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Income Taxes
 12 Months Ended
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 $1,695,000 and $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