v3.26.3
NOTE 13 - INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
NOTE 13 - INCOME TAXES

NOTE 13 - INCOME TAXES

 

The components of the Company’s net income (loss) before income taxes are as follows:

 

                     
   For the year ended December 31,
   2025  2024
       
 

U.S. federal

   $(915,852)  $(409,440)
 

Foreign

    1,001,560    —   
 

Total

   $85,708   $(409,440)

 

 

 

 

 

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The Company’s provision for income taxes consisted of:

 

   For the year ended December 31,
   2025  2024
       
Current income tax expense:      
U.S. federal  $—     $—   
U.S. state   —      —   
Foreign  —     —   
Total current income tax expense  $—    $—   
       
Deferred income taxes:          
U.S. federal  $—     $—   
U.S. state   —      —   
Foreign   (117,590)   —   
Total deferred income taxes  $(117,590)  $—   

 

 

The Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 are attributable to the following:

 

                 
   For the year ended December 31,
   2025  2024
       
Deferred tax assets:          
Lease liability  $54,888   $—   
Deductible advertising expense carryforwards (PRC)   985    —   
Fair value change on notes payable   904    —   
Net operating loss carryforwards   714,722    360,059 
Valuation allowance   (625,858)   (360,059)
Total deferred tax assets  $145,641   $—   
           
Deferred tax liabilities:          
Intangible assets identified from acquisition  $(522,768)  $—   
Right-of-use-assets   (53,886)   —   
Total deferred tax liabilities  $(576,654)  $—   
           
Net deferred tax assets  $117,177   $—   
           
Net deferred tax liabilities  $(548,190)  $—   

 

 

Following the adoption of ASU 2023-09 described in Note 1, a reconciliation of income tax expense computed by applying the U.S. federal statutory income tax rate to income before income taxes, to the Company’s reported income tax expense (benefit), for the year ended December 31, 2025 is as follows. Each reconciling item that equals or exceeds five percent of the amount computed by multiplying income before income taxes by the U.S. federal statutory rate (approximately $900 for the year ended December 31, 2025) is presented separately by nature, and foreign tax effects are presented by jurisdiction.

 

 

 

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   For the year ended December 31, 2025
   Amount  %
Income before income taxes  $85,708      
Income tax expense computed by applying the U.S. federal statutory rate of 21% to income before income taxes  $17,999    21.0%
State and local income tax, net of federal income tax effect   —      —   
Foreign tax effects:          
   Statutory rate differential (PRC)   40,261    47.0%
   Statutory rate differential (Hong Kong)   635    0.7%
   Total statutory rate differential   40,896    47.7%
   Preferential high and new technology enterprise rate (PRC)   (133,538)   (155.8%)
   Total foreign tax effects   (92,642)   (108.1%)
Nontaxable or nondeductible items:          
   Non-deductible expenses (PRC)   47,067    54.9%
Changes in valuation allowances:          
   Current year increase in valuation allowance   255,102    297.6%
   Utilization of prior year tax losses   (201,057)   (234.6%)
   Recognition of previously unrecognized deferred tax assets   (115,561)   (134.8%)
   Total changes in valuation allowances   (61,516)   (71.8%)
Other:          
   Reversal of deferred tax liability arising from business combination   (27,514)   (32.1%)
   Deferred tax effect of operating leases   (984)   (1.1%)
Income tax expense (benefit)  $(117,590)   (137.2%)

 

 

In accordance with the prospective transition method, the reconciliation for the year ended December 31, 2024 is presented under the disclosure requirements in effect prior to the adoption of ASU 2023-09:

 

   For the year ended December 31, 2024
   Amount  %
Loss before income taxes  $(409,440)     
Income tax benefit at U.S. federal statutory rate of 21%  $(85,982)   21.0%
Change in valuation allowance   85,982    (21.0%)
Income tax expense (benefit)  $—      

-% 

 

 

 

 

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Income taxes paid, net of refunds received, disaggregated between federal, state and foreign jurisdictions, was as follows:

 

    

For the year ended December 31,

      
    2025    2024 
   U.S. federal  $—     $—   
   U.S. state   —      —   
   Foreign (PRC)   —      —   
   Foreign (Hong Kong)   —      —   
Total income taxes paid, net of refunds received  $—     $—   

 

No individual foreign jurisdiction accounted for five percent or more of total income taxes paid, net of refunds received, for either period presented.

 

Summary of the Company’s tax valuation allowance:

 

   For the year ended December 31,
   2025  2024
       
Beginning balance  $360,059   $274,077 
Increase in valuation allowance   255,102    85,982 
Foreign exchange impact   10,697    —   
Ending balance  $625,858   $360,059