Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 15 – INCOME TAXES

The Company accounts for income taxes under ASC 740, which provides for an asset and liability approach of accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributed to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes. The Company’s state tax jurisdictions are Delaware,

Pennsylvania, and Florida.

The components of the Company’s provision for income taxes for the years ended December 31, 2024 and 2023 are as follows:

	Year Ended December 31,
	2024			2023
Current:
Federal	$	(97,279	)	$	—
State		—
Total current		(97,279	)		—
Deferred:
Federal		(2,848,758	)		(2,429,061	)
State		(1,492,656	)		231,286
Total deferred		(4,341,414	)		(2,197,775	)
Valuation allowance		4,341,414			2,197,775
Total income tax benefit	$	(97,279	)	$	—

The components of the Company’s income tax rate for the years ended December 31, 2024 and 2023 are as follows:

	Year Ended December 31,
	2024			2023
U.S. federal statutory rate		21.0	%		21.0	%
Effects of:
State taxes, net of federal benefit		4.4	%		—	%
Stock-based compensation		(1.6	)%		(4.0	)%
Loss on forward purchase agreement		(11.1	)%		13.7	%
Research and development expenses, net		(1.0	)%		(3.5	)%
Accrued compensation		2.5	%		—	%
Change in deferred tax rate		10.2	%		—	%
Capitalized transaction costs		—	%		(9.8	)%
Other		(0.3	)%		(3.8	)%
Valuation allowance		(23.2	)%		(13.6	)%
Effective rate		0.9	%		—	%

Significant components of the Company's deferred tax assets as of December 31, 2024 and 2023 are summarized below.

	December 31,
	2024			2023
Deferred income tax assets:
Net operating losses	$	8,909,827		$	8,775,098
Accrued interest		1,770,766			1,845,473
Federal research and development tax credits		56,911			68,106
Amortization of research expense		460,061			635,669
Right of use asset		3,590			4,676
Non-qualified deferred compensation		551,492			404,327
Change in fair value of forward purchase agreement		4,361,287			2,485,388
Capitalization of start-up costs		386,345			351,383
Change in fair value of derivative liabilities		—			(3,353,181	)
Accrual to cash and other		—			548,665
Accrued compensation		—			357,171
Gross deferred tax assets		16,500,279			12,122,775
Deferred income tax liabilities:
Depreciation and amortization		(36,090	)		—
Total gross deferred tax assets		16,464,189			12,122,775
Valuation allowance		(16,464,189	)		(12,122,775	)
Net deferred income tax assets	$	—		$	—

As of December 31, 2024, the Company had approximately $29.5 million of federal and $43.3 million of state net operating loss carryforwards. Federal and state net operating loss carryforwards were approximately $31.3 million and $30.9 million, respectively, for the year ended December 31, 2023. The Company’s federal net operating loss carryforwards consist of approximately $7.3 million of pre-2018 net operating loss carryforwards, which expire after twenty years and begin to expire starting in 2028. The Company had approximately $22.2 million of post-2017 net operating losses that carry forward indefinitely. Future utilization of the net operating loss carryforwards is subject to certain limitations under Section 382 of the Internal Revenue Code. In addition, the Company has approximately $57,000 of federal research and development credit carryovers, which expire after twenty years and begin to expire starting in 2041. The Company utilized approximately none of such credits for tax year 2024. Future realization of the credit carryforwards is subject to certain limitations under Section 383 of the Internal Revenue Code. The Company has not undertaken any formal research and development credit study to calculate its credits.

The Company provides for a valuation allowance when it is more likely than not that it will not realize a portion of the deferred tax assets. The Company has established a valuation allowance against the net deferred tax asset due to the uncertainty that enough taxable income will be generated in those taxing jurisdictions to utilize the assets. Therefore, the Company has not reflected any benefit of such

deferred tax assets in the accompanying consolidated financial statements. Our net deferred tax asset and valuation allowance increased by approximately $4,341,000 and $2,198,000 for the years ended December 31, 2024 and 2023, respectively.

The Company is subject to U.S. federal income tax examinations by tax authorities for all tax years since inception due to unexpired net operating loss carryforwards originating in and after that year. The Company may be subject to income tax examinations for the various state taxing authorities which vary by jurisdiction.

The Company has evaluated its income tax positions and has determined that it does not have any uncertain tax positions. The Company will recognize interest and penalties related to any uncertain tax positions through its income tax expense.