v3.26.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES

10. INCOME TAXES

 

    2025     2024  
United States components of income before provision for income taxes for each of the years ended December 31, were as follows (in thousands):    

 

(1,756,096

 )     (1,505,102 )

 

The Company elected to prospectively adopt the guidance in ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”.

 

The following table reconciles the U.S. federal statutory income tax rate of 21% to the Company’s effective income tax rate for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09 (In thousands, except percentages): A reconciliation of the provision for income taxes to the amount computed by applying the statutory income tax rate of 21% to the net loss before income taxes for the year ended December 31, 2025 is as follows:

 

SCHEDULE OF EFFECTIVE INCOME TAX

   Amount $  Percent
US Federal Statutory Tax Rate   (368,780)   21.00%
           
State and Local Income Taxes, net of Federal Income Tax Effect          
Other State Tax Expense/(Benefit)*   (1,033)   0.06%
State Change in VA   1,033    (0.06)%
Changes in valuation allowance   349,938    (19.93)%
Nontaxable or Nondeductible Items          
Stock Options   18,626    (1.06)%
Other   217    (0.01)%
           
Total tax expense   0    0.00%

 

*State taxes in AZ comprise the majority (greater than 50%) of the tax effect in this category.

 

A reconciliation of the provision for income taxes to the amount computed by applying the statutory income tax rate of 21% to the net loss before income taxes for the year ended December 31, 2024 as follows:

 

 

Rate reconciliation  2025   2024 
Pre-tax Book Income   21.00%   21.00%
Permanent differences   (1.07)%   (0.97)%
Foreign net operating loss write-off   (0.00)%   (0.00)%
Changes in valuation allowance   (19.93)%   (25.29)%
State taxes   0.00%   5.27%
Total tax expense   0.00%   0.00%

 

Income Tax Expenses attributable to income for continuing operations consists of the following:

 

Income tax expense  Current   Deferred   Total 
Federal      -        -       - 
State   -    -    - 
Foreign   -    -    - 
Total taxes   -    -    - 

 

As of December 31, 2025 & 2024 the Company made no cash payments and had no refunds related to income taxes in any jurisdiction.

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying value of the asset and liabilities for financial reporting purposes, and amounts used for income tax purposes.

 

The temporary differences resulted in the deferred tax assets and liabilities as follows:

 

   2025   2024 
Net operating loss carryforwards  $1,839,826   $1,592,349 
Directors fees   91,161    - 
Fixed assets   426    650 
Patents   21,385    24,468 
R&D expenses   137,753    122,114 
Total deferred tax assets   2,090,551    1,739,581 
Less: valuation allowance  $(2,090,551)  $(1,739,581)
Net deferred tax asset   -    - 

 

At December 31, 2025 and 2024, the Company had net operating losses of approximately $7,873,250 and $6,709,264 for federal income tax purposes, and approximately $4,816,444 and $4,784,463 for state income tax purposes.

 

In assessing the realizability of the deferred tax assets, management determined whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, net operating loss carryback potential and tax planning strategies in making these assessments.

 

Based on the above criteria, the Company believes that it is more likely than not that the full amount of the remaining net deferred tax assets will not be realized. Accordingly, the Company has recorded a full valuation allowance of approximately $2,090,551 against net deferred tax assets that is not expected to be realized for the year ended December 31, 2025 and approximately $1,739,581 for the year ended December 31, 2024.

 

The Company recognizes interest accrued to unrecognized tax benefits and penalties as income tax expense. The Company accrued no penalties or interest during the years ended December 31, 2025 and 2024.

 

The Company files tax returns as prescribed by the laws of the jurisdictions in which they operate. In the normal course of business, the Company is subject to examination by federal and state jurisdictions where applicable based on the statute of limitations that apply in each jurisdiction. As of December 31, 2025, open years related to federal and state jurisdictions are 2021, 2022, 2023, 2024 and 2025.

 

The Company has no open tax audits with any tax authority of December 31, 2025.

 

The federal net operating loss carryforward will be carried forward indefinitely, and the state net operating loss carryforward will expire beginning in 2041.

 

In accordance with Section 382 of the Internal Revenue code, the usage of the Company’s net operating loss carryforwards may be limited in the event of a change in ownership. A full Section 382 analysis has not been prepared and NOLs could be subject to limitation under Section 382.