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

NOTE 18 — INCOME TAXES

 

The Company’s tax rate is generally a function of the tax rates in the jurisdictions in which the Company operates, the relative amount of income earned by jurisdiction, and the relative amount of losses or income for which no tax benefit or expense is recognized due to a valuation allowance.

 

The components of “Loss before income taxes” in the Consolidated Statements of Operations are as follows:

 

   March 31, 2026   December 31, 2025 
United States  $(400,662)  $(4,239,851)
Foreign (Korea)   (96,331)   (393,042)
Total loss before income taxes  $(496,993)  $(4,632,893)

 

The effective tax rate reconciliation is as follows:

SCHEDULE OF EFFECTIVE TAX RATE RECONCILIATION 

   March 31, 2026   March 31, 2026   December 31, 2025   December 31, 2025 
Loss before income taxes  $(496,993)      $(4,632,893)    
U.S. federal statutory tax benefit   (104,369)   (21)%   (972,908)   (21)%
State and local income taxes, net of federal benefit   

-

    

0

%   

-

    0%
Foreign (Korea) tax rate differential   10,693    2%   43,628    1%
Tax credits (Korean R&D)   

-

    

0

%   -    0%
Effect of changes in tax laws or rate   

-

    

0

%   -    0%
Cross-border tax effects   

-

    

0

%   -    0%
Permanent differences, goodwill impairment loss including nondeductible expenses   

-

    

0

%  -    0%
Permanent differences, debt extinguishment loss including nondeductible expenses   

-

    

0

%   245,328    5%
Permanent differences, gain on disposal of subsidiary including nondeductible expenses   

-

    

0

%   -    0%
Change in valuation allowance   93,676    19%   683,952    15%
Income tax expense (benefit)  $-    

0

%  $-    0%
Effective Tax Rate   -    

0

%   -    0%

 

Application of ASU 2023-09 5% disaggregation threshold. The five percent disaggregation threshold for the period ended March 31, 2026 and the year ended December 31, 2025 was $5,218 and $48,645, respectively, computed as five percent of the income tax benefit derived by applying the U.S. federal statutory income tax rate of 21% to the loss before income taxes.

 

The deferred tax asset breakdown is as follows:

 

Deferred Tax Assets  March 31, 2026   December 31, 2025 
Net operating loss carryforwards – US Federal  $7,700,971   $7,254,895 
Net operating loss carryforwards – Republic of Korea   

-

    

-

 
Amortization differences   29,155    145,290 
IA Impairment differences   -    214,118 
Depreciation differences   35    260 
Lease liabilities and other temporary differences   11,829    48,713 
Bad debt   -    73 
Forex Translation Adjustment   (1,198)   (32,492)
Total deferred tax assets   7,740,792    7,630,858 
Valuation allowance   (7,740,792)   (7,630,858)
Net deferred tax asset   -    

-

 
Deferred Tax Liabilities   -    

-

 
Fixed asset basis differences   -    

-

 
Total Deferred Tax Liabilities   -    

-

 
Net Deferred Tax Asset (Liability)  $-

-

   $

-

 

 

 

GLOBAL INTERACTIVE TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements

 

NOTE 18 — INCOME TAXES (cont.)

 

The Company’s wholly-owned Korean subsidiary, Faning Korea, LLC was acquired in December 2024. Net operating losses generated under the Korean Corporate Tax Act may be carried forward for up to 15 years. Based on management’s evaluation of available evidence, no separate deferred tax asset has been recognized for the Korean tax loss carryforwards, as the related amounts are not material to the consolidated financial statements and any deferred tax asset recognized would be fully offset by a valuation allowance.

 

The parent company, Global Interactive Technologies, Inc. generated approximately $7.7 million net operating loss. Utilization of U.S. net operating loss carryforwards may be subject to substantial annual limitation under IRC 382.

 

Movements in the valuation allowance for the period ended March 31, 2026 and the year ended 2025 were as follows:

 

Valuation Allowance  March 31, 2026   December 31, 2025 
Beginning Balance  $7,630,858   $7,640,764 
Additions Charged to Income Tax Expense   -   (9,906)
Reductions / Reversals Credited to Income Tax Expense   

109,934

    - 
Ending Balance  $7,740,792   $7,630,858 

 

The Company recorded a full valuation allowance against its gross deferred tax assets as of March 31, 2026 and December 31, 2025. In assessing the realizability of deferred tax assets, the Company considered all available positive and negative evidence, especially the history of cumulative operating losses incurred at both the U.S. parent and Korean subsidiary levels, management concluded that it is more likely than not that the deferred tax assets will not be realized.

 

The cash income taxes paid information is as follows:

 

Cash Income Taxes Paid (Refunded), Net  March 31, 2026   December 31, 2025 
U.S. — Federal  $

                 -

   $          - 
U.S. — State and Local   

-

    

-

 
Republic of Korea   

-

    

-

 
Total Cash Income Taxes Paid, Net  $

-

   $

-

 

 

As of March 31, 2026 and December 31,2025, the Company had no material unrecognized tax benefits, and no material amounts have been accrued for interest or penalties associated with uncertain tax positions. The Company does not anticipate any significant changes to its unrecognized tax benefits within the nine months following March 31, 2026. A reconciliation of the beginning and ending balances of unrecognized tax benefits would result in zero activity for each period presented and is therefore not separately tabulated.