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FEDERAL AND STATE INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
FEDERAL AND STATE INCOME TAXES

NOTE 7 — FEDERAL AND STATE INCOME TAXES

 

Domestic and international pre-tax income/(loss) consists of the following:

           
    Year Ended
December 31,
2024		   Year Ended
December 31,
2023		  
           
United States   $ (6,063,740 ) $ (9,733,582 )
Loss before income taxes   $ (6,063,740 ) $ (9,733,582 )

 

Income tax expense attributable to operations is comprised of the following:

           
    Year Ended
December 31,
2024		   Year Ended
December 31,
2023		  
Current:          
Federal   $ —   $ —  
State     (2,893 )   —  
International     —     —  
Total Current     (2,893 )   —  
Deferred:              
Federal     —     (3,967,480 )
State     —     —  
International     —     —  
Total Deferred     —     (3,967,480 )
Income Tax Expense   $ (2,893 ) $ (3,967,480 )

 

Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows:

 

    December 31,
2024		   December 31,
2023		  
           
Deferred Tax Assets:              
Net Operating Loss   $ 4,025,905   $ 3,566,630  
Credits     129,598     142,030  
Capitalized Research Costs     2,451,496     2,045,616  
NQO & RSA Stock Options     350,484     1,047,608  
Deferred Lease Liability     647,446     —  
Accruals & Reserves     712,058     129,923  
Other     48     42  
Gross Deferred Tax Asset     8,317,035     6,931,849  
Valuation allowance     (7,080,843 )   (6,002,777 )
Total Deferred Tax Asset   $ 1,236,192   $ 929,072  
               
Deferred Tax Liabilities:              
Intangibles     (58,170 )   (408,260 )
ROU Assets     (538,632 )   (5,511 )
Fixed Assets     (639,390 )   (515,300 )
Total Deferred Tax Liabilities     (1,236,192 )   (929,071 )
Net Deferred Tax Asset   $ —   $ —  

 

Management regularly assesses the ability to realize deferred tax assets recorded based upon the weight of available evidence, including such factors as recent earnings history and expected future taxable income on a jurisdiction by jurisdiction basis. In the event that the Company changes its determination as to the amount of realizable deferred tax assets, the Company will adjust its valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made. The Company’s management believes that, based on a number of factors, it is more likely than not, that all or some portion of the deferred tax assets will not be realized; and accordingly, for the year ended December 31, 2024 the Company has provided a full valuation allowance against the Company’s U.S. net deferred tax assets. The net change in the valuation allowance for the year ended December 31, 2024 was an increase of $1,078,066.

 

As of December 31, 2024, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $18,313,421 and $3,533,499, respectively. The state net operating loss carryforwards will being to expire in 2041 and our federal net operating loss carryforward will last indefinitely.

 

As of December 31, 2024, the Company had federal and state research credit carryforwards of approximately $129,598 and $0 respectively. The federal research credit carryforwards will being to expire in 2036.

 

As of December 31, 2024, and 2023 the Company had no gross unrecognized tax benefits. The Company’s policy is to recognize accrued interest and penalties related to unrecognized income tax benefits in the Provision for income taxes should such amounts occur in future periods.

 

The Company files income tax returns in the US federal and various state jurisdictions with varying statutes of limitations. The Company is currently under audit by the Internal Revenue Service for tax year 2022. Tax years 2021 through 2023 are open to examination by major taxing jurisdictions to which the Company is subject.

 

Income tax expense differed from the amount computed by applying the federal statutory income tax rate of 21% to pretax income for the years ended December 31, 2024 and December 31, 2023 as a result of the following:

           
    Year Ended
December 31,
2024		   Year Ended
December 31,
2023		  
Federal tax at statutory rate   $ 1,272,820   $ 2,052,452  
State income taxes     184,595     —  
Valuation allowance     (1,078,066 )   (6,002,777 )
Deferred tax true ups     (352,653 )   —  
Other items     (29,589 )   (17,155 )
Total     (2,893 )   (3,967,480 )