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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 15 – INCOME TAXES For the years ended December 31, 2024 and 2023, pre-tax (loss) income was attributed to the following jurisdictions:
|  | For the Year Ended December 31, |
|  | 2024 |  |  | 2023 |
Domestic operations |  | $ | (15,165,728 | ) |  | $ | (9,194,652 | )
Foreign operations |  |  | 2,257,896 |  |  |  | 3,405,604 |
(Loss) income before taxes |  | $ | (12,907,831 | ) |  | $ | (5,789,048 | )
The components of the tax provision for income taxes are as follows:
|  | For the Year Ended December 31, |
|  | 2024 |  |  | 2023 |
Current: |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | 24,641 |
State |  |  | 2,560 |  |  |  | 23,153 |
International |  |  | 695,860 |  |  |  | 974,830 |
|  |  | 698,420 |  |  |  | 1,022,624 |
Deferred: |  |  |  |  |  |
Federal |  |  | - |  |  |  | (95,496 | )
State |  |  | - |  |  |  | - |
International |  |  | 28,082 |  |  |  | - |
|  |  | 28,082 |  |  |  | (95,496 | )
Total provision for income taxes |  | $ | 726,502 |  |  | $ | 927,128 |
Taxes on income vary from the statutory federal income tax rate applied to earnings before tax on income as follows:
|  | For the Year Ended December 31, |
|  | 2024 |  |  | 2023 |
Provision at federal statutory rates (21% applied to earnings before income taxes) |  | $ | (2,710,645 | ) |  | $ | (1,215,486 | )
State income taxes, net of federal benefit |  |  | (857,297 | ) |  |  | (252,544 | )
Other permanent items |  |  | 87,165 |  |  |  | (60,372 | )
Stock based compensation |  |  | (2,757 | ) |  |  | 85,990 |
Goodwill impairment |  |  | - |  |  |  | 704,987 |
Research and development credits |  |  | (205,533 | ) |  |  | 800,550 |
Change in reserve for uncertain tax positions |  |  | 66,950 |  |  |  | (338,894 | )
Change in valuation allowance |  |  | 4,182,133 |  |  |  | 984,921 |
Other |  |  | 166,486 |  |  |  | 217,976 |
|  | $ | 726,502 |  |  | $ | 927,128 |
Deferred income tax assets and liabilities arising from differences accounting for financial statement purposes and tax purposes, less valuation reserves at year end are as follows:
|  | For the Year Ended December 31, |
|  | 2024 |  |  | 2023 |
Deferred tax assets: |  |  |  |  |  |
Reserves |  | $ | 557,566 |  |  | $ | 59,564 |
Deferred compensation |  |  | 128,748 |  |  |  | 139,805 |
Stock compensation |  |  | 347,616 |  |  |  | 295,392 |
Deferred revenue |  |  | 66,170 |  |  |  | 87,770 |
Inventories |  |  | 2,257,220 |  |  |  | 617,929 |
Credits and loss carryforward |  |  | 4,822,030 |  |  |  | 3,102,512 |
Capitalized research and experimental expenditures |  |  | 1,588,187 |  |  |  | 1,206,082 |
Lease liabilities |  |  | 480,317 |  |  |  | 528,698 |
Total deferred tax assets before valuation allowance |  |  | 10,247,854 |  |  |  | 6,037,752 |
Deferred tax liabilities: |  |  |  |  |  |
Property and equipment |  |  | (217,404 | ) |  |  | (373,645 | )
Other |  |  | (555,424 | ) |  |  | (305,036 | )
ROU assets |  |  | (405,910 | ) |  |  | (464,187 | )
Total deferred tax liabilities |  |  | (1,178,738 | ) |  |  | (1,142,868 | )
Net deferred tax assets before valuation allowance |  |  | 9,069,116 |  |  |  | 4,894,884 |
Valuation allowance |  |  | (9,121,690 | ) |  |  | (4,939,557 | )
Net deferred tax liabilities |  | $ | (52,574 | ) |  | $ | (44,673 | )
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of the year ended December 31, 2024, Management believes that it is not more likely than not that the Company will realize the benefits of the net deferred tax assets and has recorded a valuation allowance against its US deferred tax assets. The Company files income tax returns in the U.S. federal jurisdiction, Arizona, Arkansas, California, Florida, Idaho, Massachusetts, Texas, Utah, and Germany and has open tax statutes for U.S. federal taxes for the years ended December 31, 2021 through 2024. For California, the open tax statutes are for years December 31, 2020 through 2024, and for Germany, the open years include December 31, 2022 through 2024. The Company had Federal net operating loss ("NOL") carryforwards as of December 31, 2024, of approximately $9,116,000. The Company may use these NOL carryforwards indefinitely to offset 80% of Federal taxable income in future years. In addition, the Company has state NOL carryforwards of $11,888,000. State NOLs will carryforward through at least 2041 and may be used to offset future state taxable income. As of December 31, 2024 and 2023, the Company had $1,695,00 0 a nd $1,505,000 respectively, of federal tax credit carryforwards which begin to expire in 2026 and state credit carryforwards of $1,045,000 and $1,002,000, respectively, which carryforward indefinitely. The Company completed an analysis of historical R&D credits and recorded an adjustment to reduce the carryforwards during 2024. As of December 31, 2024, unrecognized tax benefits associated with uncertain tax positions was $888,916, of which $20,200 is included in other accrued expenses and other liabilities, while $830,937 is included as a direct reduction on the net deferred tax assets on the accompanying consolidated balance sheets. If recognized, this would affect the Company’s effective tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Unrecognized tax benefits balance on December 31, 2022 |  |  | 1,218,396 |
Gross increases for tax positions of the prior year |  |  | 55,431 |
Gross decrease for tax positions of the current year |  |  | (505,258 | )
Gross increases for tax positions of the current year |  |  | 50,711 |
Unrecognized tax benefits balance on December 31, 2023 |  |  | 819,280 |
Gross decrease for tax positions of the current year |  |  | - |
Gross increases for tax positions of the current year |  |  | 69,635 |
Unrecognized tax benefits balance on December 31, 2024 |  | $ | 888,916 |

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