INCOME TAXES

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 6 - INCOME TAXES 

As of December 31, 2024, the Company had federal and state net operating loss carry forwards of $6,672,056. The federal net operating loss is available to the Company indefinitely and available to offset up to 80% of future taxable income each year.

Tax benefit for income taxes differs from the amount computed using the federal US statutory income tax rate as follows:

	Years Ended December 31,
	2024			2023
Tax benefit at U.S. statutory rate	$	(228,218	)	$	(348,908	)
State income taxes, net of federal benefit		3,962			(46,892	)
State rate impact of goodwill impairment		(67,819	)		—
Non-deductible items		241,457			27,278
Valuation allowance		(112,785	)		248,057
Adjustment to net operating loss		32,522			155,415
Other		6,511			—
Income Tax Expense (Benefit)	$	(124,370	)	$	34,950

The effective tax rate for the years ended December 31, 2024 and 2023, respectively, was 11.44% and (2.10%) and the statutory tax rate was 23.5% in 2024 and 23.829% in 2023.

The income tax benefit for the years ended December 31, 2024, and 2023 consists of:

	Years Ended December 31,
	2024			2023
Current:
Federal	$	—		$	—
State		—			—
Deferred:
Federal		(113,256	)		29,834	)
State		(11,114	)		5,116
Income Tax Expense (Benefit)	$	(124,370	)	$	34,950

The tax effects of temporary differences and carry forwards that give rise to significant portions of deferred tax assets and liabilities consist of the following:

	Years Ended December 31,
Deferred tax assets:	2024			2023
Accruals and allowances	$	(545	)	$	179,474
Capitalized research and development		20,742			22,702
Stock based compensation		7,464			15,485
Net operating allowances		1,707,978			1,635,069
		1,735,639			1,852,730
Deferred tax liabilities:
Intangible assets		(494,383	)		(328,916	)
Valuation allowance		(1,731,939	)		(1,844,143	)
Adjustment for goodwill impairment		294,725			269,965
Net deferred tax assets and liabilities	$	(195,958	)	$	(320,329	)

Deferred tax assets are to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred assets will not be realized. The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s history of cumulative net losses incurred and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the deferred tax assets as of December 31, 2024, and 2023. Since indefinite-lived assets cannot be used as a source of taxable income to support the realization of deferred tax asset, a valuation allowance was recorded against the deferred tax assets, and a net deferred tax liability or naked credit of approximately $196,000 and $320,000 is presented on the company’s balance sheet, respectively. The Company’s valuation allowance deceased by $112,204 in 2024.

The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes that it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcome of examinations by tax authorities in determining the adequacy of its provision for income taxes.