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

9. INCOME TAXES

 

The Company’s earnings were primarily domestic, and its effective tax rate on earnings from operations for the years ended December 31, 2025 and 2024 was 24.2%. The Company’s effective tax rate differed from the statutory federal corporate income tax rate primarily because of state income taxes, net of federal income tax benefits, and a valuation allowance upon foreign deferred tax assets of one of its foreign subsidiaries, where it was considered more likely than not that these deferred tax assets would not be realized.

 

As of December 31, 2025, the Company’s foreign subsidiaries were in a cumulative loss position. Accordingly, there were no undistributed foreign earnings for which deferred income taxes would be required.

 

 

Income (loss) before income tax expense (benefit) consisted of the following:

 

       
   December 31, 
   2025   2024 
   (in thousands) 
         
Income (loss) before income tax expense (benefit)          
U.S. Federal  $21,099   $25,852 
Foreign   (1,848)   (2,230)
Total  $19,251   $23,622 

 

Income tax expense (benefit) consisted of the following:

 

       
   December 31, 
   2025   2024 
   (in thousands) 
         
Income tax expense (benefit)          
Current tax expense (benefit)          
Federal  $4,028   $5,024 
State and local   590    707 
Foreign   -    (29)
Total current tax expense (benefit)   4,618    5,702 
Deferred tax expense (benefit)          
Federal   196    205 
State and local   31    28 
Foreign   (178)   (228)
Total deferred tax expense (benefit)   49    5 
Total income tax expense (benefit)          
Federal   4,224    5,229 
State and local   621    735 
Foreign   (178)   (257)
Total income tax expense (benefit)  $4,667   $5,707 

 

 

The following table reconciles the Company’s actual income tax expense based on the statutory federal corporate income tax rate:

 

               
   December 31, 
   2025   2024 
   Dollars   Percent   Dollars   Percent 
   (in thousands) 
                 
Income before income taxes  $19,251        $23,622      
                     
U.S. federal statutory rate   4,043    21.0%   4,961    21.0%
Federal                    
State income taxes, net of federal tax benefit (1)   491    2.5%   581    2.5%
Foreign tax effects                    
France                    
Change in valuation allowance   282    1.5%   277    1.2%
Other   (45)   (0.2)%   (44)   (0.2)%
Other foreign jurisdictions   (28)   (0.2)%   (21)   (0.1)%
Nontaxable or Nondeductible Items   (76)   (0.4)%   (47)   (0.2)%
Effective Tax Rate  $4,667    24.2%  $5,707    24.2%

 

(1)State taxes in Pennsylvania and California make up the majority (greater than 50 percent) of the tax effect in this category

 

Income taxes paid, net of refunds, are as follows:

       
   December 31, 
   2025   2024 
   (in thousands) 
         
U.S. Federal  $5,168   $4,774 
           
Pennsylvania   325    293 
Other (1)   390    468 
Total U.S. State and Local   715    761 
           
Foreign   -    - 
           
Total income taxes paid  $5,883   $5,535 
           
Less:income tax refunds   58    - 
           
Total income taxes paid, net of refunds  $5,825   $5,535 

 

(1)Income taxes paid to individual states and local jurisdictions that are not material have been aggregated and presented in the ‘Other’ category. No other individual jurisdiction accounted for 5% or more of total income taxes paid during the period.

 

 

A deferred income tax (expense) benefit results from temporary timing differences in the recognition of income and expense for income tax and financial reporting purposes. The components of and changes in the net deferred tax assets (liabilities) which give rise to this deferred income tax (expense) benefit for the years ended December 31, 2025 and 2024 are as follows:

 

       
   December 31, 
   2025   2024 
   (in thousands) 
Deferred Tax Assets:          
Compensation Assets  $194   $197 
Inventory Valuation   731    682 
Accounts Receivable Valuation   198    202 
Deferred Litigation Costs   -    12 
Capitalized Research Costs   -    423 
Accrued Product Liability   163    165 
Foreign Net Operating Losses   1,344    808 
Other   90    93 
Compensation Liabilities   142    156 
Total Deferred Assets, Before Valuation Allowance  $2,862   $2,738 
Less: Valuation Allowance   762    443 
Total Deferred Assets  $2,100   $2,295 
           
Deferred Tax Liabilities:          
Prepaid Expenses   (452)   (616)
Depreciation and Amortization   (1,475)   (1,495)
Total Deferred Liabilities  $(1,927)  $(2,111)
           
Total Deferred Tax Asset  $173   $184 

 

Management believes it is more likely than not that the Company will have sufficient taxable income when these timing differences reverse and that the deferred tax assets will be realized except for a carryover of foreign operating losses of $3,046,000 incurred by one of its foreign subsidiaries. Due to the uncertainty of future income in the foreign subsidiary, the Company has recognized a valuation allowance of $762,000, an increase of $319,000 from the previous year, related to the foreign operating losses carrying forward. These foreign operating losses may be carried forward indefinitely.

 

The Company is currently subject to audit by the Internal Revenue Service for the calendar years after 2021. The Company’s state income tax returns are subject to audit for the calendar years after 2020.