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

NOTE 14. INCOME TAXES

 

(Loss) income before income taxes for the years ended December 31, 2025, and 2024, was attributable to the following regions:

          
   December 31,
2025		   December 31,
2024		 
Domestic  $(7,426)  $14,927 
Foreign   737    90 
Total (loss) income before income taxes  $(6,689)  $15,017 

 

(Benefit) provision for income taxes for the years ended December 31, 2025, and 2024, consisted of the following:

               
   

December 31,

2025

    

December 31,

2024

  
Current:                
Federal tax on income   $  (772 )   $  2,230  
State and local, net of federal benefit     186       997  
Foreign     457       988  
Total current     (129 )     4,215  
Deferred:                
Federal tax on income     199       838  
State and local, net of federal benefit     (725 )     (320 )
Total deferred     (526 )     518  
Total (benefit) provision for income taxes   $ (655 )   $ 4,733  

 

The following presents a reconciliation of the income tax provision based on the U.S. Federal statutory tax rate to the total effective tax rate:

                    
   December 31, 2025   December 31, 2024 
   Amount   %   Amount   % 
U.S. federal statutory rate  $(1,405)   21.0%  $3,154    21.0%
State income tax, net of federal benefit                    
California   (50)   0.8    33    0.2 
Florida   (101)   1.5    65    0.4 
Georgia   (46)   0.7    –    – 
Illinois   (79)   1.2    45    0.3 
New Jersey   (43)   0.6    33    0.2 
Pennsylvania   (54)   0.8    –    – 
Texas   150    (2.2)   60    0.4 
Others   (355)   5.3    230    1.5 
Foreign tax effects:                    
El Salvador                    
Statutory tax rate difference between El Salvador and U.S.   95    (1.4)   28    0.2 
Other   141    (2.1)   118    0.8 
Other foreign                    
Statutory tax rate difference between other foreign and U.S.   (23)   0.4    (18)   (0.1)
Other   90    (1.3)   64    0.4 
Change in valuation allowance   1,063    (15.8)   967    6.4 
Tax credits – Foreign tax credits   –    –    (776)   (5.2)
Non-taxable or non-deductible items   101    (1.5)   51    0.3 
Other adjustments – return to provision   (116)   1.7    –    – 
Other adjustments – amended returns   (23)   0.3    –    – 
Other adjustments – withholding taxes   –    –    

776

    

5.2

 
Other adjustments - Other   –    –    (97)   

(0.5

)
   $(655)   9.8%  $4,733    31.5%

 

The Company’s effective tax rate (“ETR”) for the years ended December 31, 2025, and 2024, was 9.8% and 31.5%, respectively. The ETR for the year ended December 31, 2025 of 9.8% was due primarily to the recording of a valuation allowance on deferred tax assets, partially offset by state income tax expense and prior year true-ups, while the ETR for the year ended December 31, 2024, of 31.5%, (which was higher than the U.S. statutory rate of 21.0%) was due primarily to (i) foreign income tax expense (ii) state income tax expense, and (iii) valuation allowance on foreign tax credit deferred tax assets.

 

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. The tax effects of the temporary differences and carryforwards that give rise to deferred tax assets and deferred tax liabilities consist of:

          
   December 31,
2025		   December 31,
2024		 
Deferred tax asset:          
Foreign tax credit  $1,645   $2,346 
Net operating loss carryforward   329    2 
Lease liability   7,322    8,595 
Other   2,526    1,099 
Gross deferred tax assets   11,822    12,042 
           
Deferred tax liability:          
Depreciation and amortization   (1,483)   (2,015)
Right to use asset   (7,318)   (8,595)
Gross deferred tax liability   (8,801)   (10,610)
           
Less: valuation allowance   (3,409)   (2,346)
           
Total net deferred tax liabilities  $(388)  $(914)

 

A valuation allowance of $3,409 and $2,346 was recorded against the Company’s net deferred tax asset balance as of December 31, 2025, and 2024, respectively. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. On the basis of this evaluation, a portion of the deferred tax asset in 2025 is not more likely not to be realized. The valuation allowance included allowances related to foreign tax credits and other various accruals. As of December 31, 2025, and 2024, the Company has no federal loss carryforwards available to offset federal taxable income, and state loss carryforwards available to offset future state taxable income in the amounts of $7,293 and $74, respectively. As of December 31, 2025, and 2024, the Company also has carryforwards available for credits from taxes paid in foreign jurisdictions of $1,645 and $2,346, respectively.

 

The following table represents the change in valuation allowance:

          
   December 31,
2025		   December 31,
2024		 
Valuation allowance – beginning of period  $2,346   $1,379 
Allowance taken   1,063    967 
Valuation allowance – end of period  $3,409   $2,346 

 

Net cash paid for income taxes consisted of the following:

          
   December 31,
2025		   December 31,
2024		 
Federal  $602   $3,853 
Aggregates state and local jurisdictions   251    278 
Disaggregate state and local jurisdictions:          
Texas   150    – 
Maryland   50    15 
Arkansas   60    – 
Massachusetts   45    – 
Pennsylvania   20    78 
Arizona   21    42 
Florida   –    402 
New Jersey   10    160 
Illinois   –    155 
Minnesota   –    120 
Foreign   622    1,077 
Net cash paid for income taxes  $1,831   $6,180 

 

The Company is unaware of any uncertain tax positions that could result in significant additional payments, accruals, or other material deviation in this estimate over the next year.

 

Activity related to the Company’s uncertain tax positions consisted of the following:

          
    

December 31,

2025

    

December 31,

2024

 
    (in thousands) 
Balance, beginning of year  $–   $– 
Increase to tax positions taken during the current year   –    – 
Decrease to tax positions taken during the prior year   –    – 
Balance, end of year  $–   $– 

 

Major tax jurisdictions are the United States and El Salvador. All of the tax years will remain open three and four years for examination by the Federal and state tax authorities, respectively, from the date of filling of the income tax returns. There are no tax audits in process with any tax authority.