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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Taxes [Abstract]  
Income Taxes

Note 12 — Income Taxes

The components of loss before income taxes are as follows:

  

For the Years Ended
December 31,
   

2023

  

2022

U.S.

  

$

(37,106,599

)

  

$

(13,419,830

)

Foreign

  

 

(315,688

)

  

 

—

 

Total loss before income taxes

  

$

(37,422,287

)

  

$

(13,419,830

)

The Company’s major tax jurisdictions are the United States, Switzerland, and various state jurisdictions, and the Company does not have any pending tax audits. The income tax benefit recorded for the year ended December 31, 2023 related to the Company’s deferred foreign taxes. There was no income tax provision or benefit recorded for the year ended December 31, 2022. Generally, the Company’s federal returns from 2019 on and state returns from

2018 on, and foreign returns from 2018 on, are subject to examination by the United States, state, and foreign tax authorities; however, to the extent allowed by law, tax authorities have the ability to adjust the Company’s carryforwards of unutilized net operating losses and research and development credits for all years.

At December 31, 2023, the Company had a net operating loss (“NOL”) carryforward for federal, foreign, and state income tax purposes totaling approximately $27.9 million, $18.0 million, and $23.8 million, respectively, available to reduce future taxable income. The federal NOL and certain state NOLs of $16.8 million are carried forward indefinitely subject to a limitation of 80% of taxable income. State NOLs of approximately $6.8 million will begin to expire in 2024 if not utilized, and foreign NOLs of approximately $15.1 million will begin to expire in 2024 if not utilized.

The NOL carry forward is subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Under the Internal Revenue Code (“IRC”) Sections 382 and 383, annual use of the Company’s net operating loss carryforwards and research credit carryforwards to offset taxable income and tax, respectively, may be limited based on cumulative changes in ownership. The Company has not completed an analysis to determine whether any such limitations have been triggered as of December 31, 2023. The amount of the annual limitation, if any, will be determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years.

The tax effects of the temporary differences and carryforwards that give rise to deferred tax assets and liabilities consist of the following:

  

As of December 31,
   

2023

  

2022

Deferred tax assets:

  

 

  

 

  

 

  

 

Net-operating loss carryforward

  

$

10,214,760

 

  

$

2,986,738

 

Intangibles

  

 

3,349,919

 

  

 

885,176

 

Capitalized research and development

  

 

1,171,320

 

  

 

—

 

Stock-based compensation

  

 

690,760

 

  

 

308,552

 

Deposit on WraSer APA

  

 

854,896

 

  

 

—

 

Accrued compensation

  

 

150,099

 

  

 

186,573

 

License agreement

  

 

49,157

 

  

 

82,626

 

Other

  

 

520,207

 

  

 

65,886

 

Gross deferred tax assets

  

 

17,001,118

 

  

 

4,515,551

 

Valuation allowance

  

 

(15,697,701

)

  

 

(4,512,546

)

Deferred tax assets, net of allowance

  

$

1,303,417

 

  

$

3,005

 

Deferred tax liabilities:

  

 

  

 

  

 

  

 

Intangible assets

  

 

(4,345,449

)

  

 

—

 

Fixed assets

  

 

(2,560

)

  

 

(3,005

)

Other

  

 

(29,189

)

  

 

—

 

Total deferred tax liabilities

  

$

(4,377,198

)

  

$

(3,005

)

Net deferred tax liability

  

$

(3,073,781

)

  

$

—

 

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. The Company has recorded a valuation allowance against its United States and foreign deferred tax assets in each of the years ended December 31, 2023 and 2022, because the Company’s management believes that it is more likely than not that these assets will not be realized. During the years ended December 31, 2023 and 2022, the valuation allowance increased by approximately $11.2 million and $3.2 million, respectively.

The provision for income taxes on earnings subject to income taxes differs from the statutory Federal rate at December 31, 2023 and 2022, due to the following:

  

For the Years Ended
December 31,
   

2023

  

2022

Expected income tax benefit at Federal statutory tax rate

  

$

(7,858,680

)

  

$

(2,818,164

)

State and local taxes, net of Federal tax benefit

  

 

(1,192,605

)

  

 

(501,277

)

Research credits

  

 

—

 

  

 

(16,477

)

Foreign NOL expirations

  

 

315,927

 

  

 

—

 

Stock-based compensation

  

 

196,025

 

  

 

—

 

Subscription agreement liability

  

 

181,440

 

  

 

—

 

Officer’s compensation

  

 

(126,337

)

  

 

—

 

Acquisition related costs

  

 

164,073

 

  

 

—

 

Permanent items

  

 

55,486

 

  

 

194,705

 

State rate adjustment

  

 

(23,135

)

  

 

19,600

 

Other

  

 

60,599

 

  

 

(37,260

)

Change in valuation allowance

  

 

8,214,614

 

  

 

3,158,873

 

Income tax benefit

  

$

(12,593

)

  

$

—

 

Under U.S. GAAP, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, U.S. GAAP provides guidance on derecognition, classification, interest and penalties, accounting for interim periods, disclosure, and transition.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

  

For the Years Ended
December 31,
   

2023

  

2022

Beginning balance

  

$

17,010

  

$

—

Increases related to prior year tax positions

  

 

—

  

 

11,517

Increases related to current year tax positions

  

 

—

  

 

5,493

Ending balance

  

$

17,010

  

$

17,010

At December 31, 2023 and 2022, the Company’s unrecognized tax benefits were $17,010. Due to the existence of the valuation allowance, future changes in the Company’s unrecognized tax benefits will not impact the effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.

The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2023 and 2022, there were no accrued interest and penalties associated with uncertain tax positions.