XML 39 R22.htm IDEA: XBRL DOCUMENT
v3.25.1

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES |
| 10. | INCOME TAXES
We account for income taxes in accordance with ASC 740 Income Taxes. ASC 740 is an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected tax consequences or events that have been recognized in our consolidated financial statements or tax returns. ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in the consolidated financial statements. The interpretation prescribes a recognition threshold and measurement attribute for the consolidated financial statements recognition and measurement of a tax position taken, or expected to be taken, in a tax return. The Company files income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. The Company generally is no longer subject to U.S. or state examinations by tax authorities for taxable years prior to 2020. However, net operating losses utilized from prior years in subsequent years’ tax returns are subject to examination until three years after the filing of subsequent years’ tax returns. The statute of limitations expiration in foreign jurisdictions for corporate tax returns generally ranges between two and five years depending on the jurisdiction. The provision (benefit) for income taxes consists of the following:
Year ended December 31, |  | 2024 |  |  | 2023 |
Current: |  |  |  |  |  |  |  |
State |  | $ | 42,906 |  |  | $ | 14,248 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | 624,509 |  |  |  | (12,608,425 | )
State |  |  | 476,039 |  |  |  | (755,237 | )
Total |  | $ | 1,143,454 |  |  | $ | (13,349,414 | )
The difference between the income tax provision (benefit) computed at the federal statutory rate and the actual tax benefit is accounted for as follows:
December 31, |  | 2024 |  |  | 2023 |
Taxes computed at the federal statutory rate |  | $ | 932,985 |  |  | $ | 808,876 |
State income tax, net |  |  | 409,967 |  |  |  | (585,381 | )
Research and development tax credit |  |  | (145,954 | ) |  |  | (133,089 | )
Change in valuation allowance |  |  | (20,846 | ) |  |  | (13,531,626 | )
Other |  |  | (43,413 | ) |  |  | 88,308 |
Permanent differences |  |  | 10,715 |  |  |  | 3,498 |
Provision (Benefit) for income taxes |  | $ | 1,143,454 |  |  | $ | (13,349,414 | )
The components of deferred income tax assets and liabilities are as follows at December 31:
Deferred Tax Assets: |  | 2024 |  |  | 2023 |
Allowance for credit losses |  | $ | 45,969 |  |  | $ | 20,632 |
Capitalized R&D |  |  | 1,705,529 |  |  |  | 1,420,263 |
Credit carryforwards |  |  | 2,424,596 |  |  |  | 2,278,642 |
Inventory reserve |  |  | 341,031 |  |  |  | 350,073 |
Accrued payroll |  |  | 133,052 |  |  |  | 151,986 |
Loss contracts reserve |  |  | 4,878 |  |  |  | 75,402 |
Restricted stock |  |  | 55,082 |  |  |  | 94,809 |
Acquisition costs |  |  | 63,781 |  |  |  | 74,136 |
Lease liability |  |  | 461,967 |  |  |  | 1,139,836 |
Disallowed interest expense |  |  | 709,604 |  |  |  | 1,067,063 |
Net operating loss carryforward |  |  | 14,643,979 |  |  |  | 16,356,545 |
Other |  |  | 32,642 |  |  |  | 45,057 |
Deferred tax assets |  |  | 20,622,110 |  |  |  | 23,074,444 |
Valuation allowance |  |  | (973,367 | ) |  |  | (569,143 | )
Deferred Tax Liabilities: |  |  |  |  |  |  |  |
Prepaid expenses |  |  | 66,695 |  |  |  | 143,126 |
Revenue recognition |  |  | — |  |  |  | 1,224,106 |
Property and equipment |  |  | 134,214 |  |  |  | 140,449 |
ROU asset |  |  | 610,258 |  |  |  | 1,059,496 |
Deferred tax liabilities |  | $ | 811,167 |  |  | $ | 2,567,177 |
Net deferred tax assets |  | $ | 18,837,576 |  |  | $ | 19,938,124 |
As of December 31, 2024, the Company had approximately $66.0 million of gross net operating loss carryforwards (“NOLs”) for federal tax purposes and approximately $18.0 million of post apportionment NOLs for state tax purposes. The Federal NOLs begin to expire in 2034. Losses generated in 2018 and forward of $14.4 million have an indefinite life and can offset up to 80% of taxable income in the future. Federal NOLs generated prior to 2018 can offset 100% of future taxable income. The state NOLs begin to expire in 2034. The Company will recognize a tax liability in the consolidated financial statements for an uncertain tax position only if management’s assessment is that the position is “more likely than not” (i.e., a likelihood greater than 50%) to be allowed by the tax jurisdiction based solely on the technical merits of the position. The term “tax position” refers to a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for financial reporting purposes. For income tax purposes, the Company has historically calculated taxable income from its long-term contracts with customers using methodology governed under Internal Revenue Code (“IRC”) Section 460 (“Section 460”) utilizing the simplified method of cost allocation. The financial statements have been prepared to reflect a change in tax reporting methods to another method that is acceptable under Section 460, the percentage of completion method which approximates the revenue included for U.S. GAAP reporting. This type of change from one acceptable method to another is not automatic and subject to an approval process with the IRS. The result of this change had no impact on the financial position or earnings reported by the Company, and only had disclosure impact in regard to the components of deferred tax assets and liabilities. Assessing the realizability of deferred tax assets requires the determination of whether it is more likely than not that some portion or all the deferred tax assets will not be realized. In assessing the need for a valuation allowance, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, loss carryback and tax-planning strategies. Generally, more weight is given to objectively verifiable evidence, such as a cumulative loss in recent years, as a significant piece of negative evidence to overcome. For the period ended December 31, 2023, the Company achieved three years of cumulative book and taxable income, along with projections of profitability, for which management determined that there was sufficient positive evidence to conclude that it is more likely than not that a portion of the deferred tax assets will be realized. As such, $14,170,891 of the valuation allowance was released during the fourth quarter of 2023. During 2024 the Company continued to assess its ability to realize its deferred tax asset. The Company continued to be profitable in 2024 and there was no significant change to the Company’s forecast of income or its ability to realize the deferred tax asset at December 31, 2024. The increase of $404,224 is most significantly related to the state valuation allowance. The income tax for the year ended December 31, 2024 was $1,143,454, which was an effective tax rate of 25.7%. The tax rate was primarily due to federal and state statutory rates in 2024. Management makes these estimates quarterly in order to determine the appropriate level of valuation allowance to include in the Company’s financial statements at the balance sheet date.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration