XML 22 R10.htm IDEA: XBRL DOCUMENT v3.25.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Taxes [Abstract]  
Income Taxes

Note 4 - Income Taxes

 

The Company generated a worldwide pre-tax loss of $26,045,861, $1,046,973 and $5,452,383 for the periods ended December 31, 2024, December 31, 2023, and April 30, 2023 respectively.

 

Pre-tax book income/(loss) has been recorded in the following jurisdictions:

 

   Tax Years Ended 
   12/31/24    12/31/23    4/30/23 
US  $(6,861,229)  $(758,438)  $(5,450,265)
Foreign   (844,997)   13,945    12,657 
From continuing operations   (7,706,226)   (744,493)   (5,437,607)
From discontinued operations (US)   (18,339,635)   (302,480)   (14,776)
Total pre-tax income/(loss)  $(26,045,861)  $(1,046,973)  $(5,452,383)

 

The Company recorded federal and state income tax expense for the period ended December 31, 2024 of ($29,699) and ($24,561), respectively. The Company recorded federal and state income tax expense for the period ended December 31, 2023 of $166,478 and $37,808, respectively.  The Company recorded no income tax expense for the period  April 30, 2023.

 

   Tax Years Ended 
   12/31/24   12/31/23   4/30/23 
Current:            
Federal  $(29,699)  $166,478   $
         -
 
State    (24,561)   37,808    
-
 
Foreign   
-
    
-
    
-
 
    (54,260)   204,286    
-
 
Deferred:               
Federal   
-
    
-
    
-
 
State     
-
    
-
    
-
 
Foreign   
-
    
-
    
-
 
    
-
    
 
    
 
 
Income tax expense (benefit) for continuing operations   (54,260)   204,286    
-
 
Income tax expense (benefit) for discontinued operations   
 
    
 
    
 
 
Total  $(54,260)  $204,286   $
-
 

 

The Company follows the Financial Accounting Standards Board (“FASB”) ASC 740, for the computation and presentation of its tax provision. The following table presents a reconciliation of the income tax provision (benefit) computed at the statutory federal rate and the Company’s income tax provision (benefit) for the periods presented:

 

   Tax Years Ended 
   12/31/24     12/31/23     4/30/23 
U.S. federal taxes at statutory rate  $(1,440,858)  $(159,346)  $(1,144,556)
State tax   (24,561)   37,808    
-
 
Foreign Taxes   
-
    
-
    
-
 
Regulation-A Costs   12,985    24,556    368,830 
Stock Registration Expenses   257,066    946,768    
-
 
Goodwill Impairment   
 
    
 
    
 
 
Non-Controlling Interest   
 
    
 
    
 
 
Other Permanent Differences   5,280    1,979    14,457 
Other   (29,699)   
-
    
-
 
Change in valuation allowance   1,165,527    (647,479)   761,269 
Total  $(54,260)  $204,286   $
-
 

Deferred income taxes reflect the net tax effects of 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:

 

   Tax Years Ended 
   12/31/24   12/31/23   4/30/23 
Deferred tax assets:            
Net operating loss carryforwards  $5,309,474   $2,559,749   $3,238,595 
Charitable Contributions   
-
    
-
    1,483 
Section 174 Capitalization   430,891    418,028    406,010 
Property and equipment   
-
    
-
    
-
 
Gross deferred tax assets   5,740,365    2,977,777    3,646,088 
Valuation allowance   (4,951,573)   (2,523,225)   (1,592,835)
Net deferred tax assets  $788,792   $454,552   $2,053,252 
Deferred tax liabilities               
Property and equipment   (1,468)   (6,285)   (946)
Intangibles   (787,324)   (448,267)   (2,052,306)
Gross deferred tax liabilities   (788,792)   (454,552)   (2,053,252)
Net deferred tax liabilities   (788,792)   (454,552)   0 
Net deferred taxes  $
-
   $
-
   $
-
 

 

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The valuation allowance changed by $2.4 million, during the year ended December 31, 2024.

  

 For the period ended December 31, 2024, we had a total carryover of Federal Net Operating Losses (“NOLs”) of $22,085,100. The Company’s NOLs were generated after the rules of the Tax Cuts and Jobs Act (“TCJA”) became effective on January 1, 2018. The NOLs do not expire but are subject to the 80% limitation. The Company has a State and city Net Operating Loss carryover of $32,986,420. These NOLs are subject to various limitations and expiration dates.

 

The Internal Revenue Code of 1986, as amended, imposes restrictions on the utilization of net operating losses and tax credits in the event of an “ownership change” of a corporation. Accordingly, a company’s ability to use net operating losses and tax credits may be limited as prescribed under Internal Revenue Code Section 382 and 383 (“IRC Section 382”). Events which may cause limitations in the amount of the net operating losses or tax credits that the Company may use in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. Utilization of the federal and state net operating losses may be subject to substantial annual limitation due to the ownership change limitations provided by the IRC Section 382 rules and similar state provisions. In the event the Company has any changes in ownership, net operating losses and research and development credit carryovers could be limited and may expire unutilized.

It is the Company’s policy to include penalties and interest expense in income tax expense. There was no interest expense or penalties related to unrecognized tax benefits recorded through December 31, 2024.

 

The Company’s major tax jurisdictions are the United States, India, Nepal and Singapore. All of the Company’s tax years will remain open for examination by the Federal and State tax authorities for three and four years, respectively, from the date of utilization of the net operating loss or research and development credit. The Company does not have any tax audits pending in the United States.

 

‘The Inflation Reduction Act of 2022 was signed into law August 16, 2022, and includes significant legislation addressing taxes, inflation, climate change and renewable energy incentives, and healthcare. Key tax provisions include a 15% corporate minimum tax, clean energy incentives, and a 1% excise tax on stock buybacks. The Company does not expect the provisions of such legislation to have any impact on the effective tax rate of the Company but will continue to evaluate the tax effects should any provisions become applicable to the Company.

 

Change to Internal Revenue Code Section 174 under the 2017 Tax Cuts and Jobs Act went into effect during 2022. The revised code no longer permits a deduction for research and development expenditures in the tax year that such costs incurred. Instead, such costs must be capitalized and amortized over five or 15 years for U.S. and foreign costs, respectively. The Company capitalized such costs in its tax years ended December 31, 2023 and April 30, 2023 income tax provision and return, respectively.

 

The Organization for Economic Co-operation and Development (the “OECD”) has issued various proposals that would change long-standing global tax principles. These proposals include a two-pillar approach to global taxation (BEPS 2.0/ Pillar Two), focusing on global profit allocation and a global minimum tax rate. On December 12, 2022, the European Union member states agreed to implement the OECD’s global corporate minimum tax rate of 15%, to be effective as of January 2024. Other countries are also actively considering changes to their tax laws to adopt certain parts of the OECD’s proposals. The enactment of Pillar Two legislation is not anticipated to have a material adverse effect on the Company’s effective tax rate, financial position, results of operations, or cash flows. The Company will continue to monitor and reflect the impact of such legislative changes in future financial statements as appropriate.

 

    12/31/24     12/31/23 
A. Valuation Allowance Increase  $2,428,348   $
-
 
B.  Federal NOL Carryforward   22,085,100    12,061,045 
C.  City of Dublin, OH NOL Carryforward   14,232,690    8,883,628 
D.  State of Ohio NOL Carryforward   18,753,731    11,749,252