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

NOTE 9. INCOME TAXES

 

The Company's components of income tax (benefit) expense consisted of the following.

 

 

 

Years Ended December 31,

 

Income tax provision

 

2025

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

-

 

 

$

(24

)

 

$

(80

)

Foreign

 

 

(40

)

 

 

68

 

 

 

28

 

State and local

 

 

153

 

 

 

182

 

 

 

117

 

Current provision

 

 

113

 

 

 

226

 

 

 

65

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

(72

)

 

 

41

 

 

 

(173

)

Foreign

 

 

-

 

 

 

-

 

 

 

-

 

State and local

 

 

-

 

 

 

-

 

 

 

-

 

Deferred (benefit) provision

 

 

(72

)

 

 

41

 

 

 

(173

)

Income tax (benefit) expense

 

$

41

 

 

$

267

 

 

$

(108

)

 

The following tables present a reconciliation of the Company’s effective tax rates for the periods indicated.

 

 

 

Year Ended December 31,

 

 

 

2025

 

Rate reconciliation

 

Amount

 

 

Percent

 

U.S. statutory rate

 

$

(12,708

)

 

 

21.0

%

State and local income taxes, net of federal income tax effect(1)

 

 

(2,934

)

 

 

4.8

%

Foreign rate effect

 

 

 

 

 

 

Other foreign jurisdictions

 

 

3

 

 

 

0.0

%

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

 

 

-

 

 

 

0.0

%

Effect of cross-border Laws

 

 

 

 

 

 

Other

 

 

-

 

 

 

0.0

%

Change in valuation allowance

 

 

15,181

 

 

 

(25.1

%)

Nontaxable or nondeductible items

 

 

 

 

 

 

Stock compensation

 

 

681

 

 

 

(1.1

%)

Other permanent adjustments

 

 

8

 

 

 

0.0

%

Other adjustments

 

 

(190

)

 

 

0.3

%

Effective tax rate

 

$

41

 

 

 

(0.1

%)

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

 

 

 

For the Years Ended December 31,

 

Rate reconciliation

 

2024

 

 

2023

 

U.S. statutory rate

 

 

21.0

%

 

 

21.0

%

State rate net of fed benefit

 

 

7.5

%

 

 

2.7

%

Change in valuation allowance

 

 

(27.9

%)

 

 

(28.3

%)

Stock compensation

 

 

0.2

%

 

 

0.0

%

Permanent adjustments

 

 

(1.4

%)

 

 

(1.3

%)

Deferred adjustments

 

 

1.2

%

 

 

4.4

%

Other

 

 

(1.4

%)

 

 

1.7

%

Effective tax rate

 

 

(0.8

%)

 

 

0.2

%

 

The components of the income tax payments (net of refunds received) as of December 31 follow.

 

 

 

Year Ended December 31,

 

 

 

2025

 

Federal

 

$

-

 

State

 

 

 

Louisiana

 

 

8,700

 

New York

 

 

33,725

 

North Carolina

 

 

19,232

 

South Carolina

 

 

16,845

 

Texas

 

 

78,991

 

Other

 

 

9,300

 

Foreign

 

 

 

Croatia

 

 

-

 

Other

 

 

-

 

Total income tax payments (net of refunds received)

 

$

166,793

 

 

 

Tax effects of temporary differences can give rise to significant portions of deferred tax assets and deferred tax liabilities. The components of deferred income tax assets and liabilities are as follows.

