INCOME TAXES

12 Months Ended

Dec. 31, 2024

INCOME TAXES

INCOME TAXES

NOTE 10. – INCOME TAXES

The components of income tax expense (benefit) consists of the following:

	December31,
	2024			2023
Deferred:
Federal	$	(349,000	)	$	(1,000	)
State		(73,000	)		(188,000	)
		(422,000	)		(189,000	)
Change in valuation allowance		422,000			189,000
	$	0		$	0

At December 31, 2024, the Company had federal net operating loss carryforwards of approximately $11,400,000 ($9,900,000 - 2023) and various state net operating loss carryforwards of approximately $11,100,000 ($9,700,000 - 2023). Approximately $7,700,000 of these federal carryforwards can be carried forward indefinitely, with the remaining amount expiring from 2026 through 2037. Approximately $3,000,000 of these state carryforwards can be carried forward indefinitely, with the remaining amount expiring from 2025 through 2044. These carryforwards exclude federal net operating loss carryforwards from inactive subsidiaries and net operating loss carryforwards from states that the Company does not presently operate in. Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. The annual limitation may result in the expiration of the net operating loss carryforwards before utilization.

At December 31, 2024, a net deferred tax asset of approximately $3,149,000 ($2,727,000 - 2023), primarily consisting of the future benefit attributed to the available net operating loss carryforwards, had been fully offset by a valuation allowance because management believes that the statutory limitations on utilization of the operating losses and concerns over achieving profitable operations diminish the Company’s ability to demonstrate that it is more likely than not that these future benefits will be realized before they expire.

The following is a summary of the Company's temporary differences and carryforwards which give rise to deferred tax assets and liabilities.

	December 31,
Deferred tax assets (liabilities):	2024			2023
Net operating loss carryforwards		2,885,000			2,515,000
Operating lease ROU		(61,000	)		(143,000	)
Operating lease liability		61,000			146,000
Capital loss carryforward		77,000			77,000
Property and equipment		42,000			12,000
Reserves and accrued expenses payable		145,000			120,000
Gross deferred tax asset		3,149,000			2,727,000
Deferred tax asset valuation allowance		(3,149,000	)		(2,727,000	)
Net deferred tax asset		0			0

The differences between the U.S. statutory federal income tax rate and the effective income tax rate in the accompanying statements of operations are as follows:

	December 31,
	2024			2023
Statutory U.S. federal tax rate		21.0	%		21.0	%
Change in valuation allowance		(25.6	)		(10.2	)
Net operating loss carryforward expiration		0.0			(10.7	)
State taxes		4.4			10.2
Original issue discount		(0.1	)		(6.1	)
Stock-based compensation		0.4			(4.1	)
Other permanent non-deductible items		(0.1	)		(0.1	)
Effective income tax rate		0.0	%		0.0	%