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Note 8 - Income Taxes
 12 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 8:     Income Taxes

 

For the year ended December 31, 2024, there was no provision for income taxes or unrecognized tax benefits recorded.

 

The significant components of gain (loss) before income taxes are as follows:

 

  

Years Ended December 31,

 
  

2024

  

2023

 

U.S. operations

 $(5,757,824) $(6,766,409)

Foreign operations

  (51,335)  (29,052)

Total loss before provision for income taxes

 $(5,809,159) $(6,795,461)

 

The Company has no current or deferred income tax for the years ended December 31, 2024 and 2023.

 

The income tax provision differs from the expense amount that would result from applying the federal statutory rates to income before income taxes due to permanent differences, state income taxes and a change in the deferred tax valuation allowance.

 

The reconciliation between the statutory tax rate and the Company’s actual effective tax rate is as follows:

 

  

Years Ended December 31,

 
  

2024

  

2023

 

Tax at U.S. statutory rate

  (21.00)%  (21.00)%

State taxes, net of federal benefit

  (4.29)  (4.19)

Non-deductible items

  0.26   0.76 

Change in valuation allowance

  20.59   14.54 

True-up adjustment

  4.44   10.00 

Foreign operations

  —   (0.11)

Change in tax rate

  —   — 

Other

  —   — 

Effective income tax rate

  —%  —%

 

The significant components of the Company’s net deferred income tax assets are as follows:

 

  

December 31,

 
  

2024

  

2023

 

Section 174 - R&D expenses

 $2,123,800  $1,769,000 

Stock option expense

  1,584,700   1,419,300 

NOL carryforward

  12,655,300   11,620,700 

General Business credits

  1,278,400   1,503,600 

Operating lease liability

  22,500   34,700 

Right-of-use asset

  (23,400)  (35,800)

Other

  800   134,800 

Deferred tax asset, net of deferred tax liabilities

  17,642,100   16,446,300 

Valuation allowance

  (17,642,100)  (16,446,300)

Net deferred tax asset

 $—  $— 

 

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. In assessing the realizability of deferred tax assets, Management evaluates whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on Management’s evaluation, the net deferred tax asset, was offset by a full valuation allowance as of December 31, 2024 and 2023. 

 

The Company had federal and state net operating loss (“NOL”) carryforwards available as of December 31, 2024, and 2023, in the amount of approximately $49,903,000 and $45,850,000, respectively. Approximately $46,965,000 of the federal net operating loss carryforwards will be carried forward indefinitely and will be available to offset 80% of taxable income. The remaining amount of the net operating loss carryforwards will expire at varying dates through 2038.

 

The Tax Cuts and Jobs Act eliminated the current year deduction election for research and experimental expenditures. Instead, a taxpayer must charge such expenditures to a capital account and is allowed to amortize such expenditures ratably over a five-year period (or fifteen-year period for expenditures attributable to foreign research), beginning with the midpoint of the tax year in which such expenditures are paid or incurred.