INCOME TAXES

The provision (benefit) for income taxes on pre-tax income differs from the amount computed by applying the U.S. federal statutory income tax rate of 21.0% for the years ended December 31, 2025, 2024 and 2023 due to the following (in thousands):


	Year Ended December 31,
	2025				2024
	Amount		Percent		Amount		Percent
U.S. federal statutory tax rate	$	2,211	21.0	%		1,646	21.0	%
State and local income taxes, net of federal income tax effect⁽¹⁾
Current state tax provision		234	2.2	%		284	3.6	%
Deferred state tax provision		(433)	(4.1)	%		562	7.2	%
Foreign tax effects
Ireland⁽²⁾		(247)	(2.3)	%		17	0.2	%
Effects of cross border tax laws		611	5.8	%		(14)	(0.2)	%
Tax credits
Research and development tax credits		(480)	(4.6)	%		(621)	(7.9)	%
Foreign tax credit		(344)	(3.3)	%		(10)	(0.1)	%
Nontaxable or nondeductible items
Share-based payment awards		177	1.7	%		467	6.0	%
Warrants		(18)	(0.2)	%		(483)	(6.2)	%
Other		40	0.4	%		138	1.8	%
Other adjustments		201	1.9	%		-	-	%
Effective tax rate	$	1,952	18.5	%	$	1,986	25.3	%

(1)

States taxes in Florida and Arizona made up the majority (greater than 50 percent) of the tax effect in this category.

(2)

Ireland standard corporation tax rate is 12.5% for the years ended December 31, 2025, 2024, and 2023.


		Year Ended December 31,
		2023
Provision for income tax at the federal statutory rate		$	(1,613)
State taxes			165
Permanent differences			(328)
Change in valuation allowance			(1,313)
Executive compensation			3,016
Return to provision			151
FDII deduction			-
R&D credit			(1,174)
Stock-based compensation			(1,020)
Other			-
Total income tax benefit		$	(2,116)

Summary of significant components of deferred taxes

Deferred tax assets and liabilities reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities as of December 31, 2025 and 2024 are as follows (in thousands):


		Year Ended December 31,
		2025			2024
Deferred tax assets:
Net operating losses		$	5,895		$	2,986
Foreign tax credit carryforwards			1,272			768
Inventory basis differences			9,479			8,544
Maintenance deposit payments			127			10
Deferred revenue			128			420
Allowance for doubtful accounts			374			276
Start up costs			526			566
Stock-based compensation			1,369			1,003
Business interest expense - 163(j) limitation			214			1,343
Accrued expenses			562			11
Lease obligations			7,344			8,010
Section 174 capitalization			-			4,472
R&D credit			1,528			1,055
Other			424			162
Total deferred tax assets			29,242			29,626
Deferred tax liabilities:
Fixed assets			(11,716)			(11,081)
Right-of-use assets			(6,771)			(7,582)
Intangible assets			(1,111)			(792)
Other			(860)			-
Total deferred tax liabilities			(20,458)			(19,455)
Deferred income taxes, net		$	8,784		$	10,171