Safe Pro Group Inc. Income Taxes Disclosure

NOTE 15 – INCOME TAXES

 

The Company accounts for income tax using the liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The deferred tax assets on December 31, 2025 and 2024 consist only of net operating loss carryforwards. The net deferred tax asset has been fully offset by a valuation allowance because of the uncertainty of the attainment of future taxable income.

 

The items accounting for the difference between income taxes at the effective Federal statutory rate of 21%, and the Company’s effective tax rate for the years ended December 31, 2025 and 2024 were as follows:

 

SCHEDULE OF EFFECTIVE OF INCOME TAXES

		Amount				%				Amount				%
		Year Ended December 31, 2025								Year Ended December 31, 2024
		Amount				%				Amount				%
U.S. Federal statutory rate		$	(3,007,784	)			21.0	%		$	(1,559,977	)			21.0	%
State and local income tax, net of federal income tax effect
Florida income tax			(605,629	)			4.23	%			(321,976	)			4.33	%
Return to provision adjustments			(4,454	)			0.03	%			(171,736	)			2.31	%
Rate change			-				0.00	%			(28,155	)			0.38	%
Nontaxable or nondeductible items
Non-deductible meals			4,435				(0.03	)%			3,821				(0.05	)%
Stock-based compensation			(16,685	)			0.12	%			-				0.00	%
Return to provision adjustments			(21,525	)			0.15	%			(727,235	)			9.79	%
Change in valuation allowance			3,651,642				(25.50	)%			2,805,258				(37.76	)%
Total provision for income tax		$	-				0.00	%		$	-				0.00	%

 

The following is a summary of the components of deferred tax assets and liabilities as of December 31, 2025 and 2024:

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

		December 31, 2025				December 31, 2024
Deferred Tax Asset:
Net operating loss carryforward		$	4,866,339			$	1,651,702
Depreciation			(10,931	)			506
Amortization			183,556				54,689
Goodwill			133,000				-
Stock based compensation			1,971,569				1,700,823
Capitalized research and development			-				86,906
ROU liabilities			14,220				25,017
Accrued expenses			40,530				38,108
Other			12,223				11,912
Total deferred tax assets			7,210,506				3,569,663
Deferred tax liabilities:
ROU assets			(14,956	)			(25,756	)
Total deferred tax liabilities			(14,956	)			(25,756
Less: Valuation allowance			(7,195,550	)			(3,543,907	)
Net deferred tax asset		$	-			$	-

 

The net operating loss carryforward was approximately $19,240,000 on December 31, 2025. The Company provided a valuation allowance equal to the net deferred income tax asset as of December 31, 2025 and 2024 because it was not known whether future taxable income will be sufficient to utilize the loss carryforward. During the year ended December 31, 2025, the valuation allowance increased by $3,652,000. Additionally, the future utilization of the net operating loss carryforward to offset future taxable income is subject to an annual limitation as a result of ownership changes that may occur in the future. All estimated loss carry forwards may be carried forward indefinitely subject to annual usage limitations.

 

The Company does not have any uncertain tax positions or events leading to uncertainty in a tax position. The Company’s 2023, 2024, and 2025 Corporate Income Tax Return is subject to Internal Revenue Service examination.

 

 

SAFE PRO GROUP INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024