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INCOME TAXES
 12 Months Ended
Dec. 31, 2025
INCOME TAXES  
INCOME TAXES

NOTE 5 – INCOME TAXES

 

The provision for income tax expense consists for the years ended December 31, 2025, and 2024:

 

 

 

2025

 

 

2024

 

Income tax provision attributable to:

 

 

 

 

 

 

Federal

 

$(1,232,321 )

 

$(1,122,740 )

State and local

 

 

(342,374 )

 

 

(311,930 )

Valuation allowance

 

 

1,574,695

 

 

 

1,434,670

 

Net provision for income tax

 

$-

 

 

$-

 

 

Deferred tax assets consist of the following at December 31, 2025, and 2024:

 

 

 

2025

 

 

2024

 

Deferred tax asset attributable to:

 

 

 

 

 

 

Net operating loss carryover

 

$9,236,107

 

 

$7,661,412

 

Valuation allowance

 

 

(9,236,107 )

 

 

(7,661,412 )

Net deferred tax asset

 

$-

 

 

$-

 

 

The primary difference between the statutory federal rate and the Company’s effective tax rate for the years ended December 31, 2025 and 2024 was due to the 100% valuation allowance. The following is a reconciliation of the statutory federal rate and the Company’s effective tax rate for the year ended December 31, 2025, and 2024:

 

 

 

2025

 

 

2024

 

 

 

 

 

 

 

 

Tax at federal statutory rate

 

 

21.0%

 

 

21.0%

State, net of federal benefit

 

 

5.7%

 

 

5.7%

Change in temporary differences

 

 

(0.0 )%

 

 

(0.0 )%

Permanent differences

 

 

(0.4 )%

 

 

(0.4 )%

Valuation allowance

 

 

(26.3 )%

 

 

(26.1 )%

Provision for taxes

 

 

-

 

 

 

-

 

 

As of December 31, 2025 the Company had federal and state gross net operating loss carryforwards of approximately $34.4 million. The federal and state net operating losses and tax credits expire in years beginning in 2036. Under Section 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income may be limited. In general, an “ownership change” will occur if there is a cumulative change in our ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. To date, the Company hasn’t experienced “ownership changes” under section 382 of the Code and comparable state tax laws. As of December 31, 2025, the Company estimates that none of the federal and state net operating losses will be limited under Section 382 of the Code.

 

As of December 31, 2025, and 2024, the Company maintained a full valuation allowance on its net deferred tax assets. The valuation allowance was determined in accordance with the provisions of ASC 740, Accounting for Income Taxes, which requires an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction-by-jurisdiction basis. The Company’s history of cumulative losses, along with expected future U.S. losses required that a full valuation allowance be recorded against all net deferred tax assets. The Company intends to maintain a full valuation allowance on net deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance.

 

The applicable federal and state rates used in calculating the deferred tax provision were 21.0% and 5.7%, respectively.

 

The Company files income tax returns in the U.S. and Arizona. All years presented remain subject to examination for U.S. federal and state purposes. The Company is not currently under examination in federal or state jurisdictions.