v3.26.1
Note 14 - Income Taxes
 12 Months Ended
Dec. 31, 2025
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

14.

INCOME TAXES

 

The provision for income taxes consists of the following:

 

  

2025

  

2024

 

Current:

        

Federal

  -   - 

State

 $10  $14 

Foreign

  (164)  199 

 

  (154)  213 

Deferred:

        

Federal

  -   - 

State

  -   - 

Foreign

  (252)  (307)
   (252)  (307)

 

        

Net benefit

 $(406) $(94)

 

The components of loss from continuing operations before provision for income taxes consists of the following:

 

 

Year Ended December 31,

 
 

2025

 

2024

 
       

United States

$19,975 $10,537 

International

 7,434  839 
Total$27,409 $11,376 

 

The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes, (computed by applying the United States Federal tax rate of 21% to loss before taxes). The following is a reconciliation of the Company’s effective tax rate on income and the statutory rate for the year ended December 31, 2025.

 

  

December 31, 2025

 
  

$

  

%

 

Tax benefit at the U.S. statutory rate

 $(5,756)  21.00%

State and local income tax (net of FBOS)

  457   (1.67)%

Change in Valuation Allowance

  3,598   (13.13)%

Nontaxable or nondeductible items

  (5)  0.02%

Foreign tax effects:

        

Serbia:

        

Goodwill impairment

  995   (3.63)%

Rate differential

  446   (1.63)%

Prior year deferred true-up

  (223)  0.82%

Other

  (73)  0.27%

Other:

        

Prior Year True-Up

  155   (0.57)%

Total

 $(406)  1.48%

 

As previously disclosed, prior to the adoption of ASU 2023-09, the difference between the provision (benefit) for income taxes and the amount computed by applying the U.S. federal income tax rate for the year ended December 31, 2024 is as follows:

 

  

Year Ended December 31,

 
  

2024

 

Computed “expected” tax expense (benefit)

 $(2,389)

State taxes, net of federal benefit

  (761)

Change in FV of Contingent Consideration

  (982)

Non-deductible stock options

  336 

Non-deductible items

  11 

Foreign tax rate differential

  69 

True-up to tax return

  210 

Change in deferred tax asset valuation allowance

  3,412 

Total

 $(94)

 

Deferred income taxes reflect the net 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. The effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities are as follows:

 

  

Year Ended December 31,

 
  

2025

  

2024

 

Deferred tax assets:

        

Stock options

 $1,531  $1,081 

Deferred Revenue

  223   151 

Capitalized R&D

  600   828 

Patents/Intangible Assets

  2,589   1,424 

Lease Liability

  300   456 

Other

  444   310 

Net operating loss carryforward

  26,446   22,167 

Total gross deferred tax assets

  32,133   26,417 

Less: Deferred tax asset valuation allowance

  (31,810)  (25,913)

Total net deferred tax assets

  323   504 
         

Deferred tax liabilities:

        

ROU Asset

  (290)  (442)

Depreciation

  (1,236)  (1,352)

Total deferred tax liabilities

  (1,526)  (1,794)
         

Total net deferred taxes

 $(1,203) $(1,290)

 

As a result of the Company’s history of incurring operating losses, a valuation allowance has been established. The valuation allowance at December 31, 2025 was $31.8 million. The increase in the valuation allowance during 2025 was $5.9 million which was all recorded through deferred taxes.

 

At December 31, 2025, the Company has a Federal net operating loss carry forward of $92.8 million, of which $25.1 million is available to offset future net income through 2037. The net operating loss (“NOL”) expires during the years 2027 to 2037 and $67.7 million may be carried forward indefinitely and limited to offsetting 80% of taxable income. At December 31, 2025, the Company has a state net operating loss carryforward of $97.2 million and no foreign net operating loss carry forward. The utilization of the net operating loss carryforwards is dependent upon the ability of the Company to generate sufficient taxable income during the carryforward period. In the event that a significant change in ownership of the Company occurs as a result of the Company’s issuance of common stock, the utilization of the NOL carry forward will be subject to limitation under certain provisions of the Internal Revenue Code. Management does not presently believe that such a change has occurred.

 

No liability related to uncertain tax positions is recorded on the financial statements related to uncertain tax positions. There are no unrecognized tax benefits as of December 31, 2025. The Company does not expect that uncertain tax benefits will materially change in the next 12 months.

 

The Company will file U.S. Federal, California, Illinois, Michigan, New York, Tennessee, Texas and Wisconsin State tax returns, and a New York City tax return. All tax returns will remain open for examination by the Federal and State taxing authorities for three and four years, respectively, from the date of utilization of any net operating loss carryforwards. 

 

The cash paid for income tax (net of refunds) during the year consists of $6 thousand for state income taxes and $4 thousand for foreign income taxes. Domestic income taxes included $3 thousand for New York City, $1 thousand for New York State, and $2 thousand for Texas. Foreign income taxes included $4 thousand for Serbia.