AMAZE HOLDINGS, INC. Income Taxes Disclosure

14. INCOME TAXES

 

Components of the provision for income taxes for the years ended December 31, 2025 and 2024 were as follows:

 SCHEDULE OF COMPONENTS OF INCOME TAXES

			2025				2024
Current		$	—			$	—
Deferred			—				—
Total		$	—			$	—

 

No income tax benefit was recorded for the years ended December 31, 2025 and 2024 due to net losses and recognition of a valuation allowance. The following table presents a reconciliation of the tax expense computed at the statutory federal rate and the Company’s tax expense for the years ending December 31:

 

 

14. INCOME TAXES (continued)

 SCHEDULE OF INCOME TAX RECONCILIATION

		2025								2024
Tax expense (benefit) at statutory rate		$	(11,559,000	)			21.0	%		$	(532,000	)			21.0	%
State income tax expense (benefit), net of federal tax effect			(539,000	)			1.0	%			(64,000	)			2.5	%
Permanent Differences:
Goodwill amortization			715,000				-1.3	%			—				—	%
Goodwill impairment			7,539,000				-13.7	%			—				—	%
Original issue discount			47,000				-0.1	%			—				—	%
Nondeductible expenses			8,000				0.0	%			—				—	%
Change in valuation allowance on deferred tax assets			3,761,000				-6.8	%			620,000				-24.5	%
Stock award forfeiture			—				—	%			—				—	%
Change in deferred tax rate			28,000				-0.1	%			22,000				-0.9	%
Return to provision adjustments			—				—	%			(46,000	)			1.8	%
Income tax expense (benefit)		$	—				0.0	%		$	—				0.0	%

 

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company’s deferred tax assets relate primarily to its net operating loss carryforwards and other balance sheet basis differences. In accordance with ASC 740, “Income Taxes,” the Company recorded a valuation allowance to fully offset the net deferred tax asset, because it is more likely than not that the Company will not realize future benefits associated with these deferred tax assets at December 31, 2025 and 2024. The valuation allowance increased $14.5 million related to the existing valuation allowance recorded against deferred tax assets from Amaze Software, Inc. The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets are as follows:

 SCHEDULE OF DEFERRED TAX ASSETS

		December 31, 2025				December 31, 2024
Deferred tax assets:
Deferred revenue		$	169,000			$	—
Amortization			(16,000	)			1,000
Stock based compensation			667,000				117,000
Net operating losses			23,028,000				6,442,000
Inventory reserve			27,000				—
Accrued expenses			528,000				285,000
Allowance for bad debt and credit losses			—				3,000
Unrealized loss on investments			—				8,000
Unrealized loss on currency exchange			1,000				—
Accrued compensation			844,000				—
Accrued refunds			7,000				—
Research & experimentation expenditures			5,000				—
Note payable fair value adjustment			(117,000	)			—
Prepaid expenses			—				(2,000	)
Depreciation			(1,000	)			—
Valuation allowance			(25,142,000	)			(6,854,000	)
Net deferred tax assets:		$	—			$	—

 

At December 31, 2025, the Company had federal and state net operating loss carry forwards of approximately $102.7 million and $22.6 million, respectively. At December 31, 2024, the Company had federal and state net operating loss carryforwards of approximately $27.2 million and $10.5 million, respectively. The net operating loss carry forwards have no expiration.

 

The Company recognizes uncertain tax positions in accordance with ASC 740 on the basis of evaluating whether it is more likely than not that the tax positions will be sustained upon examination by tax authorities. For those tax positions that meet the more-likely-than not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement. As of December 31, 2025 and 2024, the Company has no unrecognized tax benefits. There are no unrecognized tax benefits included on the balance sheet that would, if recognized, impact the effective tax rate. The Company does not anticipate there will be a significant change in unrecognized tax benefits within the next 12 months.

 

The Company is subject to U.S. federal or state income tax examinations. The Company’s federal, state and local income tax returns are subject to examination by taxing authorities for the three years after the returns are filed, and the Company’s federal, state, and local income tax returns for 2024, 2023 and 2022 remain open to examination. Prior to the Company’s December 2021 conversion to a corporation, the Company was a limited liability company and therefore was a disregarded legal entity for income tax purposes. The Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of general and administrative expense.