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Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

Note 12 – Income Taxes

 

The components of the provision (benefit) for income taxes consist of the following for the years ended December 31, 2025 and 2024:

 

   2025   2024 
   Years Ended December 31, 
   2025   2024 
Current:        
Federal  $(1,348,586)  $40,031 
State   (267,392)   17,337 
Total current  $(1,615,978)  $57,368 
Deferred:          
Federal   (7,838,432)   (7,610,511)
State   (2,059,379)   (394,244)
Change in valuation allowance   9,897,811    8,004,755 
Total deferred   -    - 
Total income tax provision (benefit)  $(1,615,978)  $57,368 

 

 

A reconciliation of income tax expense at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows:

 

Permanent differences:          
   Year Ended December 31, 2025 
U.S. federal statutory rate  $(10,187,502)   21.0%
State and local income taxes, net of federal income tax effect (a)   (640,593)   1.3%
Effect of changes in tax laws or rates enacted in the current period   5,685    0.0

%

Tax credits

          

Research and development credits

   (1,163,440)   2.4

%

Changes in valuation allowance

   7,838,433    -16.2

%

Nontaxable or nondeductible items

          
Stock based compensation   574,070    -1.2%
Contingent consideration remeasurement   (169,231)   0.3%
Other   74,808    -0.2%
Change in unrecognized tax benefits   (539,126)   1.1%
Other adjustments       
Federal refund due to OBBBA   (870,633)   1.8%
Change in deferred balances due to OBBBA   3,251,940    -6.7%
Other   209,611    -0.3%
Total provision for (benefit from) income taxes and effective tax rate  $(1,615,978)   3.3%

 

(a) State taxes in Massachusetts made up the majority (greater than 50%) of the tax effect in this category

 

Permanent differences:          
   Year Ended December 31, 2024 
U.S. federal statutory rate  $(7,892,144)   21.0%
State and local income taxes, net of federal income tax effect   (147,008)   0.4%
Effect of changes in tax laws or rates enacted in the current period   17,708    0.0

%

Tax credits

          

Research and development credits

   (691,801

)

   1.8

%

Changes in valuation allowance

   8,004,755    -21.3

%

Nontaxable or nondeductible Items

          
Stock based compensation   738,310    -2.0%
Contingent consideration remeasurement   (150,124)   0.4%
Other   74,886    -0.2%
Change in unrecognized tax benefits   120,180    -0.3%

Other adjustments

          

Federal refund due to OBBBA

   -    0.0

%

Change in deferred balances due to OBBBA   -    0.0%
Other   (17,394)   0.0%
Total provision for (benefit from) income taxes and effective tax rate  $57,368    -0.2%

 

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law, introducing a broad range of tax reform provisions affecting businesses, including extending and modifying certain key Tax Cuts & Jobs Act provisions (both domestic and international), expanding certain Inflation Reduction Act incentives while accelerating the phase-out of others. The Company filed amended federal income tax returns for tax years 2022 and 2023 under the OBBBA provisions and subsequently received a $870,633 refund from the Internal Revenue Service.

 

The following table presents income taxes paid (net of refunds received) for the year ended December 31, 2025 as required by ASU 2023-09:

 

Schedule of Income Taxes Paid Net of Refunds Received

   Year Ended December 31, 2025 
     
Cash paid for income taxes, net of refunds:     
Federal  $(870,633)
State   11,763 
Total  $(858,870)

 

Net deferred tax assets and liabilities consist of the following components as of December 31, 2025 and 2024:

 

Deferred compensation   367,775    638,454 
   December 31, 
   2025   2024 
Deferred tax assets:          
Accrued liabilities  $39,066   $44,364 
Reserves and allowances   644,915    643,206 
Deferred compensation   367,775    638,454 
Section 174 costs   553,562    9,372,153 
Lease liability   296,605    491,744 
UNICAP   9,181    20,846 
Net operating loss carryforwards   22,035,104    8,552,938 
Research and development credits   3,303,255    2,314,332 
Other   2,677    196 
Total gross deferred tax assets   27,252,140    22,078,233 
Less valuation allowance   (24,877,802)   (14,884,382)
Total deferred tax assets   2,374,338    7,193,851 
Deferred tax liabilities:          
Property and equipment, net   (234,815)   (418,148)
Intangibles, net   (1,731,564)   (5,963,713)
Prepaids   (118,336)   (233,162)
Right of use asset   (289,623)   (483,220)
Other comprehensive income   -    (95,608)
Total deferred tax liabilities   (2,374,338)   (7,193,851)
           
Net deferred tax asset (liability)  $-   $- 

 

Valuation allowances are established when necessary to reduce deferred tax assets, including temporary differences and net operating loss carryforwards, to the amount expected to be realized in the future. FASB guidance indicates that forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years. The Company had cumulative losses from continuing operations for the three-year period ended December 31, 2025. The Company considered this negative evidence along with all other available positive and negative evidence and concluded that, at December 31, 2025, it is more likely than not that the Company’s U.S. deferred tax assets will not be realized. As of December 31, 2025, a valuation allowance has been recorded on the Company’s deferred tax assets to recognize only the portion of the deferred tax asset that is more likely than not to be recognized. The Company’s total valuation allowance was $24,877,802 at December 31, 2025 and $14,884,382 at December 31, 2024.

 

The following table summarizes changes in the valuation allowance during the years ended December 31, 2025 and 2024:

Schedule of Change in Valuation Allowance

   2025   2024 
   Years Ended December 31, 
   2025   2024 
Valuation allowance at beginning of year  $14,884,382   $6,938,829 
Change in valuation allowance   9,993,420    7,945,553 
Valuation allowance at end of year  $24,877,802   $14,884,382 

 

At December 31, 2025, the Company had federal net operating loss carryforwards of $92,932,557 and federal research and development credit carryforwards of $2,987,836. The net operating losses have an indefinite carryforward period. If not utilized, the credits will begin to expire in 2042. At December 31, 2025, the Company had state net operating loss carryforwards of $59,475,952 and $1,137,149 of state research and development credit carryforwards. Of the total state net operating losses, $43,809,105 are attributable to Utah. All of the Utah net operating losses are carried forward indefinitely. The remaining state net operating loss carryforwards are attributable to various other states and begin to expire in 2044. If unused, the state research credit carryforward will expire in 2036.

 

 

ASC Topic 740-10-05 requires that the impact of a tax position be recognized in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. Our unrecognized tax benefit balances included $618,749 at December 31, 2025 and $1,200,035 at December 31, 2024 of tax positions that, if recognized, would reduce the annual effective tax rate offset by deferred tax assets recorded for uncertain tax positions. During the next 12 months, the Company does not anticipate a material change in the unrecognized tax benefits. Interest and penalties associated with uncertain tax positions are recorded as a component of income tax expense. A reconciliation of the beginning and ending amount of unrecognized benefits is as follows:

 

   December 31, 
   2025   2024 
Unrecognized tax benefits at the beginning of the year  $1,200,035   $1,078,431 
Gross increases - current year tax positions   111,065    137,527 
Gross increases - prior year tax positions   -    51,225 
Gross decreases - prior year tax positions   (692,351)   (67,148)
Unrecognized tax benefits at end of year  $618,749   $1,200,035 
           
Interest and penalties in year-end balance  $-   $128,783 

 

The Company is subject to taxation in the United States and other state jurisdictions. The tax years from December 31, 2022 through December 31, 2025 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which the Company is subject. The Company is not currently under examination by any taxing authority.