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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 12 – INCOME TAXES

 

The Company accounts for income taxes in accordance with ASC Topic No. 740, Income Taxes. This standard requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carry forwards.

 

After applying the provisions of Section 382 of the Internal Revenue Code, the unexpired net operating loss (“NOL”) carryforward at December 31, 2024 was approximately $57.5 million, of which, approximately $26.5 million, generated in 2017 and prior, will expire between 2024 and 2037. Under the Tax Cuts and Jobs Act, the NOL generated from 2018 through 2024, of approximately $30.9 million, will have an indefinite carryforward period but can generally only be used to offset 80% of taxable income in any particular year. The Company may be subject to certain limitations in its annual utilization of NOL carry forwards to off-set future taxable income pursuant to Section 382 of the Internal Revenue Code, which could result in NOLs expiring unused.

 

 

The components of the deferred income tax assets and liabilities consisted of the following:

 

   2024   2023 
   As of December 31, 
   2024   2023 
Deferred tax assets          
Net operating loss carry forwards  $12,907,965   $12,467,570 
Research and development costs   3,006,029    2,119,193 
Stock compensation expense   789,373    711,598 
Accrued expenses   7,330    528,148 
Lease liability   389,882    512,668 
Contingent liability   221,065    221,028 
Acquisition liability   112,722    176,629 
Bad debt and other reserves   287,900    129,924 
Inventory reserves   130,605    109,176 
Other temporary differences   1,049,365    203,340 
Total deferred tax assets   18,902,236    17,179,274 
Deferred tax liabilities          
Depreciation and amortization   (5,683,259)   (6,180,688)
Right of Use assets   (353,763)   (487,402)
Accrued expenses   -    (424,423)
Contingent liability   (38,308)   (130,802)
Other temporary differences   (294,608)   (166,712)
Valuation allowance   (12,532,298)   (9,789,247)
Net deferred tax asset  $-   $- 

 

A 100% valuation allowance has been provided for all deferred tax assets, as the ability of the Company to generate sufficient taxable income in the future is uncertain.

 

 

Reconciliations of the expected federal income tax expense (benefit) based on the statutory income tax rate of 21% to the actual benefit for the years ended December 31, 2024 and 2023 are listed below.

 

   2024   2023 
   For the Year Ended
December 31,		 
   2024   2023 
Expected federal income tax benefit  $(2,019,060)  $(903,220)
State and local taxes, net of federal benefit   (338,138)   (226,714)
Fair value adjustments   (497,373)   (819,270)
Share-based compensation   (237,838)   (557,168)
Other permanent differences   199,857    118,765 
NOL carryover adjustments   97,806    (5,148,128)
Intangibles   -    (720,407)
Other true ups   90,343    (230,474)
Changes in tax rates   9,732    673,449 
Change in valuation allowance   2,743,051    7,813,167 
Income tax expense  $48,380   $- 

 

All tax years starting with 2021 are open for examination. The Company’s 2022 federal tax return was under audit as of March 24, 2025.