XML 29 R14.htm IDEA: XBRL DOCUMENT
v3.25.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2025
Income Taxes [Abstract] |
Income Taxes | Note 7 – Income Taxes The Company has no material income tax paid or accrued for year ended December 31, 2025 and December 31, 2024. The Company’s effective tax rate differs from the federal statutory tax rate mainly due to non deductible officer compensation, stock based compensation and non taxable mark to market warrant adjustment and valuation allowance against the net deferred tax assets. As of December 31, 2025, the company has adopted ASU 2023-09 prospectively. A reconciliation of the U.S. statutory tax rate to our effective tax rate as of December 31, 2025 according to the new standard is presented below:
|  | December 31, 2025 |  |  |  |
Tax at Statutory Rate |  | $ | (3,731,486 | ) |  |  | 21 | %
State income taxes, net of federal benefit |  |  | — |  |  |  | 0 | %
Tax Credits: |  |  |  |  |  |  |  |
R&D credits |  |  | (470,761 | ) |  |  | 3 | %
Non taxable or non deductible items: |  |  |  |  |  |  |  |
Section 162(m) officer compensation limitation |  |  | 6,461,438 |  |  |  | -36 | %
Stock based compensation windfall |  |  | (9,088,130 | ) |  |  | 51 | %
Warrant mark-to-market adjustments |  |  | (2,467,450 | ) |  |  | 14 | %
Other permanent differences |  |  | 47,686 |  |  |  | 0 | %
Change in valuation allowance |  |  | 3,670,897 |  |  |  | -21 | %
Other: |  |  |  |  |  |  |  |
True up of prior year deferred tax items |  |  | 3,528 |  |  |  | 0 | %
True up of stock based compensation |  |  | 5,574,279 |  |  |  | -31 | %
Tax Expense |  | $ | 0 |  |  |  | 0 | %
The reconciliation of the U.S. statutory tax rate to our effective tax rate as of December 31, 2024 and December 31, 2023 according to the standard before ASU 2023-09 is presented below:
|  | 2024 |  |  | 2023 |
Federal statutory income tax rate |  |  | 21.0 | % |  |  | 21.0 | %
State income taxes, net of federal benefit |  |  | (3.1 | )% |  |  | 0.0 | %
Warrant mark-to-market adjustments |  |  | (12.4 | )% |  |  | 2.0 | %
Change in business credits |  |  | 0.5 | % |  |  | 0.0 | %
Other permanent differences |  |  | (0.1 | )% |  |  | (0.3 | )%
True-ups |  |  | 0.0 | % |  |  | 0.0 | %
Change in deferred tax asset valuation allowance |  |  | (6.0 | )% |  |  | (22.3 | )%
Effective income tax rate |  |  | 0.0 | % |  |  | 0.4 | %
The Company has deferred tax assets and liabilities as follows:
|  | Year Ended December, 31 |
|  | 2025 |  |  | 2024 |
Deferred Tax Assets |  |  |  |  |  |
Accrued Expenses |  |  | 1,617 |  |  |  | 95 |
Lease Liability |  |  | 658 |  |  |  | 356 |
Allowance for Bad Debts |  |  | 142 |  |  |  | 123 |
Other |  |  | 19 |  |  |  | 17 |
NOLs |  |  | 27,083 |  |  |  | 18,833 |
Research and Development Credits |  |  | 1,086 |  |  |  | 615 |
Capitalized Research and Development Expenses |  |  | 6,244 |  |  |  | 2,559 |
Stock Based Compensation |  |  | 3,708 |  |  |  | 10,538 |
Gross Deferred Tax Assets |  |  | 40,557 |  |  |  | 33,136 |
Deferred Tax Liabilities |  |  |  |  |  |  |  |
Unrealized Gain and loss |  |  | (244 | ) |  |  | - |
Intangibles |  |  | (1,856 | ) |  |  | (1,885 | )
ROU |  |  | (601 | ) |  |  | (334 | )
Total Deferred Tax Liabilities |  |  | (2,700 | ) |  |  | (2,220 | )
Net Deferred Tax Assets and Liabilities |  |  | 37,857 |  |  |  | 30,916 |
Valuation Allowance |  |  | (37,857 | ) |  |  | (30,916 | )
Net Deferred Tax Assets & Liabilities |  |  | - |  |  |  | - |
As of December 31, 2025, the Company had federal and state net operating loss carryforwards of approximately $118.9 million and $39.2 million, respectively. All of the federal NOL carryforwards were generated during 2018 or later and will carryforward indefinitely but will be subject to 80% taxable income limitation beginning tax years after December 31, 2021, as provided by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act (PL 116-136). State net operating loss will begin to expire in 2043 for state tax purposes. The Company had federal research and development tax credits of approximately $1.6 million, which begins to expire in 2043. The Company had no state tax credits. Furthermore, the utilization of NOLs and tax credit carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that have occurred previously or