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

Note 17 – Income Taxes

We account for income taxes under the provisions of ASC Topic 740, Income taxes, which provides for an asset and liability approach for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributable to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes.

The Company recognized income tax expense of $123,579 and $0 for the periods ended December 31, 2024 and 2023, respectively.

The effective income tax rate for the years ended December 31, 2024 and 2023 consisted of the following:

 

 

December 31,

 

 

 

 

2024

 

 

 

2023

 

 

Federal statutory income tax rate

 

 

 

21.00

 

%

 

 

 

21.00

 

%

State income taxes

 

 

 

0.00

 

%

 

 

 

0.00

 

%

Permanent differences

 

 

(0.16

 

)%

 

 

(0.21

 

)%

Change in effective state income tax rate

 

 

 

0.00

 

%

 

 

 

0.00

 

%

True up prior year tax return

 

 

 

0.05

 

%

 

 

0.06

 

%

Change in valuation allowance

 

 

(0.11

 

)%

 

 

(20.85

 

)%

Net effective income tax rate

 

 

 

20.78

 

%

 

 

 

0.00

 

%

 

The components of the deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows:

 

 

December 31,

 

 

 

2024

 

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

 

 

 

Federal and state net operating loss carryovers

 

$

 

8,835,743

 

 

 

$

 

9,391,254

 

Stock compensation

 

 

 

3,587,594

 

 

 

 

 

2,578,060

 

Stock-based debt discounts

 

 

 

669,499

 

 

 

 

 

440,963

 

Goodwill and intangibles

 

 

 

1,012,214

 

 

 

 

 

1,106,693

 

Reorganization costs

 

 

 

28,135

 

 

 

 

 

28,135

 

Allowances

 

 

 

237,044

 

 

 

 

132

 

Total deferred tax assets

 

$

 

14,370,229

 

 

 

$

 

13,545,237

 

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

 

Property and equipment

 

 

 

(672,148

)

 

 

 

 

(561,128

)

Total deferred liabilities

 

 

 

(672,148

)

 

 

 

 

(561,128

)

 

 

 

 

 

 

 

 

 

 

Net deferred tax assets (liabilities)

 

 

 

13,698,081

 

 

 

 

 

12,984,109

 

Less: valuation allowance

 

 

 

(13,698,081

)

 

 

 

 

(12,984,109

)

Deferred tax assets (liabilities)

 

$

 

-

 

 

 

$

 

-

 

As of December 31, 2024, the Company has a net operating loss carryover of approximately $42,074,964. Under existing Federal law, a portion of the net operating loss may be utilized to offset taxable income through the year ended December 31, 2037. A portion of the net operating loss (“NOL”) carryover begins to expire in 2031. For tax years beginning after December 31, 2017 pursuant to the enactment of the Tax Cuts and Jobs Act (“TCJA”) net operating losses now carry forward indefinitely but are limited to offsetting 80% of taxable income in a tax year. Of the total estimated net operating loss as of December 31, 2024 , approximately $16,603,694 of the Company’s NOL is subject to the TCJA net operating loss provisions.

ASC Topic 740 provides that a valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. As of December 31, 2024, the Company is increasing its valuation allowance from $12,984,109 to $13,698,081 due to a decrease in the net estimated deferred tax assets. At this time, the Company believes it is more likely than not that the benefit of the remaining net deferred tax assets will not be realized, the Company will continue to evaluate this valuation allowance quarterly.

The Company filed annual US Federal income tax returns and annual income tax returns for the state of Minnesota through 2020. Following the 2020 tax year, the Company has filed annual state franchise tax returns for the state of Texas. We are not subject to income tax examinations by tax authorities for years before 2020 for all returns. Income taxing authorities have conducted no formal examinations of our past federal or state income tax returns and supporting records.

The Company adopted the provisions of ASC Topic 740 regarding uncertainty in income taxes. The Company has found no significant uncertain tax positions as of any date on or before December 31, 2024. We account for income taxes under the provisions of ASC Topic 740, Income taxes, which provides for an asset and liability approach for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributable to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes. The Company has found no significant uncertain tax positions as of any date on or before December 31, 2024.