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

INCOME TAXES

v3.26.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2025
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, 2025 and 2024:

 

 

 

2025

 

 

2024

 

U.S. (loss)

 

$

(9,892,170

)

 

$

(10,051,064

)

Non-U.S. income

 

 

11,520,138

 

 

 

7,481,601

 

Income (loss) before income taxes

 

$

1,627,968

 

 

$

(2,569,463

)

 

 

 

 

 

 

 

 

 

2025

 

 

2024

 

Current:

 

 

 

 

 

 

Federal

 

$

843

 

 

$

(17,309

)

State

 

 

25,282

 

 

 

2,393

 

Foreign

 

 

113,509

 

 

 

117,899

 

Total current

 

 

139,634

 

 

 

102,983

 

Deferred:

 

 

 

 

 

 

Federal

 

 

16,535

 

 

 

8,993

 

State

 

 

(11,820

)

 

 

(25,353

)

Total deferred

 

 

4,715

 

 

 

(16,360

)

Noncurrent

 

 

 

 

 

 

Federal

 

 

—

 

 

 

(28,976

)

Total Noncurrent

 

 

—

 

 

 

(28,976

)

Provision for income taxes

 

$

144,349

 

 

$

57,647

 

 

 

 

 

 

The tax effects of significant temporary differences representing net deferred tax assets and liabilities consisted of the following at December 31, 2025 and 2024:

 

 

 

2025

 

 

2024

 

Deferred Tax Assets:

 

 

 

 

 

 

Right-of-use liability

 

$

67,558

 

 

$

119,719

 

Net operating loss

 

 

519,957

 

 

 

403,289

 

Share based compensation

 

 

544,474

 

 

 

459,640

 

Intangible assets

 

 

(452,099

)

 

 

103,274

 

Tax credits

 

 

816,451

 

 

 

638,363

 

Capitalized R&D Cost

 

 

—

 

 

 

407,919

 

Accruals and reserves

 

 

376,079

 

 

 

107,861

 

Debt issuance costs

 

 

—

 

 

 

128,645

 

Business Interest Expense Limitation

 

 

99,489

 

 

 

—

 

Other

 

 

94,206

 

 

 

70,527

 

Total deferred tax assets

 

 

2,066,115

 

 

 

2,439,237

 

 

 

 

 

 

 

 

Total valuation allowance

 

 

(1,807,161

)

 

 

(2,102,373

)

 

 

 

 

 

 

 

Deferred Tax Liabilities:

 

 

 

 

 

 

Right-of-use asset

 

 

(62,952

)

 

 

(131,074

)

Prepaid assets

 

 

(93,449

)

 

 

(103,921

)

Basis difference in fixed assets

 

 

(151,698

)

 

 

(128,115

)

Other

 

 

—

 

 

 

(18,183

)

Total deferred tax liabilities

 

 

(308,099

)

 

 

(381,293

)

Net deferred tax liabilities

 

$

(49,145

)

 

$

(44,429

)

 

 

The income tax provision differs from that computed at the federal statutory corporate income tax rate as follows:

 

 

 

2025

 

 

 

Amount

 

 

%

 

 

 

 

 

 

 

 

Income tax (benefit) at statutory rate

 

$

341,873

 

 

 

21.0

%

State and local income taxes (net of federal income tax effect) [a]

 

 

3,421

 

 

 

0.2

%

Foreign tax effects

 

 

113,509

 

 

 

7.0

%

Tax credits

 

 

(178,088

)

 

 

-10.9

%

Change in valuation allowance

 

 

(244,349

)

 

 

-15.0

%

Nontaxable or nondeductible items

 

 

 

 

 

 

Transaction costs

 

 

84,042

 

 

 

5.2

%

Share Based Compensation

 

 

(23,100

)

 

 

-1.4

%

Other perms

 

 

21,268

 

 

 

1.3

%

Other reconciling items

 

 

 

 

 

 

RTP

 

 

(66,228

)

 

 

-4.1

%

Other

 

 

92,001

 

 

 

5.7

%

Provision for income taxes

 

$

144,349

 

 

 

8.9

%

 

[a] State taxes in Illinois, Louisiana and New Jersey made up the majority (greater than 50 percent) of the tax effect in this category.

 

As previously disclosed for the year ended December 31, 2024, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:

 

 

2024

 

Tax provision computed at the federal statutory rate

$

(458,856

)

Foreign rate differential

 

52,559

 

State income tax, net of federal benefit

 

13,719

 

Other permanent items

 

660,115

 

Credits

 

(205,311

)

State tax true ups

 

(40,157

)

Other rate changes, net of benefit

 

(28,859

)

Change in valuation allowance

 

64,437

 

Provision for income taxes

$

57,647

 

 

The amounts of cash taxes paid are as follows:

 

 

 

2025

 

US Federal

 

$

35,000

 

State

 

 

 

   California

 

 

12,000

 

   New Jersey

 

 

3,000

 

   Other States

 

 

6,330

 

Foreign

 

 

 

   Puerto Rico

 

 

111,250

 

Income taxes paid (net of refunds received)

 

$

167,580

 

 

Net operating losses ("NOLs") and credit carryforwards as of December 31, 2025:

 

Federal NOLs prior to 2018

 

 

—

 

Begin to Expire In

 

N/A

 

 

 

 

 

Federal NOLs post 2017

 

$

2,032,247

 

Begin to Expire In

 

Indefinite

 

 

 

 

 

State NOLs

 

$

2,022,341

 

Begin to Expire In

 

 

2032

 

 

 

 

 

Federal R&D Credits

 

$

301,341

 

Begin to Expire In

 

 

2042

 

 

 

 

 

Foreign Tax credit

 

$

515,110

 

Begin to Expire In

 

 

2030

 

 

As of December 31, 2025, the Company recognized federal and state net operating loss carryforwards of $2,032,247 and $2,022,341, 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 the 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, 2025. 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 deferred tax assets in the amount of $1,807,161. The current year change resulted in a tax benefit of $244,349 which impacted the Company's effective tax rate by (15.0%).

Uncertain Tax Positions

 

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, 2025 and 2024:

 

 

 

2025

 

 

2024

 

Beginning balance of unrecognized tax benefits

 

$

1,934

 

 

$

30,909

 

Decreases for tax positions related to the prior year

 

 

—

 

 

 

(28,975

)

Lapse of statutes of limitations

 

 

(1,934

)

 

 

—

 

Ending balance of unrecognized tax benefits

 

$

—

 

 

$

1,934

 

 

Our total liability for unrecognized gross tax benefits was $0 at December 31, 2025. We have no accrual for interest or penalties related to uncertain tax positions at December 31, 2025 and 2024, and did not recognize interest or penalties in the statements of operations during the years ended December 31, 2025 and 2024, as such amounts would be immaterial, if any.

 

The Company is subject to U.S. federal income tax as well as many states jurisdictions in which the Company operates. The U.S. tax years from 2022 forward remain effectively open to examination due to the carryover of unused net operating losses and tax credits.

 

On July 4, 2025, the U.S. government enacted tax legislation commonly referred to as the One Big Beautiful Bill Act. The Company evaluated the impact of the legislation in accordance with ASC 740 and determined that it did not have a material effect on the Company's financial statements for the year ended December 31, 2025.