v3.26.1
INCOME TAX
 6 Months Ended
Jun. 30, 2026
INCOME TAX  
INCOME TAX

NOTE 11 - INCOME TAX

 

The Company provides for income taxes under ASC 740, “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

 

The loss from operation before income tax of the Company for the six months ended June 30, 2026 and June 30, 2025 were comprised of the following:

 

 

 

For the

 

 

For the

 

 

 

six months ended

 

 

six months ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2026

 

 

2025

 

Tax jurisdiction from:

 

$

 

 

$

 

- Local

 

 

176,713

 

 

 

(26,059)

- Foreign, representing:

 

 

 

 

 

 

 

 

China

 

 

187,753

 

 

 

(1,008)

Hong Kong

 

 

(257,497)

 

 

-

 

Income (Loss) before income taxes

 

$106,969

 

 

$(27,067)

A reconciliation between expected income taxes and the income tax net expense included in the statements of operations for the six months ended June 30, 2026 and 2025 is as follows:

 

 

 

For the

 

 

For the

 

 

 

six months ended

 

 

six months ended

 

 

 

June 30, 2026

 

 

June 30, 2025

 

 

 

Total

 

 

Total

 

Net income (loss) before income tax

 

$(8,001,684)

 

$(7,087,167)

Statutory tax Rate

 

 

21%

 

 

21%

Tax (benefit) expense at the statutory tax rate

 

 

(1,680,354)

 

 

(1,488,305)

Tax effect of Stock-based compensation

 

 

1,603,237

 

 

 

1,482,621

 

Changes in valuation allowance

 

 

77,117

 

 

 

5,684

 

Income tax expense (benefit) per book

 

$-

 

 

$-

 

 

The components of the Company’s deferred tax asset and reconciliation of income taxes computed at the statutory rate to the income tax amount recorded as of June 30, 2026 and December 31, 2025, are as follows:

 

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

June 30,

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

 

 

2026

 

 

2026

 

 

2026

 

 

2026

 

 

2025

 

 

2025

 

 

2025

 

 

2025

 

 

 

USA

 

 

China/HK

 

 

Foreign rate differential

 

 

Total

 

 

USA

 

 

China/HK

 

 

Foreign rate differential

 

 

Total

 

Net operating loss carryforward

 

$731,602

 

 

$103,441

 

 

 -

 

 

$835,043

 

 

$554,887

 

 

$33,696

 

 

 -

 

 

$588,583

 

Statutory tax rate

 

 

21%

 

 

25%

 

 -

 

 

 

21%

 

 

21%

 

 

25%

 

 -

 

 

 

21%

Deferred tax asset

 

 

153,636

 

 

 

25,860

 

 

 

(4,137)

 

 

175,359

 

 

 

116,526

 

 

 

8,424

 

 

 

(1,348)

 

 

123,602

 

Less: Valuation allowance

 

 

(153,636)

 

 

(25,860)

 

 

4,137

 

 

 

(175,359)

 

 

(116,526)

 

 

(8,424)

 

 

1,348

 

 

 

(123,602)

Net deferred asset

 

$-

 

 

$-

 

 

 

-

 

 

$-

 

 

$-

 

 

$-

 

 

 

 -

 

 

$-

 

 

The valuation allowance increased by $51,757 during the six months ended June 30, 2026. As of June 30, 2026, the Company had approximately $835,000 in net operating losses (“NOLs”) that may be available to offset future taxable income, which begin to expire between 2028 and 2036. In accordance with Section 382 of the U.S. Internal Revenue Code, the usage of the Company’s net operating loss carry forwards is subject to annual limitations following greater than 50% ownership changes. Tax returns for the years ended 2018 through 2026 are subject to review by the tax authorities.