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v3.26.1

INCOME TAXES | 3 Months Ended
--- | ---
Mar. 31, 2026
INCOME TAXES |
INCOME TAXES | NOTE 13 — INCOME TAXES The Company and its operating subsidiaries in the United States are subject to federal and various state income taxes. The Company elected to file income taxes as a corporation instead of an LLC for the tax years ended December 31, 2020 through December 31, 2025.
(i) | (Loss) before Income tax expense (benefit)
​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ ​ ​ | ​ | For the Three Months Ended
​ | ​ | ​ | March 31,
​ | ​ | 2026 | ​ ​ ​ | 2025
(Loss) from continuing operations before income taxes | ​ | $ | (611,865) | ​ | $ | (748,554)
​
(ii) | The components of the income tax provision were as follows:
​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months Ended
​ | ​ | March 31,
​ | ​ ​ ​ | 2026 | ​ ​ ​ | 2025
Current: | ​ | ​ | ​ |  | ​ | ​
Federal | ​ | $ | — | ​ | $ | —
State | ​ |  | 4,400 | ​ |  | 5,200
Total current income tax provision | ​ |  | 4,400 | ​ |  | 5,200
Deferred: | ​ |  | ​ | ​ |  | ​
Federal | ​ |  | — | ​ |  | —
State | ​ |  | — | ​ |  | —
Total deferred income tax expenses (benefits) | ​ |  | — | ​ |  | —
Adjustments related to prior year income taxes | ​ | ​ | — | ​ | ​ | 155
Total income tax benefits | ​ | $ | 4,400 | ​ | $ | 5,355
​
(iii) | Reconciliations of the statutory income tax rate to the effective income tax rate were as follows:
​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months Ended |
​ | ​ | March 31, | ​
​ | ​ ​ ​ | 2026 | ​ ​ ​ | 2025 |
Federal income tax at the statutory rate | ​ | 21.0 | % | 21.0 | %
State statutory tax rate | ​ | (0.6) | % | 7.7 | %
Permanent Items | ​ | (0.4) | % | (0.4) | %
Change in valuation allowance | ​ | (21.9) | % | (29.0) | %
NOL Adjustment | ​ | 1.2 | % | — | %
Other | ​ | — | % | — | %
Effective tax rate | ​ | (0.7) | % | (0.7) | %
​
(iv) | Deferred tax assets, net were composed of the following:
​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ ​ ​ | March 31, | ​ ​ ​ | March 31,
​ | ​ | 2026 | ​ | 2025
Deferred tax assets: |  | ​ | ​ | ​ | ​ | ​
Net operating loss carry forwards | ​ | $ | 1,139,445 | ​ | $ | 1,110,892
Lease liability | ​ | ​ | 291,093 | ​ | ​ | 382,246
Others | ​ | ​ | 464,089 | ​ | ​ | 438,159
Total gross deferred tax assets | ​ | ​ | 2,094,627 | ​ | ​ | 1,931,297
​ | ​ | ​ | ​ | ​ | ​ | ​
Less valuation allowance | ​ | ​ | (1,565,904) | ​ | ​ | (1,293,194)
Total deferred tax assets, net of valuation allowance | ​ | ​ | 528,723 | ​ | ​ | 638,103
​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred tax liabilities: | ​ | ​ | ​ | ​ | ​ | ​
Intangible assets | ​ | ​ | (286,391) | ​ | ​ | (241,798)
Fixed assets | ​ | ​ | (27,121) | ​ | ​ | —
Right of use assets | ​ | ​ | (215,211) | ​ | ​ | (395,705)
Total deferred tax liabilities | ​ | ​ | (528,723) | ​ | ​ | (637,503)
​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred tax assets, net | ​ | $ | — | ​ | $ | 600
​ The Company assesses deferred tax assets to determine whether they are realizable. As of March 31, 2026, the Company recorded a full valuation allowance against deferred tax assets, as it has generated a three-year cumulative pretax book loss and is forecasting a loss for 2026. Based on this evidence, realization of deferred tax assets is not considered more-likely-than-not at this time. The Company records uncertain tax positions in accordance with ASC 740, using a two-step process to determine whether tax positions will be sustained. The Company has concluded that there are no uncertain tax positions requiring recognition as of March 31, 2026 and 2025. The Company was not previously subject to the interest expenses limitation under §163(j) of the U.S. Internal Revenue Code, due to the small business exemption. Its average annual gross receipts for the three tax years preceding 2022 do not exceed the relevant threshold amount ($27 million for 2022). The Company no longer met the small business exception in 2024, but it meets one of the other exceptions to the §163(j) limitation, “floor plan financing indebtedness” (indebtedness used to finance the acquisition of motor vehicles held for sale or lease or secured by such inventory) and will therefore continue to be exempt from the §163(j) interest expenses limitation in 2026. The Company monitors tax law changes and has determined that no recent changes materially impact the financial statements.

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