Income Taxes

3 Months Ended

Mar. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Note 14. Income Taxes

The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. While the Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event the Company were to determine that it would not be able to realize all or part of its net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made. Likewise, should the Company determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax assets would increase income in the period such determination was made.

The components of the provision for income tax expense are as follows for the years ended:

	December 31,
	2024			2023
Current taxes
Federal	$	—		$	—
State		—			—
Current taxes		—			—
Change in deferred taxes		62,146			347,400
Change in valuation allowance		(62,146	)		(347,400	)
Provision for income tax expense	$	—		$	—

The following is a summary of the significant components of the Company’s deferred tax assets and liabilities at December 31, 2024 and 2023:

	December 31,
	2024			2023
Deferred tax assets:
Equity based compensation	$	416,237		$	416,237
Allowance for doubtful accounts		5,954			13,800
Deferred Rent		(1,796	)		-
Reserves for slow moving inventory		50,292			47,800
Depreciation		52,867			23,800
Reserve for recall		0			3,200
Net operating loss carry forward		2,027,000			2,027,000
Total deferred tax assets		2,550,554			2,531,837
Deferred tax liabilities
Reserve for recall		-			-
Total deferred tax asset (liability)		-			-
Total deferred tax		2,550,554			2,531,837
Valuation allowance		(2,550,554	)		(2,531,837	)
Deferred tax assets, net of valuation allowance	$	-		$	-

The effective tax rate used for calculation of the deferred taxes as of December 31, 2024 was 26.35. The Company has established a 100% valuation allowance against deferred tax assets of approximately $2,550,500, due to the uncertainty regarding realization reserve against the deferred tax assets. The change in valuation allowance was an increase of $18,717. The Company has approximately $3,346,650 of net loss carryforward that expire through 2037 and $4,497,364 that carryforward indefinitely but is limited to 80% of taxable income in any one year.

The effective tax rate used for calculation of the deferred taxes as of December 31, 2023 was 21.39%. The Company has established a 100% valuation allowance against deferred tax assets of $2,531,800 due to the uncertainty regarding realization reserve against the deferred tax assets. The change in valuation allowance was an increase of $347,400.

The significant differences between the statutory tax rate and the effective tax rates for the Company for the years ended are as follows:

	December 31,
	2024			2023
Statutory tax rate		(21.00	)%		(21.00	)%
State tax, net of Federal benefits		(4.28	)%		(4.28	)%
Permanent differences		0.11	%		0.21	%
Temporary differences		(1.18	)%		3.68	%
Change in valuation allowance		26.35	%		21.39	%
Effective tax rate		—	%		—	%

The Company’s income tax returns for 2020 through 2024 remain subject to examination by the Internal Revenue Services and state tax authorities.