 

 

 

As of December 31,

 

Tax effects of temporary differences

 

2025

 

 

2024

 

Attributes

 

 

 

 

 

 

Deferred tax asset

 

 

 

 

 

 

Federal NOLs

 

$

52,863

 

 

$

46,547

 

State NOLs

 

 

13,911

 

 

 

12,400

 

Deferred revenue

 

 

13,481

 

 

 

11,217

 

Capitalized R&D

 

 

7,763

 

 

 

12,138

 

Other deferred tax assets

 

 

15,329

 

 

 

9,138

 

Total deferred tax assets

 

 

103,347

 

 

 

91,440

 

 

 

 

 

 

 

 

Less: Valuation allowance

 

 

(95,793

)

 

 

(80,612

)

Total net deferred tax asset

 

$

7,554

 

 

$

10,828

 

 

 

 

 

 

 

 

IRC 481(a) Adjustment

 

 

(146

)

 

 

(603

)

Deferred costs of revenue

 

 

(956

)

 

 

(2,987

)

Intangibles

 

 

(4,531

)

 

 

(5,308

)

Other deferred tax liabilities

 

 

(1,947

)

 

 

(2,027

)

Total deferred tax liabilities

 

 

(7,580

)

 

 

(10,925

)

Net deferred tax liability

 

$

(26

)

 

$

(97

)

 

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. As a result of historical cumulative losses, Management determined that, based on all available evidence, there was substantial uncertainty as to whether it will recover recorded net federal and state deferred taxes in future periods. Therefore, a valuation allowance equal to the amount of the net federal and state deferred tax assets was provided at December 31, 2025 and 2024. The net valuation allowance increased by $15,226 from $80,612 to $95,793 in 2025.

 

As of December 31, 2025, the Company has gross NOLs of $252,280 and $245,468 for federal and state income tax return purposes, respectively. Federal NOLs can be carried forward indefinitely, while State NOLs will expire between 2032 and 2045. The Company also has $145 of R&D credits available that expire in 2039.

 

The Tax Reform Act of 1986 (the "Act") provides for a limitation of the annual use of the net operating loss carryforwards following certain ownership changes (as defined by the Act and codified under IRC 382) that could limit the company's ability to utilize these carryforwards. The Company has not completed a formal Section 382 study; however, given its cumulative losses and valuation allowance position, management does not expect any potential limitation to have a material impact on the Company’s income tax provision. A formal analysis would be performed when taxable income is generated in future periods and the utilization of these attribute become probable.

 

The income tax expense on the Consolidated Statement of Operations and Comprehensive Loss is primarily related to state minimum and franchise taxes. We have established a full valuation allowance for net deferred U.S. federal and state tax assets, including net operating loss carryforwards. We expect to maintain this valuation allowance until it becomes more likely than not that the benefit of our federal and state deferred tax assets will be realized in future periods.

 

The Company files income tax returns in the U.S. federal and various state jurisdictions, as well as in Croatia and India. The Company is subject to U.S. federal and state income tax examinations by authorities for all tax years beginning in 2018, due to the accumulated net operating losses that are carried forward. Similarly, SightPlan Holdings, Inc. is subject to U.S. federal and state income tax examination by authorities for all tax years beginning in 2012. The Company is subject to Croatian income tax examinations for all tax years beginning in 2019. The Company is subject to Indian income tax examinations for all tax years beginning in 2023.

 

The Company evaluates uncertain tax positions which requires significant judgments. We believe that we have established an adequate allowance for our uncertain tax positions, although we can provide no assurance that the final outcome of these matters will not be materially different. To the extent that the final outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. A summary of changes in the Company's gross unrecognized tax benefits for the years ended December 31, 2025 and 2024 is as follows.

 

 

 

As of December 31,

 

 

 

2025

 

 

2024

 

Unrecognized tax benefits - January 1

 

$

1,212

 

 

$

3,817

 

Gross increases - tax positions in prior period

 

 

-

 

 

 

-

 

Gross decreases - tax positions in prior period

 

 

-

 

 

 

(2,605

)

Gross increases - tax positions in current period

 

 

-

 

 

 

-

 

Settlement

 

 

-

 

 

 

-

 

Lapse of statute of limitations

 

 

-

 

 

 

-

 

Unrecognized tax benefits - December 31

 

$

1,212

 

 

$

1,212

 

Unrecognized tax benefits - December 31 (tax-effected)

 

$

339

 

 

$

339

 

 

The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefit as a component of income tax expense. The Company has not accrued penalties and interest as of December 31, 2025.