may occur in the future. Under Sections 382 and 383 of the Internal Revenue Code, a corporation that undergoes an ownership change may be subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes otherwise available to offset future taxable income and/or tax liability. An ownership change is defined as a cumulative change of 50% or more in the ownership positions of certain stockholders during a rolling three-year period. The Company’s ability to use its NOLs or tax credit carryforwards may be restricted. As of December 31, 2025, the significant components of the Company’s net deferred tax assets included stock-based compensation of $3.7 million, capitalized research and development expenditures of approximately $6.2 million, and accrued expenses of $1.6 million. The most significant component of deferred tax liability which was used to offset gross deferred tax asset includes deferred tax liability of $1.9 million related to intangibles. The Company believes that it is more likely than not that the benefit from the net deferred tax assets will not be realized. Accordingly, it has provided a full valuation allowance on any potential deferred tax assets. The Company has valuation allowance against the net deferred tax assets of $37.9 million. The valuation allowance increased by approximately $6.9 million for the period ending December 31, 2025. The provision for income taxes is not material in the years presented due to there being no taxable income. As of December 31, 2024, the Company had federal and state net operating loss carryforwards of approximately $89.3 million and $7 million, respectively. The Company has federal R&D credit carryforwards of approximately $878 thousand. The Company has no state R&D credit carryforwards. The significant components of the Company’s net deferred tax assets included stock-based compensation of $14 million, and capitalized research and development expenditure of approximately $3 million. The Company believes that it was more likely than not that the benefit from the net deferred tax assets will not be realized. Accordingly, the Company assessed a valuation allowance of $31 million in the period ended December 31, 2024. Uncertain Tax Positions The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions, with varying statutes of limitations. All tax years remain open to examination due to the carryover of unused net operating losses that are being carried forward for tax purposes. The Company’s policy is to account for interest and penalties as income tax expense. As of December 31, 2025, the Company had no interest related to unrecognized tax benefits, and no amounts for penalties related to unrecognized tax benefits were recognized in the provision for income taxes. We do not anticipate any significant change of the Company’s unrecognized tax benefits within twelve months of this reporting date. The Company has unrecognized tax benefits related to research and development credit carryforwards. A full valuation allowance has been provided against the Company’s research and development credits. Therefore, any adjustments to these unrecognized tax benefits would be offset by corresponding adjustments to the valuation allowance, resulting in no impact on the consolidated balance sheet or statement of operations.
|  | Year end December 31 |
|  | 2025 |  |  | 2024 |
Beginning balance |  | $ | 263,541 |  |  | $ |  |
Changes related to tax positions taken in the prior year |  |  |  |  |  |  | 95,767 |
Changes related to tax positions taken in the current year |  |  | 201,755 |  |  |  | 167,774 |
Ending balance |  | $ | 465,296 |  |  | $ | 263,541 |

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 942 -SubTopic 740 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147477617/942-740-50-1 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480738/235-10-S50-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 944 -SubTopic 740 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478822/944-740-50-1 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 5: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 15: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 16: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 17: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration