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

Note 13. Income Taxes

 

The Company’s pre-tax income (loss) by jurisdiction was as follows for the years ending December 31, 2024 and December 31, 2023:

 

   2024   2023 
   Year ended December 31, 2023 
   2024   2023 
         
Domestic  $(25,047,740)  $(25,567,244)
Foreign   (3,513,957)   3,545 
Total   (28,561,697)   (25,563,699)

 

The provision for income taxes for continuing operations for the year ended December 31, 2024 and 2023 consist of the following

 

   2024   2023 
   Year ended December 31, 2024 
   2024   2023 
Current Income Taxes          
Federal  $0   $0 
State   26,315    60,000 
Foreign   0    0 
Total current income taxes   26,315    60,000 
           
Deferred Income Taxes          
Federal   -    - 
State   -    - 
Foreign   -    - 
Total deferred income taxes   -    - 
Total Income Tax Expense (benefit)  $26,315   $60,000 

 

A reconciliation between the amount of reported income tax expense (benefit) and the amount computed by multiplying income from continuing operations before income taxes by the statutory federal income tax rate is shown below. Income tax expense for the year ended December 31, 2024 includes state minimum taxes, permanent differences, and deferred tax assets for which a full valuation allowance has been placed.

 

   2024   2023 
   Year ended December 31, 2024 
   2024   2023 
         
Tax Expense at statutory federal rate of 21%  $(5,510,503)  $(5,369,121)
State income taxes, net of federal income tax benefit   26,315    60,000 
Foreign Rate Differential   319    319 
Permanent Differences   1,203,361    1,203,361 
Other - Misc.          
Change in Valuation Allowance   4,306,823    4,165,441 
Income tax expense (benefit)   26,315    60,000 

 

 

Deferred income taxes reflect the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. The following table discloses those significant components of our deferred tax assets and liabilities, including any valuation allowance:

 

   2024   2023 
Long-term deferred tax assets:          
Federal Net Operating Loss Carryforwards  $36,378,116   $36,378,116 
Intangible Assets   1,492,426    1,492,426 
Accrued Compensation & Benefits   863,049    863,049 
Foreign Net Operating Loss Carryforwards   773,134    773,134 
Stock Compensation   -    - 
State Net Operating Loss Carryforwards   -    - 
Other   19,540    19,540 
Total deferred tax assets before valuation allowance   39,526,265    39,526,265 
    -    - 
Deferred tax liabilities:   -    - 
Fixed Assets   316    316 
Intangible Assets   -    - 
Total deferred tax liabilities   316    316 
           
Valuation Allowance   (39,525,950)   (39,525,950)
Net deferred tax assets and liabilities  $-   $- 

 

For the year ended December 31, 2024, the valuation allowance increased by $10,265,807. The Company believes a full valuation allowance against the net deferred tax asset is appropriate at this time. The Company will continue to evaluate the realizability of its deferred tax assets in future years.

 

At December 31, 2024, our carryforwards available to offset future taxable income consisted of federal net operating loss (“NOL”) carryforwards of approximately $173,229,125. Of this total $22,050,149 expires between 2035 and 2037 and $151,178,976 of which has no expiration date.

 

We account for uncertain tax positions in accordance with ASC 740-10-25, which prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. We have not recorded any unrecognized tax benefits as of December 31, 2024.

 

Our practice is to recognize interest and penalties related to income tax matters in income tax expense in our consolidated statements of operations.

 

The Company files U.S. federal and state returns. The Company’s foreign subsidiaries also file local tax returns in their jurisdiction. From a U.S. federal, state, Mexican and United Kingdom perspective the years that remain open to examination are consistent with each jurisdiction’s statute of limitations. The Company has not filed its 2023 and 2024 U.S. federal and state corporate income tax returns. The Company’s foreign subsidiaries in Mexico and the United Kingdom are current with the filing of their tax returns through 2023. The Company expects to file U.S. federal and state tax returns for 2023 and 2024 as soon as possible. While the Company is in a net loss position and expects no income tax amounts to be due except for minimum state and local income taxes, the Company is at risk of penalties for failure to file. As of the date of this Report, the Company has not been informed that such penalties have been assessed, therefore no accrual for such has been recorded in the Company’s financial statements. The Company’s federal income tax returns for the years 2020-2023 remain subject to examination by the Internal Revenue Service. The state returns for 2019-2023 are also open for examination.