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

12. Income Taxes

 

Loss from operations before income taxes for the years ended December 31, 2024 and 2023 is summarized below (in thousands):

   2024   2023 
   For the year ended December 31, 
   2024   2023 
Loss from operations before income taxes:          
US   (12,855)   (1,990)
Foreign   (4,947)   1,454 
Loss from operations before income taxes   (17,802)   (536)

 

 

The provision (benefit) for income taxes for the years ended December 31, 2024 and December 31, 2023 is as follows (in thousands):

 

   2024   2023 
   For The Years Ended 
   2024   2023 
Current          
Federal   -    - 
State   -    - 
Foreign   -    - 
Current income tax   -    - 
Deferred          
Federal   (2,429)   (843)
State   355    (355)
Foreign   (931)   (251)
Deferred income tax   (3,005)   (1,449)
           
Change in Valuation Allowance   3,005    1,449 
           
Net Income Tax Expense   -    - 

 

Income tax provision differed from the amount computed by applying the U.S. federal income tax rate of 21% to income (loss) before taxes, as follows (in thousands):

 

   US   Foreign   Consolidated 
   For The Year Ended 
   2024 
   US   Foreign   Consolidated 
Taxes at federal statutory rate  $(2,705)  $(1,039)  $(3,744)
Foreign Rate Differential   -    91     91 
Meals & Entertainment   0    -    0 
Eq Comp Perm   84    -    84 
Convertible Debt Adjustment   268    -    268 
State Re-Rate   355    -    355 
Other   (76)   17    (59)
Change In Valuation Allowance   2,074    931    3,005 
                
Total provision (benefit) for income taxes  $-   $-   $- 

 

   US   Foreign   Consolidated 
   For The Year Ended 
   2023 
   US   Foreign   Consolidated 
Taxes at federal statutory rate  $(417)  $305   $(112)
State Taxes   (175)   -    (175)
Foreign Rate Differential   -    490    490 
Meals & Entertainment   0    2    2 
Eq Comp Perm   3    -    3 
Convertible Debt Adjustment   -    (1,048)   (1,048)
Purchase Accounting Adjustment   (609)   -    (609)
Change In Valuation Allowance   1,198    251    1,449 
                
Total provision (benefit) for income taxes  $-   $-   $- 

 

The tax effects of temporary differences which give rise to significant portions of deferred tax assets are as follows as of December 31 (in thousands):

 

   US   Foreign   Consolidated 
   For The Year Ended 
   2024 
   US   Foreign   Consolidated 
Deferred Tax Assets               
Stock options  $280   $-   $280 
Transaction Costs   393    -    393 
Research & Development   

671

    

-

    

671

 
Accruals   141    -    141 
Net operating loss   1,788    1,182    2,970 
                
Total deferred tax asset   3,273    1,182    4,455 
                
Valuation allowance   (3,273)   (1,182)   (4,455)
Net deferred tax assets (liability)  $-   $-   $- 

 

   US   Foreign   Consolidated 
   For The Year Ended 
   2023 
   US   Foreign   Consolidated 
Deferred Tax Assets               
Stock options  $37   $-   $37 
Transaction Costs   599         599 
Net operating loss   562    251    813 
                
Total deferred tax asset   1,198    251    1,449 
                
Valuation allowance   (1,198)   (251)   (1,449)
Net deferred tax assets (liability)  $-   $-   $- 

 

 

As of December 31, 2024 and December 31, 2023, the Company had net operating loss (“NOL”) carryforwards for U.S. federal” purposes of approximately $8.5 million and $1.9 million, respectively, which carryforward indefinitely and can offset 80% of taxable income in future years. As of December 31, 2024 and December 31, 2023, the Company had state NOL carryforwards of nil and $1.9 million, respectively. As of December 31, 2024 and December 31, 2023, the Company had net operating loss (“NOL”) carryforwards for foreign purposes of approximately $4.7 million and $1.0 million, respectively, which carryforward indefinitely. Net operating loss (NOL) carryforwards are subject to limitations in the event of a change in control under Section 382 of the Internal Revenue Code. This section limits the amount of taxable income that can be offset by NOLs after an ownership change. The limitation is calculated as the value of the old loss corporation multiplied by the long-term tax-exempt rate. If the new loss corporation does not continue the business enterprise of the old loss corporation for a specified period, the NOL carryforwards may be disallowed. The Company has not yet conducted a Section 382 study to determine whether any ownership changes have occurred that would impose annual limitations on its ability to utilize its NOL carryforwards. Until such a study is completed, there is substantial uncertainty regarding the amount of NOL carryforwards that could be utilized annually to offset future taxable income.

 

The Company establishes a valuation allowance when it is more likely than not that the Company’s recorded net deferred tax asset will not be realized. In determining whether a valuation allowance is required, the Company must take into account all positive and negative evidence with regard to the utilization of a deferred tax asset. As of December 31, 2024 and December 31, 2023, the valuation allowance for deferred tax assets totaled approximately $4.5 million and $1.4 million, respectively.