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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Taxes [Abstract]  
INCOME TAXES

NOTE 11: INCOME  TAXES

 

Loss before income taxes consisted of income from domestic and foreign operations of $45.4 million for the calendar year ended December 31, 2024. Income tax expense included in the statements of operations and comprehensive loss consisted of the following:

 

   December 31, 
   2024   2023 
Current        
Federal  $935,717   $2,381,973 
Foreign   
-
    2,204,454 
State   (229,642)   995,545 
Total current   706,075    5,581,972 
Deferred          
Federal   270,495    366,647 
Foreign   
-
    
-
 
State   
-
    
-
 
Total deferred   270,495    366,647 
Total provision  $976,570   $5,948,619 

 

Income tax expense differed from the amount computed by applying the Federal statutory income tax rate of 21% to pretax income (loss) for fiscal year 2024 as a result of the following:

 

   December 31, 2024 
   Amount   Rate 
Income (loss) before taxes  $(45,360,217)     
Federal tax at statutory rate   (9,482,578)   21%
State income taxes, net of federal tax benefit   (311,211)   0.7%
Foreign taxes   (377,077)   0.8%
Change in valuation allowance   (5,169,650)   11.5%
162(m) limitations   1,217,581    (2.7)%
Stock based compensation   3,891,235    (8.6)%
Permanent differences   (615,723)   1.4%
Difference and changes in tax rates   (96,667)   0.2%
Impact of deconsolidation   2,613,260    (5.8)%
Return to provision   9,307,400    (20.6)%
Total  $976,570    (2.1)%

The tax effects of temporary differences that gave rise to significant portions of the Company’s deferred tax assets and liabilities related to the following:

 

   December 31, 
   2024   2023 
Assets        
Net operating loss carryforwards  $20,003,160   $25,994,146 
Operating Lease Liability   1,097,752    630,235 
Accrued Liabilities   1,062,960    1,989,103 
Unrealized Loss   1,127,685    1,428,304 
Stock based compensation   3,278,494    5,836,809 
Disallowed Interest Expense   
-
    
-
 
Business interest expense deduction limit   2,578,311    2,178,167 
Other   22,288    22,865 
Total deferred tax assets   29,170,650    38,079,629 
           
Liabilities          
Right of Use Asset   (1,148,959)   (597,503)
Property, plant and equipment, net   (6,420,798)   (10,150,612)
Derivative asset   (726,139)   (1,016,616)
Total deferred tax liabilities   (8,295,896)   (11,764,731)
           
Valuation allowance   (21,511,895)   (26,681,545)
Net deferred tax liability  $(637,141)  $(366,647)

 

Management believes that, based on available evidence, both positive and negative, it is more likely than not that the deferred tax assets will not be utilized. The valuation allowance decreased by $5.2 million for the year ended December 31, 2024, primarily as a result of current year activities.

 

As of December 31, 2024, the Company had approximately $0 million Australian net operating losses (NOL), that will have an indefinite life carryforward. In addition, the Company has approximately $77.5 million of indefinite lived US Federal NOLs and $100.6 million of U.S. state NOLs as of December 31, 2024. The Internal Revenue Code “IRC” limits the amount of NOL carryforwards that a company may use in a given year in the event of certain cumulative changes in ownership over a three-year period as described in Section 382 of the IRC. Utilization of NOL carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. The Company has not conducted a Section 382 study as of December 31, 2024.

 

If recognized, all of the unrecognized tax benefits would not impact the effective tax rate due to the valuation allowance against certain deferred tax assets. As of December 31, 2024, the Company had no unrecognized income tax benefits. The Company does not anticipate any significant increases or decreases to unrecognized tax benefit during the next twelve months. The Company’s policy is to classify interest and penalties associated with unrecognized tax benefits as income tax expense. The Company had no interest or penalty accruals associated with uncertain tax benefits in its consolidated balance sheet and consolidated statement of operations for the tax year ended December 31, 2024.

 

The Company files income tax returns in the U.S. Federal, U.S. State, and foreign jurisdictions. The Company is not currently under examination by income tax authorities in federal or state jurisdictions. All tax returns will remain open for examination by the federal and most state taxing authorities for three years and four years, respectively, from the date of utilization of any net operating loss carryforwards or research and development credits.

 

The Company has made no provision for U.S. income taxes on cumulative undistributed non-U.S. earnings as of December 31, 2024 due to the Company’s limited cumulative earnings and profits generated in its non-US jurisdictions. The Company doesn’t anticipate any material withholding taxes based on cumulative earnings as of December 31, 2024.