCOME TAXES

 

The Company adopted Accounting Standards Update (ASU) 2023‑09, “Improvements to Income Tax Disclosures,” on a retrospective basis within its annual reporting for the year ended December 31, 2025. The adoption of ASU 2023‑09 resulted in enhanced disclosures related to the effective tax‑rate reconciliation, including additional disaggregation requirements prescribed by the standard. For further details, see Note 1, Recently Adopted Accounting Pronouncements.

 

The components of income tax expense for the years ended December 31, 2025, and 2024 consist of the following: 

          

 

 

2025

 

 

2024

 

Current tax provision

 

$—

 

 

$—

 

Deferred tax (benefit) expense

 

 

16,191,904

 

 

 

(9,128,198)

Valuation allowance

 

 

(16,191,904)

 

 

9,128,198

 

Total income tax provision

 

$—

 

 

$—

 

 

Reconciliations between the statutory rate and the effective tax rate for the years ended December 31, 2025, and 2024 consist as follows:

 

 

 

As of December 31,

 

 

 

2025

 

 

2024

 

US federal statutory income tax rate

 

 

12,669,312

 

 

 

21.00%

 

 

(8,232,834)

 

 

21.00%

Domestic state and local taxes, net of federal effect

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kentucky income tax effect

 

 

(139,732)

 

 

-0.23%

 

 

(1,318,124)

 

 

3.36%

Indiana income tax effect

 

 

(418,310)

 

 

-0.69%

 

 

(378,516)

 

 

0.97%

State Rate Adjustment

 

 

35,314

 

 

 

0.06%

 

 

-

 

 

 

0.00%

Transfer of Legal Liability to Subsidiary Via Spin Off (State)

 

 

390,692

 

 

 

0.65%

 

 

-

 

 

 

0.00%

Valuation Allowance related to Deferred Tax Attributes Transferred via Spin Off

 

 

4,178,190

 

 

 

6.93%

 

 

-

 

 

 

0.00%

Change in VA from Disc Ops Transferred via Spin Off

 

 

(1,422,159)

 

 

-2.36%

 

 

-

 

 

 

0.00%

Change in VA from All Operations

 

 

(2,623,995)

 

 

-4.35%

 

 

1,696,640

 

 

 

-4.33%

Nontaxable or nondeductible items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Compensation

 

 

413,329

 

 

 

0.69%

 

 

791,549

 

 

 

-2.02%

Other Permanent Items

 

 

2,884

 

 

 

0.00%

 

 

9,728

 

 

 

-0.02%

Losses Attributable to Disc Ops Prior to Spin Off

 

 

4,582,330

 

 

 

7.60%

 

 

-

 

 

 

0.00%

Tax Free Spin Off Reorg

 

 

(19,958,469)

 

 

-33.08%

 

 

-

 

 

 

0.00%

Other Adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transfer of Legal Liability to Subsidiary Via Spin Off

 

 

2,108,969

 

 

 

3.50%

 

 

 

 

 

 

 

 

Change in Federal valuation allowance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation Allowance related to Deferred Tax Attributes Transferred via Spin Off

 

 

20,803,927

 

 

 

34.48%

 

 

-

 

 

 

0.00%

Change in VA from Disc Ops Transferred via Spin Off

 

 

(7,054,417)

 

 

-11.69%

 

 

-

 

 

 

0.00%

Change in VA from All Operations

 

 

(13,567,865)

 

 

-22.49%

 

 

7,431,557

 

 

 

-18.96%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Taxes Provision (Benefit)

 

 

-

 

 

 

0.00%

 

 

-

 

 

 

0.00%

 

Significant components of the Company’s deferred tax assets as of December 31, 2025, and 2024 are summarized below. The calculations presented below reflect the new U.S. federal statutory corporate tax rate of 21% effective January 1, 2018. See Note 2 – Income Taxes

 

 

 

2025

 

 

2024

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carry forwards

 

 

34,141,809

 

 

 

35,952,532

 

Remediation Liability

 

 

-

 

 

 

5,554,862

 

Capitalized R&D

 

 

9,676

 

 

 

418,370

 

Fixed Assets

 

 

(3,299)

 

 

5,095,109

 

Accrued Litigation Liability

 

 

460,110

 

 

 

3,576,251

 

ROU Assets/Liabilities

 

 

250,067

 

 

 

507,138

 

    Stock Compensation

 

 

 390,528

 

 

 

 336,487

 

Total deferred tax asset

 

 

35,248,891

 

 

 

51,440,749

 

Valuation allowance

 

 

(35,248,891)

 

 

(51,440,749)

 

As of December 31, 2025, the Company had approximately $134.3 million of net operating loss carryforwards. Net operating losses generated prior to January 1, 2018 expire beginning in 2035, while net operating losses generated thereafter may be carried forward indefinitely, subject to an annual limitation. A full valuation allowance has been recorded against the Company’s deferred tax assets as it is more likely than not that such assets will not be realized.

 

We reviewed all income tax positions taken or that we expect to be taken for all open years and determined that our income tax positions are appropriately stated and supported for all open years. The Company is subject to U.S. federal income tax examinations by tax authorities for years after 2021 due to unexpired net operating loss carryforwards originating in and subsequent to that year. The Company may be subject to income tax examinations for the various taxing authorities which vary by jurisdiction.

 

The Company has calculated federal and state net operating loss carryforwards based on the preparation of its income tax returns; however, such returns have not yet been finalized or filed. Accordingly, the NOL amounts reflected in the accompanying financial statements represent management’s best estimates and are subject to change upon completion of the tax returns. Any such changes could be material to the Company’s deferred tax assets; however, a full valuation allowance has been recorded against these amounts.

 

In addition, tax years including 2021 and after remain unfiled as of December 31, 2025, and therefore the statute of limitations for those years remains open.