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INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES
14. INCOME TAXES
Income (loss) before provision for income taxes, by tax jurisdiction, was as follows, during the year ended December 31, 2025 and 2024:
Year Ended December 31,
20252024
United States$(65,328)$(982)
The provision for income taxes for the years ended December 31, 2025 and 2024, consisted of the following:
Year Ended December 31,
20252024
Current:
Federal$150 $— 
State725 159 
Total current875 159 
Deferred:
Federal162 270 
State(142)(109)
Total deferred20 161 
Provision for income taxes$895 $320 
Cash paid for income taxes, net of refunds, during the year ended December 31, 2025 and 2024 was as follows:
Year Ended December 31,
20252024
U.S. Federal income taxes, net$— $— 
State and local income taxes, net131 — 
Total cash paid for income taxes$131 $— 
Our federal and state income tax payments, net of refunds, were $0.1 million in 2025, attributable solely to Texas and zero in 2024.
A reconciliation of the provision for income taxes to the amount computed by applying the 21.0% statutory U.S. federal income tax rate to the income before income taxes after the adoption of ASU 2023-09 is as follows:
Year ended December 31, 2025
AmountPercent
Computed income taxes at the statutory rate$(13,719)21.0 %
Other Perm165 (0.3)%
Warrant Liability - Mark-to-market change1,244 (1.9)%
Nondeductible Interest Expense1,322 (2.0)%
Change in Valuation Allowance11,140 (17.1)%
Uncertain Tax Positions647 (1.0)%
State Income Tax32 — %
Other64 (0.1)%
$895 (1.4)%
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to the income before income taxes for the year prior to the adoption of ASU 2023-09 is as follows:
Year Ended December 31,
2024
Federal statutory income tax rate21 %
Computed income tax provision at federal statutory rate$(206)
State income tax(2,037)
Uncertain tax position1,889 
Mark-to-market change on warrants(8,056)
Nondeductible interest811 
Other nondeductible expenses161 
Equity based compensation(97)
Valuation allowance7,833 
Other22 
Provision for income taxes$320 
The final determination of our income tax liability may be materially different from our income tax provision. Significant judgment is required in determining our provision for income taxes. Our calculation of the provision for income taxes is subject to our interpretation of applicable tax laws in the jurisdictions in which we file. In addition, our income tax returns are subject to periodic examination by the Internal Revenue Service and other taxing authorities. As of December 31, 2025, the Company had no open income tax examinations.
The components of deferred tax assets and deferred tax liabilities at December 31, 2025 and 2024, were as follows:
 December 31, 2025December 31, 2024
Deferred tax assets:
Intangible assets$25,097 $20,873 
Lease liability11,702 12,666 
Interest deduction carryforward8,727 6,492 
Stock compensation10 30 
Net operating losses19,090 11,925 
Property and equipment— 38 
Other1,841 1,438 
Valuation allowance(45,713)(32,956)
Total deferred tax assets20,754 20,506 
Deferred tax liabilities  
Indefinite-lived intangible assets(11,073)(9,721)
Right of use asset(12,432)(13,720)
Property and equipment(204)— 
Total deferred tax liabilities(23,709)(23,441)
Net deferred tax liabilities$(2,955)$(2,935)
A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset (“DTA”) will not be realized. The Company has considered future taxable income and ongoing prudent and feasible tax-planning strategies in assessing the need for the valuation allowance. As of December 31, 2025 and 2024, the Company recorded a valuation allowance against its DTAs, because the Company's management determined that it was more likely than not that certain assets would not be fully realized.
The Company records certain deferred tax liabilities (“DTLs”) related to indefinite-lived intangibles that are not expected to reverse during the carry-forward period. These DTLs can be considered a source of future taxable income to support realization of net operating losses (“NOLs”) that do not expire and DTAs that upon reversal would give rise to NOLs that do not expire. With this consideration, the total valuation allowance recorded at December 31, 2025 and 2024, was $45.7 million and $33.0 million, respectively, resulting in a net $3.0 million and $2.9 million DTL, respectively. The change in valuation allowance from $33.0 million to $45.7 million is primarily the result of additional NOLs and DTAs generated in 2025.
As of December 31, 2025, the Company has $70.5 million of federal NOLs and $68.5 million of state NOLs available to offset future taxable income. The federal NOLs do not expire. Certain state NOL carryforwards begin expiring in the year ending December 2039.
Accounting Standards Codification paragraph 740-10 clarifies the accounting for uncertainty in income taxes by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken within a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest benefit that is greater than 50 percent likely of being realized upon ultimate settlement. As of December 31, 2025 and 2024 the estimated value of the Company's net uncertain tax positions was approximately $7.7 million and $0.4 million, respectively, all of which is reported as a noncurrent liability. The following is a tabular reconciliation of the total amounts of gross unrecognized tax benefits for the years ended December 31, 2025 and 2024:
 December 31, 2025December 31, 2024
Gross unrecognized tax benefit - opening balance$390 $390 
Gross increases - tax position prior year7,278 — 
Gross increases - tax position current year— — 
Decreases relating to settlement with taxing authorities— — 
Gross decreases - lapse of applicable statute of limitation— — 
Gross unrecognized tax benefit - ending balance$7,668 $390 
All of the unrecognized tax benefits as of December 31, 2024, if recognized, would reduce the Company’s provision for income taxes. Of the $7.7 million of unrecognized tax benefits as of December 31, 2025, $1.8 million, if recognized, would reduce the Company’s provision for income taxes. Due to the uncertain and complex application of tax regulations, it is possible that the ultimate resolution of audits may result in liabilities that could be different from this estimate. In such case, the Company will record additional tax expense or tax benefit in the tax provision, or reclassify amounts on the accompanying consolidated balance sheets in the period in which such matter is effectively settled with the taxing authority.
The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. Related to the uncertain tax positions noted above, the Company accrued $165 thousand of interest and $489 thousand of penalties during the current year.