NOTE 17 - INCOME TAXES

Loss before income taxes consists of the following:

 SCHEDULE OF LOSS BEFORE INCOME TAXES

The provision for income taxes consists of the following for the periods presented:

 SCHEDULE OF PROVISION FOR INCOME TAXES

The difference between income taxes at the statutory federal income tax rate and income taxes reported in the Consolidated Statements of Operations for the years ended December 31 and March 31 is attributable to the following:

  SCHEDULE OF STATUTORY FEDERAL INCOME TAX RATE

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2022 and 2023 and March 31, 2024 are presented below:

 SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

A reconciliation of the beginning and ending amount of unrecognized tax positions is as follows as of December 31, 2022 and 2023 and March 31, 2024:

  SCHEDULE OF UNRECOGNIZED TAX POSITIONS

The unrecognized tax benefits, if recognized, would reduce the Company’s annual effective tax rate. The Company does not expect any significant changes to its unrecognized tax positions during the next twelve months.

At March 31, 2024, the Company had an aggregate net operating loss carryforward of approximately $81,563 for U.S. federal income tax purposes. At March 31, 2024, the Company had an aggregate net operating loss carryforward of approximately $40,299 for state income tax purposes and a foreign net operating loss carryforwards of approximately $28,742. Substantially all of the net operating loss carryforwards expire from 2024 through 2037 for pre-2018 federal net operating loss carryforwards and from 2024 through 2044 for state purposes. The net operating loss carryforwards may be limited to use in any particular year based on Internal Revenue Code (“IRC”) Section 382 related to change of ownership restrictions. Section 382 of the IRC imposes an annual limitation on the utilization of NOL carryforwards based on long-term bond rates and the value of the corporation at the time of a change in ownership as defined by Section 382 of the IRC. In 2019, the Company incurred a change in ownership under Section 382 of the IRC and this change of ownership is not expected to materially impact the Company’s ability to utilize its net operating loss carryforward amounts in the future. In addition, future stock issuances may subject the Company to further limitations on the utilization of its net operating loss carryforwards under the same Internal Revenue Code provision.

At March 31, 2024, the Company has New Jersey net operating loss carryforwards (“NJ NOLs”) included above in the approximate amount of $8,689, expiring through 2044, which are available to reduce future earnings which would otherwise be subject to state income tax.

The Company is asserting permanent reinvestment of all accumulated undistributed earnings of its foreign subsidiaries as of March 31, 2024, in excess of annual debt service costs requirements.

For the year ended March 31, 2024 the Company’s valuation allowance increased to $46,532, compared to $44,495 as of December 31, 2023 primarily due to the increase of net operating losses and other timing differences. The Company has provided a valuation allowance against the full amount of its domestic deferred tax assets and the majority of the foreign deferred tax assets. The valuation allowance was established because of the uncertainty of realization of the deferred tax assets due to lack of sufficient history of generating taxable income. Realization is dependent upon generating sufficient taxable income prior to the expiration of the net operating loss carryforwards in future periods. The valuation increased in 2023 by $803 and increased for the three months ended March 31, 2024 by $2,037.

Audits for federal income tax returns are closed for the years through 2019. However, the Internal Revenue Service (“IRS”) can audit the NOL’s generated during those years in the years that the NOL’s are utilized. State income tax returns are generally subject to examination for a period of three to six years after the filing of the respective tax return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. Foreign income tax returns are generally subject to examination based on the tax laws of the respective jurisdictions.

On August 16, 2022, the President of the United States signed into law H.R. 5376, commonly referred to as the Inflation Reduction Act of 2022 (the “IRA”). The IRA is federal legislation designed to raise revenue from, among other things, the imposition of certain corporate tax measures, while authorizing spending on energy and climate change initiatives and subsidizing the Affordable Care Act. The IRA also introduced a 1% excise tax on certain corporate stock buybacks, which would impose a nondeductible 1% excise tax on the fair market value of certain stock that is “repurchased” during the taxable year by a publicly traded U.S. corporation or acquired by certain of its subsidiaries. The passage of the IRA did not have a material impact to the Company nor its calculated AETR as of March 31, 2024.

On August 9, 2022, the President of the United States signed into law H.R. 4346, “The CHIPS and Science Act of 2022.” CHIPS is a federal statue providing funding for research and domestic production of semiconductors. Additional funding can be provided through CHIPS to various federal agencies as well as towards climate science research. Tax measures include a 25% advanced investment tax credit for certain investments in semiconductor manufacturing. The passage of the CHIPS and Science Act did not have a material impact to the Company nor its calculated AETR as of March 31, 2024.