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

6. Income Taxes

 

(Loss) income before income taxes consists of the following: 

 

   Three Months Ended
June 30,		   Six Months Ended
June 30,		 
   2026   2025   2026   2025 
                 
Federal  $(3,321,074)   833,268   $(5,389,424)   1,517,691 
Foreign   
—
    
—
    
—
    
—
 
(Loss) income before income taxes  $(3,321,074)   833,268   $(5,389,424)   1,517,691 

 

During the three and six months ended June 30, 2026, the Company recognized an income tax benefit of $809,888 and $1,289,957, respectively. During the three and six months ended June 30, 2025, the Company recognized an income tax expense of $202,637 and $388,468, respectively.

 

The Company’s income tax provision consists of the following for the three and six months ended June 30, 2026 and 2025:

 

   Three Months Ended
June 30,		   Six Months Ended
June 30,		 
   2026   2025   2026   2025 
Current income tax expense                
Federal  $
—
   $193,516   $
—
   $370,659 
State   3,751    41,195    8,154    84,356 
Total current income tax expense  $3,751   $234,711   $8,154   $455,015 
                     
Deferred income tax benefit                    
Federal   (796,224)   (25,402)   (1,139,405)   (64,637)
State   (17,415)   (6,672)   (158,706)   (1,910)
Total deferred income tax benefit  $(813,639)  $(32,074)  $(1,298,111)  $(66,547)
                     
Total income tax provision  $(809,888)  $202,637   $(1,289,957)  $388,468 

 

Beginning in its 2025 annual financial reporting, the Company adopted ASU 2023-09 on a prospective basis. The following table presents the reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax provision for the three and six months ended June 30, 2026 after the adoption of ASU 2023-09:

 

   Three Months Ended
June 30, 2026		   Six Months Ended
June 30, 2026		 
   Amount   Rate   Amount   Rate 
Statutory federal income tax rate   (697,391)   21.0%   (1,131,745)   21.0%
State taxes (net of federal benefit)   (105,171)   3.2    (167,663)   3.1 
Permanent difference   (9,900)   0.3    (5,948)   0.1 
Other   2,574    (0.1)   15,399    (0.3)
Effective tax rate   (809,888)   24.4%   (1,289,957)   23.9%

 

The following table presents the reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax provision for the three and six months ended June 30, 2025 prior to the adoption of ASU 2023-09:

 

   Three Months
Ended
June 30,
2025		   Six Months
Ended
June 30,
2025		 
Statutory federal income tax rate   21.0%   21.0%
State taxes (net of federal benefit)   3.1    4.3 
Permanent difference   0.2    0.3 
Effective tax rate   24.3%   25.6%

The Company’s net deferred tax assets and liabilities consisted of the following as of June 30, 2026 and December 31, 2025:

 

   June 30,   December 31, 
   2026   2025 
Deferred tax assets:        
Net Operating Loss   1,612,058    388,182 
Stock-based compensation   80,333    53,586 
Bad debt allowance   263,634    91,828 
Accrued liability   8,065    8,140 
Gross deferred tax assets  $1,964,090   $541,736 
           
Deferred tax liabilities:          
Research & Development credits   (1,423,623)   (1,299,380)
Right of use assets/Lease Liability   (31)   (31)
Total Deferred Tax Liabilities  $(1,423,654)  $(1,299,411)
           
Net deferred tax assets (liabilities):  $540,436   $(757,675)

 

As of June 30, 2026, the Company had federal net operating loss carryforwards of approximately $6.7 million, which may be carried forward indefinitely to offset future taxable income, but are subject to the 80% taxable income limitation upon utilization. Additionally, the Company had state net operating loss carryforwards of approximately $6.7 million as of June 30, 2026. Certain state net operating loss carryforwards may be carried forward indefinitely, while the remaining carryforwards begin to expire in 2033 through 2055, depending on the applicable state jurisdiction. State net operating loss carryforwards are also subject to various state-specific utilization limitations.

 

In general, under Section 382 of the U.S. Internal Revenue Code of 1986, as amended, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating loss carryforwards (“NOLs”) to offset future taxable income. As of June 30, 2026, the Company has not performed such an analysis evaluation the potential limitation of the Company’s net operating loss carryforwards due to the “Change in ownership” as defined under Section 382 of the Internal Revenue Code. 

 

The Company evaluates the realizability of its deferred tax assets and the need for a valuation allowance at the end of each fiscal quarter. Based on all available positive and negative evidence, including forecasts of future taxable income and statutory carryforward periods, management concluded that it is more likely than not that its deferred tax assets will be realized. Accordingly, no valuation allowance was required as of June 30, 2026. 

 

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, introducing significant changes to the U.S. federal tax system. Among other provisions, the OBBBA restored immediate expensing for certain domestic research and experimental (“R&E” ) expenditures, provided potential retroactive relief or accelerated deductions for previously capitalized R&E costs, reinstated EBITDA-based limitations for interest expense deductions, and made certain business tax incentives permanent. The OBBBA did not have a material impact on the Company¡¯s income tax benefit or expense, or related tax assets and liabilities, for the period ended June 30, 2026. The Company plans to expense qualifying domestic R&E costs beginning in 2025 and accelerate the amortization of previously capitalized and unamortized R&E costs. The Company does not intend to apply retroactive treatment to prior tax periods.

 

The amounts of cash income taxes paid by the Company were as follows:

 

   Six Months
Ended
June 30,
2026		 
Federal   
—
 
State   10,035 
Foreign   
—
 
Total  $10,035