INCOME TAXES

12 Months Ended

Dec. 31, 2024

NOTE 10 — INCOME TAXES

The Company identified their federal and Texas state tax returns as their “major” tax jurisdictions. The periods for income tax returns that are subject to examination for these jurisdictions is 2019 through 2024. The Company believes their income tax filing positions and deductions would be sustained on audit, and they do not anticipate any adjustments that would result in a material change to their financial position. Therefore, no liabilities for uncertain tax positions have been recorded.

As of December 31, 2024, the Company had approximately $23.8 million in net operating loss carry-forwards for federal and state income tax reporting (not tax effected) purposes. As a result of the Tax Cuts Job Act 2017 (the “Act”), certain future carryforwards do not expire. The Company has not performed a formal analysis but believes its ability to use such net operating losses and tax credit carryforwards in the future is subject to annual limitations due to change of control provisions under Sections 382 and 383 of the Internal Revenue Code, which will significantly impact its ability to realize these deferred tax assets.

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

Deferred tax assets, liabilities
	Year Ended December 31,
	2024			2023
Deferred tax assets:
Net operating loss carryforwards	$	4,999,000		$	3,504,000
R&D costs		376,000			200,000
Accrued bonus		50,000			-
Stock-based compensation		323,000			215,000
Total deferred tax assets		5,748,000			3,919,000
Valuation allowance		(5,748,000	)		(3,919,000	)
Net deferred tax assets	$	-		$	-

We recorded a valuation allowance in the full amount of our net deferred tax assets since realization of such tax benefits has been determined by our management to be less likely than not. The valuation allowance increased by approximately $1,830,000 and $543,000 during the years ended December 31, 2024 and 2023, respectively.

A reconciliation of the statutory federal income tax benefit to actual tax benefit for the years ended December 31, 2024 and 2023 is as follows:


	2024			2023
Federal statutory blended income tax rates		(21	)%		(21	)%
State statutory income tax rate, net of federal benefit		(-	)		(-	)
Non-deductible R&D costs		-			6
Permanent differences		(3	)		2
Change in valuation allowance		24			12
Other		-			1
Effective tax rate		-	%		-	%

- Definition

The entire disclosure for income tax.

+ References

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+ Details

Nexalin Technology, Inc. 10-K/A