v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Tax
NOTE 10. INCOME TAXES
The Company accounts for income taxes under the asset and liability method; under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax reporting bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain.
The Company utilizes a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.
For financial reporting purposes, Loss before provision for income taxes, includes the following components:
 
 
  
December 31, 2025
 
  
December 31, 2024
 
Domestic
  
$
(2,333,243
)
  
$
(2,606,565
) 
Foreign
  
 
— 
 
  
 
— 
 
  
 
 
 
  
 
 
 
Loss before income taxes
  
$
(2,333,243
)
  
$
(2,606,565
) 
  
 
 
 
  
 
 
 
Income taxes paid, net of refunds received for the years ended December 31, 2025 and 2024, includes the following components:
 
 
  
December 31, 2025
 
  
December 31, 2024
 
US Federal
  
$
10,000
 
  
$
85,000
 
New York
  
 
58
 
  
 
55
 
Foreign
  
 
— 
 
  
 
— 
 
  
 
 
 
  
 
 
 
Total Income Taxes Paid
  
$
10,058
 
  
$
85,055
 
  
 
 
 
  
 
 
 
Income tax expense from continuing operations consists of the following for the years ended December 31, 2025 and 2024:
 
 
  
December 31, 2025
 
  
December 31, 2024
 
Current Tax Expense
  
  
US Federal
  
$
6,310
 
  
$
91,218
 
New York
  
 
58
 
  
 
58
 
  
 
 
 
  
 
 
 
Total Current Tax Expense
  
$
6,368
 
  
$
91,276
 
  
 
 
 
  
 
 
 
Deferred Tax Expense
  
  
US Federal
  
$
— 
 
  
$
— 
 
New York
  
 
— 
 
  
 
— 
 
  
 
 
 
  
 
 
 
Total Deferred Tax Expense
  
$
— 
 
  
$
— 
 
  
 
 
 
  
 
 
 
Total Deferred Tax Expense
  
  
US Federal
  
$
6,310
 
  
$
91,218
 
New York
  
 
58
 
  
 
58
 
  
 
 
 
  
 
 
 
Total Deferred Tax Expense
  
$
6,368
 
  
$
91,276
 
  
 
 
 
  
 
 
The Company’s net deferred tax assets are as follows:
 
 
  
December 31, 2025
 
  
December 31, 2024
 
Deferred tax assets:
  
  
Net operating losses
    $ 8,872      $ —   
Startup/organizational costs
      1,978,171        1,220,968  
  
 
 
     
 
 
  
Total deferred tax assets
      1,987,043        1,220,968  
  
 
 
     
 
 
  
Valuation Allowance
      (1,987,043 )
 
      (1,220,968 ) 
  
 
 
     
 
 
  
Deferred tax asset, net
    $ —        $ —   
  
 
 
     
 
 
  
In assessing the realization of the deferred tax assets, management considers whether it is more likely t
han
not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ended December 31, 2025 and 2024, the change in the valuation allowance was $766,075 and $460,044, respectively.
As required under ASU 2023-09, the Company has included only the portion of the valuation allowance related to federal deferred tax assets in the “change in valuation allowance” line of the rate reconciliation. The following table presents a reconciliation of the total change in the valuation allowance:
 
 
  
December 31, 2025
 
  
December 31, 2024
 
Beginning balance
    $ (1,220,968 )     $ (760,924 ) 
Change charged to income tax expense
      (766,075 )      (460,044 ) 
  
 
 
     
 
 
  
Ending Balance
    $ (1,987,043 )    $ (1,220,968 )
  
 
 
     
 
 
  
 
Income tax provision (benefit) related to continuing operations differ from the amounts computed by applying the statutory income tax rate of 21% to pretax loss as follows:
 
    
Year Ended December 31,
  
    
2025
     
%
    
2024
     
%
  
At Statutory Rate
    $ (489,993 )      21.00 %   $ (547,379 )       21.00 % 
State Income Taxes, net of Federal Effect
      46        0.00 %      46        0.00 % 
Change in Valuation Allowance
      766,075        (32.83 )%     460,044        (17.65 )%
Nontaxable or Nondeductible Items
           
Transaction Costs
      (385,956 )      16.54 %     350,543        (13.45 )%
Fines and Penalties
      51,495        (2.21 )%      4,672        (0.18 )% 
Change in fair value of warrants
      64,701        (2.77 )%      (180,201 )       6.91 % 
Other Non-Deductible Expenses
      —       0.00  %      3,655      (0.14 )%
Other
      —         —        (104 )      0.00 %
  
 
 
     
 
 
    
 
 
     
 
 
  
Total
    $ 6,368      $ (0.27 )%   $ 91,276        (3.50 )% 
  
 
 
     
 
 
    
 
 
     
 
 
  
The Company’s effective tax rates for the periods presented differ from the expected (statutory) rates due to certain permanent differences including changes in the fair value of warrants, nondeductible expenses, and the change in the valuation allowances on deferred tax assets.
The Company files income tax returns in the U.S. federal jurisdiction and is subject to examination by the various taxing authorities. The federal tax years open to examination are 2022 to 2025. The Company’s state and local tax years that are open to tax examination are generally 2022 to 2025. The Company considers New York to be a significant state tax jurisdiction. As of December 31, 2025 and 2024, the Company had no U.S. federal net operating loss carryovers available to offset future taxable income.
The Company applied the applicable authoritative guidance which prescribes a comprehensive model for the manner in which a company should recognize, measure, present and disclose in its financial statements all material uncertain tax positions that it has taken or expects to take on a tax return. As of December 31, 2025, and 2024, we had no material uncertain tax positions. The Company does not expect that its unrecognized tax benefits will significantly increase or decrease within twelve months.