v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

 

15. Income Taxes

 

The provision for income taxes consisted of the following for the years ended December 31 (in thousands):

 

   2025   2024 
Current          
State  $3   $3 
Foreign   5    22 
Provision for income taxes  $8   $25 

 

Loss before income taxes was as follows for the years ended December 31 (in thousands):

  

   2025   2024 
United States  $(1,540)  $(9,598)
Foreign   (140)   (121)
Total  $(1,680)  $(9,719)

 

The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes are as follows:

 

   2025   2024 
Federal statutory rate   21%   21%
Effect of:          
Permanent differences   18.13    (0.14)
Foreign taxes   0.23    - 
Stock Compensation   -    (2.33)
True up   (4.98)   - 
State income taxes, net of federal benefit   9.16    3.71 
Change in valuation allowance   (42.97)   (24.19)
Other, net   (1.11)   1.52 
Provision for income taxes   (0.54)%   (0.43)%

 

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred income taxes were as follows (in thousands):

 

   2025   2024 
Federal and state net operating loss carryforwards  $19,621   $18,965 
Stock-based compensation   408    303 
Other, net   297    336 
Total deferred tax asset   20,326    19,604 
Valuation allowance   (20,326)   (19,604)
Net deferred tax asset  $-   $- 

 

We continue to experience significant losses in our U.S. operations that are material to our decision to maintain a full valuation allowance against our net U.S. deferred tax assets. This is due to the fact that the relevant accounting guidance puts more weight on the negative objective evidence of cumulative losses in recent years than the positive subjective evidence of future projections of pretax income. For the years ended December 31, 2025 and December 31, 2024, the valuation allowance increased by $0.7, and $0.5, respectively.

 

We continually analyze the realizability of our deferred tax assets, but we reasonably expect to continue to record a full valuation allowance on future U.S tax benefits until we sustain an appropriate level of taxable income through improved U.S. operations and tax planning strategies.

 

 

At December 31, 2025, we had net operating loss carryforwards for federal and state income tax purposes of $54,865,311 and $21,438,990 respectively, which expire at various times commencing 2026. We also had net operating loss carryforwards for federal and state income tax purposes of $28,433,173, and $3,094,477 respectively, that may be carried forward indefinitely. Net operating loss carryforwards may be subject to certain limitations under Section 382 of the Internal Revenue code.

 

There are no uncertain tax positions to recognize as of December 31, 2025 and 2024.

 

We are no longer subject to U.S. Federal examination for tax years ending before 2021, to state examinations before 2020, or to foreign examinations before 2020.

 

However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses or tax credits were generated and carried forward and make adjustments up to the amount of the net operating losses or credit carryforward. As of December 31, 2025, we were not under examination by a tax authority. The net operating losses for prior years are subject to adjustment under examination to the extent they remain unutilized in an open year.