v3.26.1
Income Taxes
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes

Note 10. Income Taxes

 

There was no income tax expense reflected in the results of operations for the six months ended June 30, 2026 and the year ended December 31, 2025 because the Company carried forward net losses for tax purposes.

 

As of June 30, 2026 and December 31, 2025, the Company had federal net operating loss carry forwards of $1,382,000 and $804,000 respectively, and state net operating loss carryforwards of $2,976,000 and $2,757,000 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. Pennsylvania NOL's began to expire in 2024, with $964,948 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 (in approximate amounts):

 

         
   June 30, 2026   December 31, 2025 
         
Deferred tax assets/(liabilities)          
Net operating loss carryforward  $466,100   $412,600 
R&D Credits   84,700    80,300 
Stock-based compensation   4,100    — 
Operating lease assets   2,300    2,200 
Capitalize research & development costs   41,300    53,600 
Depreciation & amortization   (5,300)   2,300 
Total deferred tax assets   593,200    551,000 
Valuation allowance   (593,200)   (551,000)
Net  $—   $— 

 

For the six months ended June 30, 2026, the net increase in valuation allowance was $42,000.

 

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.

  

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

 

                 
   June 30, 2026   December 31, 2025 
   Amount   %   Amount   % 
U.S. Federal statutory tax rate   (112,200)   21.00    (32,500)   21.00 
State and local income tax, net of federal income tax effect                    
    Pennsylvania state modifications   (9,600)   1.80    (33,200)   21.40 
    Pennsylvania income tax   7,400    (1.40)   (11,800)   7.63 
    State valuation adjustment   (73,900)   13.80    —    — 
    Pennsylvania net operating loss expiration   8,000    (1.5)   —    — 
    Other   68,100    (12.80)   (2,100)   1.38 
Tax credits   (4,500)   0.9    (39,000)   25.20 
Changes in valuation allowance   116,200    (21.70)   (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   500    (0.1)   —    — 
                     
Provision for income taxes   —    —    —    — 

 

 

Internal Revenue Code Section 382 may limit the Company’s ability to utilize net operating loss carryforwards if an ownership change, as defined by the Code, occurs. The Company has not completed an analysis to determine whether an ownership change has occurred or whether any resulting limitation would materially affect the utilization of its net operating loss carryforwards. If an ownership change has occurred, the amount of net operating loss carryforwards available for future use could be limited.

 

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

 

Tax years 2023 through 2025 remain open to examination for federal income tax purposes and by other major taxing jurisdictions to which the Company is subject.