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INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The Company recorded a federal income tax loss fully related to its U.S.-based jurisdictions for the years ended December 31, 2025 and 2024, respectively. As a full valuation allowance is recorded against all of the deferred tax assets, the Company did not record a federal provision for income tax or benefits during the years ended December 31, 2025 and 2024. The provision for income taxes for the year ended December 31, 2025 relates to state income taxes.
A reconciliation of the Company’s statutory income tax rate to the Company’s effective income tax rate is as follows:

Years Ended Year Ended December 31, 2025Years Ended Year Ended December 31, 2024
AmountPercent
Amount
Percent
Pretax income (loss) before income taxes$1,684 $(25,772)
US federal statutory tax rate 354 21.0%(5,412)21.0%
State and local income taxes, net of federal benefit 223 13.2%111 (0.4%)
Change in valuation allowance 2,991 177.6%5,455 (21.2%)
Nontaxable or nondeductible Items:
Other (37)(2.2%)(456)1.8%
Transaction costs 625 37.1%— —%
Debt modification(868)(51.5%)— —%
Gain on derivative liability (3,654)(217.0%)— —%
Stock compensation 685 40.7%$445 (1.7%)
Total$319 18.9%$143 (0.5%)

The Company’s effective tax rate includes the effects of state and local income taxes, net of the federal income tax benefit, which are primarily attributable to Arizona, Florida, Maryland, and North Carolina where the Company has significant business activities. These states have higher effective tax rates compared to other jurisdictions where the Company operates, and together, they account for more than half of the Company’s total state tax expense.
The components of deferred tax assets and liabilities are as follows:
Year Ended Year Ended December 31,
20252024
Deferred tax assets:
Accruals and reserves$1,410 $1,811 
Net operating loss carryforwards52,856 30,814 
Section 163(j) interest carryforward398 11,281 
Stock options538 1,183 
Lease liabilities111 158 
Total deferred tax asset before valuation allowance55,313 45,247 
Valuation allowance(44,805)(44,495)
Deferred tax asset - net of valuation allowance10,508 752 
Deferred tax liabilities:
Depreciation and amortization(10,411)(144)
Right-of-use assets(97)(608)
Total deferred tax liabilities(10,508)(752)
Net deferred tax asset (liability)$— $— 
As of December 31, 2025 and 2024, the Company had a U.S. federal net operating loss carryforward of $234.2 million and $124.8 million, respectively. As of December 31, 2025 and 2024, the Company has state net operating loss (“NOL”) carryforwards of $69.1 million and $91.0 million, respectively. Of the $234.2 million of federal NOL carryforwards, $22.5 million begins to expire in 2033 and $211.7 million may be carried forward indefinitely. The state NOL carryforwards begin to expire in 2025.
Future realization of the tax benefits of existing temporary differences and NOL carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period. As of December 31, 2025 and 2024, the Company performed an evaluation to determine whether a valuation allowance was needed. The Company considered all available evidence, both positive and negative, which included the results of operations for the current and preceding years. The Company determined that it was not possible to reasonably quantify future taxable income and determined that it is more likely than not that all of the deferred tax assets will not be realized. Accordingly, the Company maintained a full valuation allowance as of December 31, 2025 and 2024.
Under Internal Revenue Code Section 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. We conducted an ownership analysis under IRC Section 382 as of December 31, 2025 and determined that there have been multiple ownership changes with the most recent being November 3, 2025. These ownership changes generate a limit on the pre-change tax attributes and may cause some tax attributes to expire unutilized. The Company has maintained a valuation allowance against its tax attributes given the uncertainty of being able to utilize them. Additionally, the pending strategic merger with CCFI and Aaron's could create future limitations on the utilization of our tax attributes and the Company will continue to monitor going forward.
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations for both federal taxes and the many states in which we operate or do business in. ASC 740 states that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits.

The Company records uncertain tax positions as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. As of December 31, 2025 and 2024, we have not recorded any uncertain tax positions in our financial statements.
The Company recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations and comprehensive income (loss). As of December 31, 2025 and 2024, no accrued interest or penalties are included on the related tax liability line in the consolidated balance sheet.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. The Company's tax years are still open under statute from December 31, 2022, to the present.

The following summarizes the Company’s income taxes paid (net of refunds received) for the years presented below:

Year Ended December 31,
20252024
Federal$— $— 
State106 226 
Foreign— — 
Total$106 $226 

The following summarizes the jurisdictions that exceeded 50% of the Company’s total income taxes paid (net of refunds) for the years presented below (in thousands):

Year Ended December 31,
20252024
California$— $12 
Illinois— 42 
Massachusetts9 — 
North Carolina14 14 
New Hampshire7 — 
Pennsylvania— 58 
Texas48 40 
Other28 60 
Total
$106 $226