Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note 9 – Income Taxes

The Company’s provision for income taxes consists of the following for the years ended December 31, 2024 and 2023:

	December 31,
	2024		2023
Current income tax provision
Federal	$	-	$	-
State		26,768		-
Foreign		149,894		-
Total		176,662		-
Deferred income tax provision
Federal		-		-
State		-		-
Foreign		-		-
Total		-		-
Total provision for income taxes	$	176,662	$	-

The Company’s deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows:

	December 31,
	2024			2023
Deferred tax assets:
NOL carryforward	$	85,790,968		$	89,055,237
R&D credit carryforward		2,559,479			2,559,479
Share-based compensation		893,280			729,693
Interest expense		-			-
ROU liabilities		545,917			553,374
Deconsolidation of subsidiary		18,171,409			17,161,363
Accruals and other		4,148,610			605,455
Total deferred tax assets		112,109,663			110,664,601
Valuation allowance		(111,592,614	)		(110,358,421	)
Deferred tax liabilities:
Intangible assets		-			-
ROU assets		(222,963	)		(35	)
Depreciation		(294,086	)		(306,145	)
Net	$	-		$	-

The difference between the Company’s expected income tax provision (benefit) from applying federal statutory tax rates to the pre-tax loss and actual income tax provision (benefit) relates to the effect of the following:

	2024			2023
Federal income tax benefit at statutory rates		21.0	%		21.0	%
Permanent adjustment		11.3	%		(0.1	)%
Provision to return adjustment		1.0	%		0.2	%
State income tax benefit, net of federal benefit		3.6	%		10.7	%
Foreign rate differential		(8.5	)%		(11.6	)%
Adjustment on deferred foreign intangible		(30.8	)%		0.0	%
Foreign income tax		1.2	%		0.0	%
Lost or expired NOLs		5.4	%		(7.0	)%
Blended state tax rate change effect on deferrals		(10.7	)%		0.0	%
Change in valuation allowance		10.1	%		(13.2	)%
Other		(2.1	)%		0.0	%
Total		1.5	%		0.0	%

Management followed the guidance in ASC 740, which states that “a cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome” and concluded that the Company’s net deferred tax assets were not realizable as of December 31, 2024 and 2023. Accordingly, a valuation allowance has been recorded to offset the net deferred tax assets in their entirety.

The Company has federal NOL carryforwards of $227.1 million and $241.1 million at December 31, 2024 and 2023, respectively. The NOL carryforwards incurred prior to 2018 began expiring in 2022. In December 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), most of the provisions of which took effect starting in 2018. Under the Tax Act, the amount of post 2017 NOLs that we are permitted to deduct in any taxable year is limited to 80% of our taxable income in such year, where taxable income is determined without regard to the NOL deduction itself. In addition, the Tax Act generally eliminates the ability to carry back any NOL to prior taxable years, while allowing post 2017 unused NOLs to be carried forward indefinitely. Utilization of the NOL carryforwards may be subject to an annual limitation as provided by Section 382 of the Code, defined earlier. There can be no assurance that the NOL carryforwards will ever be fully utilized. To date, the Company has not performed a formal study to determine if any of its remaining NOL and credit attributes might be further limited due to the ownership change rules of Section 382 or Section 383 of the Code, as amended. The Company will continue to monitor this matter going forward. There can be no assurance that the NOL carryforwards will ever be fully utilized.

The Tax Act amended IRC Section 174 to require capitalization of all research and development (“R&D”) costs incurred in tax years beginning after December 31, 2021. These costs are required to be amortized over five years if the R&D activities are performed in the U.S., or over 15 years if the activities were performed outside the U.S. The Company capitalized approximately $2.1 million of R&D expenses incurred as of December 31, 2024.