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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Taxes  
Income Taxes

Note 10 – Income Taxes

 

Deferred income taxes are provided based on the provisions of ASC Topic 740, “Accounting for Income Taxes”, to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

 

Significant components of the Company’s net deferred income taxes are as follows:

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$96,963

 

 

$151,634

 

Capitalized start-up costs

 

 

30,851

 

 

 

55,077

 

Other intangibles

 

 

3,818

 

 

 

6,808

 

Other accruals

 

 

239,219

 

 

 

36,760

 

Stock compensation

 

 

532,688

 

 

 

359,378

 

Net operating losses

 

 

6,112,848

 

 

 

3,561,783

 

Contribution carryforward

 

 

1,108

 

 

 

832

 

Unearned revenue

 

 

7,634

 

 

 

35,399

 

Research and development costs

 

 

1,509,504

 

 

 

887,434

 

Reserves and allowances

 

 

269,264

 

 

 

136,942

 

Deferred tax assets

 

 

8,803,897

 

 

 

5,232,047

 

Less valuation allowance

 

 

(8,386,790)

 

 

(5,173,947)

Net deferred tax assets after valuation allowance

 

$417,107

 

 

$58,100

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

$(407,355)

 

$(58,100)

Lease liabilities

 

 

(9,752)

 

 

-

 

Deferred tax liabilities

 

 

(417,107)

 

 

(58,100)

Net deferred tax asset (liability)

 

$—

 

 

$—

 

A reconciliation of the U.S. statutory federal income tax rate to the effective income tax rate (benefit) follows:

 

Rate Reconciliation

 

 

 

December 31,

 

 

 

2024

 

 

2023

 

Rate Reconciliation

 

 

 

 

 

 

Federal income tax at statutory rate

 

 

21.00%

 

 

21.00%

Change in state tax

 

 

-0.85%

 

 

1.99%

Change in valuation allowance

 

 

-25.84%

 

 

-43.19%

Permanent differences

 

 

0.73%

 

 

10.70%

State taxes

 

 

4.45%

 

 

6.23%

Other

 

 

0.51%

 

 

3.27%

Effective income tax rate

 

 

0.00%

 

 

0.00%

 

The Company has gross net operating loss carryforwards for federal tax purposes totaling approximately $23.1 million and $13.3 million at December 31, 2024 and 2023 respectively, which will carry forward indefinitely. The Company has gross net operating loss carryforwards for state tax purposes totaling approximately $18.3 million and $11.0 million at December 31, 2024 and 2023 respectively, which will carry forward indefinitely.

 

NOLs that were acquired with the acquisition of businesses are excluded from the amount of available NOLs to the extent their use is limited by the provisions of Section 382 of the Internal Revenue Code. Under the provisions of the Internal Revenue Code, certain substantial changes in the Company's ownership may result in further limitation on the amount of net operating loss carryforwards which can be utilized in future years.

 

In evaluating the amount of the valuation allowance against its deferred tax assets as of December 31, 2024 and 2023, the Company considered all available positive and negative evidence and concluded that it is more likely than not that a portion of its deferred tax assets would not be realized. Accordingly, the Company has recorded a valuation allowance against its net deferred tax assets due to the uncertainty surrounding the realization of such assets.

 

The Company had no unrecognized tax benefits as of December 31, 2024 and 2023. The Company does not anticipate a significant change in total unrecognized tax benefits within the next 12 months. Tax years 2021-2023 remain open to examination by the major taxing jurisdictions to which the Company is subject.