v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

7. Income Taxes

The amounts of income tax expense reflected in operations is as follows:

 

 

 

2025

 

 

2024

 

Current:

 

 

 

 

 

 

Federal

 

$

389,899

 

 

$

1,045,995

 

State

 

 

24,172

 

 

 

175,507

 

Foreign

 

 

299,068

 

 

 

537,654

 

Total:

 

$

713,139

 

 

$

1,759,156

 

 

 

 

 

 

 

Deferred:

 

 

 

 

 

 

Federal

 

$

1,996,275

 

 

$

480,188

 

State

 

 

223,787

 

 

 

30,714

 

Total:

 

 

2,220,062

 

 

 

510,902

 

Total Income Tax Expense:

 

$

2,933,201

 

 

$

2,270,058

 

 

Cash paid during the year for income taxes, net of refunds, are as follows:

 

 

 

2025

 

Payments, net of refunds:

 

 

 

United States, federal

 

$

—

 

United States, state

 

 

149,475

 

Canada

 

 

181,684

 

Hong Kong

 

 

229,252

 

Other

 

 

312

 

     Total taxes paid

 

$

560,723

 

Difference between the U.S. statutory federal tax rate and the Company's 2025 effective income tax rate presented prospectively in accordance with ASU 2023-09:

 

 

 

 

 

 

 

 

 

2025

 

 

 

 

Federal income taxes at 21% statutory rate

 

$

2,754,701

 

 

 

21.0

%

State and local taxes, net of federal income tax effect

 

 

245,615

 

 

 

1.9

%

Nontaxable or nondeductible items

 

 

302,532

 

 

 

2.3

%

Federal statutory tax rate difference

 

 

(122,296

)

 

 

-0.9

%

Tax credit

 

 

(247,351

)

 

 

-1.9

%

Provision for income taxes:

 

$

2,933,201

 

 

 

22.4

%

 

Differences between the U.S. statutory federal tax rate and the Company’s effective income tax rate for periods prior to the adoption of ASU 2023-09 are analyzed below:

 

 

2024

 

Federal income taxes at 21% statutory rate

 

$

2,531,261

 

State and local taxes, net of federal income tax effect

 

 

144,938

 

Nontaxable or nondeductible items

 

 

(349,451

)

Federal statutory tax rate difference

 

 

(56,690

)

Provision for income taxes:

 

$

2,270,058

 

A summary of United States and foreign income before income taxes follows:

 

 

 

2025

 

 

2024

 

United States

 

$

11,153,255

 

 

$

9,225,285

 

Foreign

 

 

1,964,367

 

 

 

3,067,124

 

Total:

 

$

13,117,622

 

 

$

12,292,409

 

 

As discussed in Note 10 below, for segment reporting, direct import sales are included in the United States segment. However, the revenues are earned by our Hong Kong subsidiary and related income taxes are paid in Hong Kong whose rate approximates 16.5%. As such, income of the Asian subsidiary is included in the foreign income before taxes.

 

 

The following summarizes deferred income tax assets and liabilities:

 

 

 

2025

 

 

2024

 

Deferred income tax liabilities:

 

 

 

 

 

 

Property, plant and equipment

 

$

5,149,663

 

 

$

2,620,900

 

Intangible assets

 

 

1,582,202

 

 

 

1,487,297

 

Other

 

 

559,564

 

 

 

887,074

 

     Total deferred tax liabilities

 

 

7,291,429

 

 

 

4,995,271

 

 

 

 

 

 

 

Deferred income tax assets:

 

 

 

 

 

 

Net operating loss carryover

 

 

841,362

 

 

 

915,122

 

Stock compensation

 

 

2,271,260

 

 

 

2,011,200

 

Asset valuations

 

 

1,134,001

 

 

 

1,317,965

 

Other

 

 

201,450

 

 

 

201,450

 

      Total deferred tax assets

 

 

4,448,073

 

 

 

4,445,737

 

Less: valuation allowance

 

 

(841,362

)

 

 

(915,122

)

      Total deferred tax assets, net

 

 

3,606,711

 

 

 

3,530,615

 

Net deferred income tax liability:

 

$

3,684,718

 

 

$

1,464,656

 

 

The gross amount of the net operating loss available as of December 31, 2025 and 2024, with the net operating loss applying to foreign locations, is $2,804,901 and $3,050,406, respectively. These net operating loss carry forwards do not have an expiration date.

 

The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company is no longer subject to U.S. federal examination for years before 2022, state and local examinations for year before 2021 and foreign examinations before 2022. The Company evaluated its tax positions for each year which remain subject to examination by major tax jurisdictions, in accordance with the requirements of ASC 740 and as a result, concluded no adjustment was necessary.

 

The Company’s evaluation of uncertain tax positions was performed for the tax years ended December 31, 2022 and forward, the tax years which remain subject to examination by major tax jurisdictions as of December 31, 2025.

Due to the uncertain nature of the realization of the Company's deferred income tax assets based on past performance of its German subsidiary, the Company has recorded a valuation allowance for the amount of deferred income tax assets which are not expected to be realized. This valuation allowance, all of which is related to deferred tax assets resulting from net operating losses of the Company’s German subsidiary of approximately $0.8 million, is subject to periodic review, and, if the allowance is reduced, the tax benefit will be recorded in future operations as a reduction of the Company's tax expense.