Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES

v3.25.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 11. INCOME TAXES

The components of the provision consist of the following for the years ended December 31, 2024 and 2023:

 

 

 

2024

 

 

2023

 

U.S. (loss)

 

$

(10,051,064

)

 

$

(7,356,941

)

Non-U.S. income

 

 

7,481,601

 

 

 

5,628,583

 

Loss before income taxes

 

$

(2,569,463

)

 

$

(1,728,358

)

 

 

 

 

 

 

 

 

 

2024

 

 

2023

 

Current:

 

 

 

 

 

 

Federal

 

$

(17,309

)

 

$

—

 

State

 

 

2,393

 

 

 

3,360

 

Foreign

 

 

117,899

 

 

 

87,479

 

Total current

 

 

102,983

 

 

 

90,839

 

Deferred:

 

 

 

 

 

 

Federal

 

 

8,993

 

 

 

(5,347

)

State

 

 

(25,353

)

 

 

(6,264

)

Total deferred

 

 

(16,360

)

 

 

(11,611

)

Noncurrent:

 

 

 

 

 

 

Federal

 

 

(28,976

)

 

 

—

 

Total Noncurrent

 

 

(28,976

)

 

 

—

 

Provision for income taxes

 

$

57,647

 

 

$

79,228

 

 

The income tax provision differs from that computed at the federal statutory corporate income tax rate as follows for the years ended December 31, 2024 and 2023:

 

 

 

2024

 

 

2023

 

Tax provision computed at the federal statutory rate

 

$

(458,856

)

 

$

(301,859

)

Foreign rate differential

 

 

52,559

 

 

 

37,042

 

State income tax, net of federal benefit

 

 

13,719

 

 

 

(18,142

)

Share based compensation

 

 

—

 

 

 

(38,517

)

Other permanent items

 

 

660,115

 

 

 

18,880

 

Credits

 

 

(205,311

)

 

 

(161,989

)

State tax true ups

 

 

(40,157

)

 

 

(194,415

)

Other rate changes, net of benefit

 

 

(28,859

)

 

 

37,582

 

Change in valuation allowance

 

 

64,437

 

 

 

700,646

 

Provision for income taxes

 

$

57,647

 

 

$

79,228

 

 

The tax effects of significant temporary differences representing net deferred tax assets and liabilities consisted of the following at December 31, 2024 and 2023:

 

 

 

2024

 

 

2023

 

Deferred Tax Assets:

 

 

 

 

 

 

Right-of-use asset

 

$

119,719

 

 

$

174,188

 

Net operating loss

 

 

403,289

 

 

 

605,773

 

Share based compensation

 

 

459,640

 

 

 

384,078

 

Intangible assets

 

 

103,274

 

 

 

244,130

 

Tax credits

 

 

638,363

 

 

 

443,433

 

Capitalized R&D Cost

 

 

407,919

 

 

 

255,079

 

Accruals and reserves

 

 

107,861

 

 

 

132,076

 

Debt issuance costs

 

 

128,645

 

 

 

136,226

 

Other

 

 

70,527

 

 

 

55,195

 

Total deferred tax assets

 

 

2,439,237

 

 

 

2,430,178

 

 

 

 

 

 

 

 

Total valuation allowance

 

 

(2,102,373

)

 

 

(2,037,936

)

 

 

 

 

 

 

 

Deferred Tax Liabilities:

 

 

 

 

 

 

Right-of-use liability

 

 

(131,074

)

 

 

(189,461

)

Prepaid assets

 

 

(103,921

)

 

 

(102,757

)

Basis difference in fixed assets

 

 

(128,115

)

 

 

(141,302

)

Other

 

 

(18,183

)

 

 

(19,512

)

Total deferred tax liabilities

 

 

(381,293

)

 

 

(453,032

)

Net deferred tax liabilities

 

$

(44,429

)

 

$

(60,790

)

 

As of December 31, 2024, the Company recognized federal and state net operating loss carryforwards of $1,353,800 and $2,112,699, respectively. The majority of the state carryforward amounts will begin to expire in 2040, while some state net operating losses have an indefinite carryforward period. The federal carryforward does not expire and subject to utilization in future periods up to 80% of federal taxable income.

In accordance with U.S. GAAP, the need to establish a valuation allowance against deferred tax assets is assessed periodically based on a more-likely-than-not realization threshold. Appropriate consideration is given to all positive and negative evidence related to that realization. This assessment considers, among other matters, the nature, frequency and severity of recent losses; forecasts of future profitability; the duration of statutory carryforward periods; experience with tax attributes expiring unused; and tax planning alternatives. The weight given to these considerations depends upon the degree to which they can be objectively verified.

A significant piece of objective negative evidence evaluated was the three-year cumulative loss position the company is in as of the period ended December 31, 2024. Such objective negative evidence limits the ability to consider other more subjective evidence such as projections of future income. The amount of the deferred tax asset considered realizable could be adjusted in future periods if the objective negative evidence of a cumulative loss is no longer present, and more weight is given to subjective evidence such as future income and growth.

Upon assessing all of the relevant evidence, the Company determined it has not met the more-likely-than-not threshold to support the realization of all or part of its deferred tax assets. The Company has recorded a valuation allowance against certain of its deferreds in the amount of $2,102,373. The current-year change resulted in additional tax expense of $64,437, which impacted the Company’s effective tax rate by (2.95)%.

The aggregate changes in the balance of gross unrecognized tax benefits (included as part of deferred tax liabilities, net in the accompanying consolidated financial statements), which excludes interest and penalties, are as follows as of and for the years ended December 31, 2024 and 2023:

 

 

 

2024

 

 

2023

 

Beginning balance

 

$

30,909

 

 

$

30,909

 

Decreases related to tax positions taken of the prior years

 

 

(28,975

)

 

 

—

 

Ending balance

 

$

1,934

 

 

$

30,909

 

 

Our total liability for unrecognized gross tax benefits was $1,934 at December 31, 2024. We are subject to examination by the Internal Revenue Service for fiscal years 2021 and thereafter. For states within the U.S. in which we conduct significant business, we generally

remain subject to examination for fiscal years 2021 and thereafter, unless extended for longer periods under state laws. We have no accrual for interest or penalties related to uncertain tax positions at December 31, 2024 and 2023, and did not recognize interest or penalties in the statements of operations during the years ended December 31, 2024 and 2023, as such amounts would be immaterial, if any.