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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 13 – INCOME TAXES

As of December 31, 2024 and 2023, the Company had consolidated income tax net operating loss ("NOL") carryforwards for federal tax purposes of approximately $199.4 million and $212.4 million, respectively, and net operating loss carryforwards for foreign income tax purposes of approximately $26.7 million and $26.7 million, respectively. The federal NOL carryforwards from 2005 and forward will expire in various years beginning 2025 and ending through the year 2035. From 2025 through 2027, approximately $27.0 million of the NOL will expire, and from 2028 through 2037, approximately $128.0 million of the NOL will expire. The NOL generated in 2018 through 2021 of approximately $44.0 million will be carried forward indefinitely.

There was no provision for income tax for the years ended December 31, 2024 and 2023.

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

For the Year Ended December 31,

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

Net operating loss and tax credit carryforwards

$

53,001,832

 

 

$

67,688,664

 

Excess of book over tax depreciation

 

—

 

 

 

39,070

 

Stock option and restricted stock award expense

 

2,294,946

 

 

 

1,799,988

 

Debt Extinguishment

 

61,946

 

 

 

61,946

 

Less: valuation allowance

 

(55,169,825

)

 

 

(69,345,930

)

$

188,899

 

 

$

243,738

 

Deferred tax liability:

 

 

 

 

 

Property and equipment basis

$

40,394

 

 

$

84,020

 

Prepaid expenses

 

148,505

 

 

 

159,718

 

$

188,899

 

 

$

243,738

 

Net deferred tax asset

$

—

 

 

$

—

 

As reflected above, we have not recorded a net deferred tax asset as of both December 31, 2024 and 2023. In accordance with ASC 740, we have evaluated whether it is more likely than not that the deferred tax assets will be realized. Based on the available evidence, we have concluded that it is more likely than not that those assets would not be realized without the recovery and rights of ownership or salvage rights of high-value shipwrecks or other forms of taxable income, thus a full valuation allowance has been recorded as of December 31, 2024 and 2023.

The change in the valuation allowance is as follows:

December 31, 2024

$

55,169,825

 

December 31, 2023

 

69,345,930

 

Change in valuation allowance

$

(14,176,105

)

 

The federal and state income tax provision (benefit) is summarized as follows for the years ended:

For the Year Ended December 31,

 

 

2024

 

 

2023

 

Income tax at the statutory rate

$

3,093,385

 

 

$

1,122,622

 

Effects of:

 

 

 

 

 

State income taxes net of federal benefits

 

640,036

 

 

 

294,020

 

Nondeductible expense

 

589,781

 

 

 

698,160

 

Subpart F income

 

1,305,118

 

 

 

6,418,307

 

Derivatives fair value

 

(3,357,883

)

 

 

2,200,259

 

Change in valuation allowance

 

2,369,354

 

 

 

(1,721,451

)

OML termination

 

1,076,377

 

 

 

—

 

Foreign rate differential

 

(5,716,168

)

 

 

(9,011,917

)

$

—

 

 

$

—

 

The Company’s effective income tax rate is lower than what would be expected if the federal statutory rate were applied to income before income taxes primarily because of certain expenses deductible for financial reporting purposes that are not deductible for tax purposes, research and development tax credits, operating loss carryforwards, and adjustments to previously-recorded deferred tax assets and liabilities due to the enactment of the Tax Cuts and Jobs Act.

We have not recognized a material adjustment in the liability for unrecognized tax benefits and have not recorded any provisions for accrued interest and penalties related to uncertain tax positions.

The earliest tax year still subject to examination by a major taxing jurisdiction is 2020.