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Income Taxes
 9 Months Ended 12 Months Ended
Sep. 30, 2024
Dec. 31, 2023
Income Tax Disclosure [Abstract]    
Income Taxes

Note 12. Income Taxes

 

At the end of each interim reporting period, the Company estimates its effective tax rate expected to be applied for the full year. This estimate is used to determine the income tax provision or benefit on a year-to-date basis and may change in subsequent interim periods. Accordingly, the Company’s effective tax rate for the three and nine months ended September 30, 2024 and 2023 was 0%. The Company’s effective tax rates for both periods were affected primarily by a full valuation allowance on domestic net deferred tax assets.

 

Note 12. Income Taxes

 

A reconciliation of the Federal statutory rate of 21% and 28% in the years ended December 31, 2023 and 2022, respectively to the total effective rate applicable to income (loss) is as follows:

 

   Year Ended   Year Ended 
   December 31, 2023   December 31, 2022 
         
Expected benefit at statutory federal tax rate  $(2,073,230)  $(974,329)
Permanent differences – net   (35,469)   (859,515)
State and local taxes, net of federal tax benefit   -    (265,607)
Other   (24,569)   (21,965)
Change in valuation allowance   2,103,268    2,121,416 
Income tax expense (benefit)  $(30,000)  $- 

 

The components of the Company’s deferred tax assets (liabilities) are as follows:

 

   Year Ended
December 31,
2023		   Year Ended
December 31,
2022		 
Deferred tax assets (liabilities):          
Fixed assets  $(281,073)  $(268,594)
Interest   35,178    62,310 
Research and development expenses   400,810    454,942 
Stock-based compensation   895,509    917,351 
Charitable Contributions   420      
Net operating losses - federal   4,456,242    2,898,411 
Net operating losses – state and local   543,264    921,350 
Net operating losses - foreign   233,114    37,686 
Research credit   28,985    28,985 
Less valuation allowance   (6,474,449)   (5,244,441)
Net deferred tax liability  $(162,000)  $(192,000)

 

 

SHARPS TECHNOLOGY, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

 

 

Note 12. Income Taxes (continued)

 

The authoritative guidance requires the asset and liability method of accounting for deferred income taxes. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities. Deferred tax assets or liabilities at the end of each period are determined using the tax rate expected to be in effect when taxes are actually paid or recovered.

 

The guidance also requires that a valuation allowance be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. A review of all available positive and negative evidence needs to be considered, including a company’s current and past performance, the market environment in which the company operates, length of carryback and carryforward periods and existing contracts that will result in future profits. After reviewing all the evidence, the company has recorded a full valuation allowance.

 

As of December 31, 2023, the Company had U.S. federal net operating loss carryforwards of approximately $21,222,000 of which $241,000, if not fully utilized, expires by 2038 and which $20,981,000 do not expire. The Company has foreign net operating loss carryforwards of $2,590,000, if not fully utilized, expire through 2028. Utilization is dependent on generating sufficient taxable income prior to expiration of the tax loss carryforwards.

 

The geographical components of loss before income taxes consisted of the following for the years ended December 31:

 

   Year Ended   Year Ended 
   December 31,
2023		   December 31,
2022		 
         
United Stated Operations  $(8,173,807)  $(3,978,832)
International Operations   (1,667,831)   (660,830)
(Loss) Income before taxes   (9,871,638)   (4,639,662)