Company: GEDC
Filing Date: 2025-04-02
Form Type: 10-K
Source: 0001641172-25-002190
Chunk: 960

Company: CalEthos, Inc.
Filing Date: 2025-04-02
Form: 10-K
Item: Item 11
Chunk 960
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 deductible
temporary differences reverse.

    F-22

For
financial reporting purposes, the Company has incurred a loss in each period since its inception. Based on all available evidence, including
the Company’s history of losses, management believes it is more likely than not that the net deferred tax assets will not be fully
realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets on December 31, 2024,
and 2023. During the years ended December 31, 2024, and 2023, the valuation allowance increased (decreased) by $413,000 and $444,000,
respectively. The increase was mostly attributable to the increase in our net operating loss carryforwards. The total valuation allowance
results from the Company’s estimate of its inability to recover its net deferred tax assets.

On
December 31, 2024, the Company has federal and state net operating loss carryforwards, which are available to offset future taxable income,
of approximately $7,421,000 which for federal purposes has an unlimited carryforward period and $7,411,000 which for state purposes begins
to expire in 2037. These carryforwards may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code
of 1986, and similar state provisions if the Company experienced one or more ownership changes that would limit the amount of NOL and
tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change,
as defined by Sections 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock
of the corporation by more than 50 percentage points over a three-year period. The Company has not completed an IRC Section 382/383 analysis.
If a change in ownership were to have occurred, NOL and tax credit carryforwards could be eliminated or restricted. If eliminated, the
related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to
the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company’s
effective tax rate.

The
Company files income tax returns in the United States and the state of California. The statute of limitation is 3 and 4 years for Federal
and California, respectively. The first year that remains open is tax year ended December 31, 202