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INCOME TAX
 9 Months Ended
Sep. 30, 2026
Income Tax Disclosure [Abstract]  
INCOME TAX

NOTE 10 – INCOME TAX

 

The Company accounts for income taxes in accordance with ASC 740. For interim reporting purposes, income tax expense is recognized using an estimated annual effective tax rate applied to year-to-date ordinary income, together with the tax effects of discrete items recognized in the period.

 

For the nine months ended September 30, 2026, the Company recorded no income tax expense or benefit. The Company generated pre-tax income of $198,943 during the period; however, it continues to maintain a full valuation allowance against its deferred tax assets, as management has determined that it is more likely than not that such assets will not be realized.

 

As of September 30, 2026, the Company’s deferred tax assets continue to consist primarily of net operating loss carryforwards. There have been no material changes to the components of deferred tax assets, valuation allowance, or related estimates from those disclosed in the Company’s audited financial statements as of December 31, 2025.

 

The Company’s effective tax rate for the nine months ended September 30, 2026 differs from the combined statutory tax rate primarily due to the full valuation allowance recorded against its deferred tax assets, partially offset by permanent differences related to stock-based compensation.

 

The following table reconciles the combined statutory income tax rate to the Company’s effective tax rate for the nine months ended September 30, 2026 and 2025:

 

   2026   2025 
Federal statutory rate   21.0%   21.0%
State taxes, net of federal benefit*   17.0%   17.0%
Combined statutory rate   38.0%   38.0%
Permanent differences (stock-based compensation)   8.8%   (7.0)%
Change in valuation allowance   (46.8)%   (31.0)%
Effective income tax rate   0.0%   0.0%

 

*The state rate reflects the Illinois corporate income tax rate of 7.0%, the Illinois personal property replacement tax rate for C corporations of 2.5%, and the Connecticut corporate income tax rate of 7.5%.