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

Note 12 - Income Taxes

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Note 12 - Income Taxes
 12 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 12 — Income Taxes

 

Income taxes are disproportionate to income due to net operating loss carryforwards, which are fully reserved. As of December 31, 2024, the Company has federal net operating loss carryforwards of approximately $76 million. The federal net operating loss carryforward for years prior to 2018 expire from 2031 through 2038. Federal net operating loss carryforwards for year 2018 and thereafter do not expire.

 

Pursuant to Internal Revenue Code Sections 382 and 383, use of the Company’s net operating loss and credit carryforwards may be limited if a cumulative change in ownership of more than 50% occurs within any three-year period since the last ownership change. The Company may have had one or more changes in control under these Sections. However, the Company does not anticipate performing a complete analysis of the limitation on the annual use of the net operating loss and tax credit carryforwards until the time that it projects it will be able to utilize these tax attributes.

 

Management has concluded that it is more likely than not that the Company will not have sufficient foreseeable taxable income within the carryforward period as applicable and permitted by current law to allow for the utilization of certain of the deductible amounts generating the deferred tax assets; therefore, a full valuation allowance has been established to reduce the net deferred tax assets to zero at December 31, 2024 and 2023.

 

The following is a summary of the significant components of the Company’s net deferred income tax assets and liabilities as of December 31, 2024 and 2023:

 

   

For the Year Ended December 31,

 
   

2024

    

2023

  

Current deferred income tax assets:

                

Accrued compensation and other

   $ 8,000     $ 31,000  

Less: valuation allowance

     (8,000 )     (31,000 )
    $ —     $ —  

Non-current deferred income tax assets and (liabilities):

                

Net operating loss

   $ 16,049,000     $ 14,686,000  

Research and development credit

     18,000       18,000  

Research and experimental costs

     2,018,000       1,207,000  

Warrants issued for services

     —       45,000  

Depreciation and amortization

     6,000       227,000  

Exercise of options and warrants

     (49,000 )     (36,000 )

Stock based compensation

     1,968,000       1,718,000  

Intangibles and other

     (561,000 )     (787,000 )

Less: valuation allowance

     (19,449,000 )     (17,078,000 )

Net non-current deferred tax assets

   $ —     $ —  

 

The Company has applied the provisions of FASB ASC 740, Income Tax, which clarifies the accounting for uncertainty in tax positions. FASB ASC 740 requires the recognition of the impact of a tax position in the financial statements if that position is more likely than not of being sustained on a tax return upon examination by the relevant taxing authority, based on the technical merits of the position. At December 31, 2024 and 2023, the Company had no unrecognized tax benefits.

 

The Company recognizes interest and penalties related to income tax matters in interest expense and operating expenses, respectively. As of December 31, 2024 and 2023, the Company has no accrued interest and penalties related to uncertain tax positions.

 

The Company is subject to tax in the United States (“U.S.”) and files tax returns in the U.S. federal and certain state jurisdictions. The Company is generally no longer subject to U.S. federal, state and local income tax examinations by tax authorities for all tax years since inception due to the carryover of unused net operating losses and tax credits. The Company currently is not under examination by any tax authority.

 

The reconciliation between the statutory income tax rate and the effective tax rate is as follows:

 

   

For the Year Ended

 
   

December 31,

 
   

2024

    

2023

  

Statutory federal income tax rate

     (21 )%     (21 )%
Other     (2 )     —  

Valuation allowance

     23       21  
      — %     — %