INCOME TAXES

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

(9) INCOME TAXES

Income tax expense consists of:

	Current		Deferred		Total
Year Ended December 31, 2023:
U.S. Federal	$	-	$	-	$	-
State and local		16,623		-		16,623
Foreign		25,996		-		25,996
	$	42,619	$	-	$	42,619
Year Ended December 31, 2024:
U.S. Federal	$	-	$	-	$	-
State and local		11,216		-		11,216
Foreign		-		-		-
	$	11,216	$	-	$	11,216

The principal components of deferred tax assets, net, were as follows at December 31:

	2024			2023
Deferred income tax assets:
Capitalized research and development	$	-		$	-
Inventories		-			550,023
Accounts receivable		-			261,564
Accrued expenses		-			29,414
Net operating loss and tax credit carry forwards		14,629,440			19,244,464
Plant and equipment		-			85,332
Stock compensation		-			-
Other – interest expense		-			293,932
Total deferred income tax assets		14,629,440			20,464,729
Valuation allowance		(14,629,440	)		(20,464,729	)
Net deferred tax assets	$	-		$	-

As of December 31, 2024, the Company had Federal net operating loss carry forwards of approximately 70 million, which are available to offset future taxable income. They are due to expire in varying amounts from 2025 to 2044. As of December 31, 2018, federal net operating losses of approximately $37 million may be carried forward indefinitely. A valuation allowance has been established for the full amount of net deferred income tax assets as management has concluded that it is more likely than not that the benefits from such assets will not be realized. The NOL constitutes the majority of the deferred assets and the other components have not been presented as to the immateriality as compared to the NOL.

The Federal NOLs may be subject to certain limitations under Section 382 of the Internal Revenue Code, which could significantly restrict the Company’s ability to use the NOLs to offset taxable income in subsequent years.

As result of changes made by the Tax Cuts and Jobs Act of 2017, that became effective as of January 1, 2022, the company is now required to capitalize for tax purposes certain research and development expenses and amortize domestic expenses over a 5 year period and foreign expenses over a 15 year period, resulting in a deferred tax asset for the capitalized amounts as reflected in the above table.

The following is a reconciliation of the statutory Federal income tax rate to the actual effective income tax rate for continuing operations:

	2024			2023
Federal tax (benefit) rate		21	%		21	%
Increase (decrease) in taxes resulting from:
State income taxes		-			4
Change in valuation allowance		(21	)		(21	)
Expiration of NOLs		-			(5	)
Expiration of stock options		-			(1	)
Permanent differences		-			1
Changes in Federal and state rates		-			1
Effective income tax rate		0	%		0	%

The Company reviews annually the guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in the financial statements. Tax positions must meet a “more-likely-than-not” recognition threshold. At December 31, 2024 and 2023, the Company did not have any material uncertain tax positions. No interest and penalties related to uncertain tax positions were accrued at December 31, 2024 and 2023.

The Company files income tax returns in the U.S., India, and Mexico. Tax years subsequent to 2017 remain subject to examination for both U.S. Federal and state tax reporting purposes. Tax years subsequent to 2016 remain subject to examination for Mexico tax reporting purposes. The foreign income tax reported represents tax on operations for the Company that is located in a special economic zone in Mexico. Other than the Mexico facility, the Company has an India operation and has no other operations in a foreign location. The India operation had no tax obligations as of December 31, 2024.