v3.26.1
Note 14 - Income Taxes
 3 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

NOTE 14 – INCOME TAXES

 

The Company accounts for income taxes under ASC 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities.

 

Income tax expense

 

Income tax expense (benefit) from continuing operations for the three months ended June 30,2026, and 2025 consisted of the following:

 

June 30,

  

2026

    

2025

  

Current:

                

Federal

   $ 0     $ 0  

State

     2,000       1,500  

Foreign

     0       0  

Deferred:

                

Federal

     0       0  

State

     0       0  

Foreign

     0       0  

Total income tax expense

   $ 2,000     $ 1,500  

 

 

Deferred income taxes

 

Deferred tax assets and liabilities at June 30, 2026, and 2025 consisted of the following:

 

June 30,

  

2026

    

2025

  

Deferred tax assets:

                

Allowance for doubtful accounts

   $ 255,478     $ 255,478  

Federal net operating loss carryforward

     325,714       302,275  

State net operating loss carryforward

     214,795       198,459  

Federal tax credit carryforwards

     316,772       315,772  

State tax credit carryforwards

     45,366       45,366  

Stock Compensation

     42,715       42,715  

Depreciation – Federal

     0       33,466  

Depreciation – State

     13,408       8,739  

Total deferred tax assets

     1,214,248       1,201,970  

Less: valuation allowance

     (1,214,248 )     (1,201,970 )

Net deferred tax assets

     0       0  

Deferred tax liabilities:

                

Depreciation - Federal

     (885 )     (148 )

Depreciation – State

     0       0  

Total deferred tax liabilities

     (885 )     (148 )

Less: valuation allowance

     885       148  

Net deferred tax liability

   $ 0     $ 0  

 

The valuation allowance increased by $61,286 during the three months ended June 30, 2026. Management believes it is more likely than not that the remaining deferred tax assets will not be realized through future taxable income.

 

As of June 30, 2026, the Company has federal net operating loss carryforwards of $1,551,019 and state net operating loss carryforwards of $2,386,617, which may be used to offset future taxable income.

 

Effective tax rate reconciliation

 

The Company’s effective tax rate reconciliation for the three months ended June 30, 2026, and 2025 was as follows:

 

   

% of pretax income

    

2026

    

% of pretax income

    

2025

  

Tax at U.S. federal statutory rate (21.0%)

     21.0 %   $ 7,216       21.0 %   $ 69,118  

State and local income taxes, net of federal benefit

     (9.0 %)     (3,092 )     (9.0 %)     (29,622 )

Foreign tax effects

     0.0 %     0       0.0 %     0  

Effect of changes in tax laws or rates enacted in the current period

     0.0 %     0       0.0 %     0  

Effect of cross-border tax laws

     0.0 %     0       0.0 %     0  

Tax credits

     (0.0 %)     0       0.0 %     0  

Changes in valuation allowance

     178.3 %     61,286       7.0 %     23,043  

Nontaxable or nondeductible items

     (184.5 %)     (63,410 )     (19.5 %)     (64,039 )

Changes in unrecognized tax benefits

     0.0 %     0       0.0 %     0  

Income tax expense and effective tax rate

     5.8 %   $ 2,000       0.5 %   $ 1,500  

 

 

The Company pays taxes to only one state – New Jersey.

 

Income taxes paid

 

Income taxes paid (net of refunds received) for the three months ended June 30, 2026, and 2025 were as follows:

 

June 30,

  

2026

    

2025

  

Federal

   $ 0     $ 0  

State

     0       0  

Foreign

     0       0  

Total

   $ 0     $ 0  

 

The following jurisdictions individually represented 5% or more of total income taxes paid (net of refunds received) for the three months ended June 30, 2026, and 2025:

 

Jurisdiction

  

2026

    

2025

  

United States — Federal

   $ 0     $ 0  

New Jersey

     0       0  

 

Unrecognized tax benefits

 

A reconciliation of the Company’s unrecognized tax benefits for the three months ended June 30, and 2025 are as follows:

 

June 30,

  

2026

    

2025

  

Unrecognized tax benefits at April1,

   $ 0     $ 0  

Increases for tax positions taken in the current year

     0       0  

Increases for tax positions taken in prior years

     0       0  

Decreases for tax positions taken in prior years

     0       0  

Settlements

     0       0  

Lapse of statute of limitations

     0       0  

Unrecognized tax benefits at June 30,

   $ 0     $ 0  

 

At June 30, 2026, and 2025, unrecognized tax benefits that, if recognized, would affect the effective tax rate were $0.

 

Interest and penalties

 

The Company recognizes interest and penalties related to uncertain tax positions as a component of selling, general and administrative expenses. Interest and penalties for the three months ended June 30, 2026, and 2025 were $1,648 and $0, respectively.

 

Open tax years

 

The Company files income tax returns in the United States federal jurisdiction and various state jurisdictions, and in certain foreign jurisdictions. The Company’s federal, state, and foreign income tax returns for tax years after March 31, 2023, for federal and March 31, 2022, for the State of New Jersey remain subject to examination by taxing authorities.