Income Taxes |
3 Months Ended |
|---|---|
Mar. 31, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | NOTE 7 – INCOME TAXES
The Company accounts for income taxes under ASC 740, Income Taxes, which require the recognition of deferred tax assets and liabilities for temporary differences between condensed consolidated financial statements carrying amounts and tax bases of assets and liabilities. During the three months ended March 31, 2026, we generated federal net operating losses (“NOL”) of $6.3 million and foreign NOL carryforwards of $0.5 million. As of March 31, 2026, we had consolidated income tax NOL carryforwards for federal tax purposes of approximately $218.4 million and net operating loss carryforwards for foreign income tax purposes of approximately $29.7 million. From 2026 through 2027, approximately $26.4 million of the NOL will expire, and from 2028 through 2037, approximately $128.0 million of the NOL will expire. The NOL generated in 2018 through 2026 of approximately $64.0 million will be carried forward indefinitely. Of the foreign NOL, $26.4 million has a limited carryforward period and will begin to expire in 2026. During the fourth quarter of 2025, the Company experienced an ownership change involving a 5‑percent shareholder that resulted in an increase in ownership in excess of 50 percentage points, as defined under Section 382 of the Internal Revenue Code. Based on this ownership change, which occurred on October 14, 2025, not including the effects of the Proposed Merger, the Company currently expects that the utilization of certain pre‑change tax attributes, including net operating loss and tax credit carryforwards, may become subject to limitation under Section 382 and similar state income tax provisions. The Company is in the process of completing an analysis to determine the extent of any such limitations and the resulting impact on its deferred tax assets and valuation allowances. As of the reporting date, the Company has not completed the calculation of the Section 382 limitation, and therefore no adjustments related to this matter have been reflected in the accompanying condensed consolidated financial statements. However, given the full valuation allowance recorded due to cumulative losses and lack of positive evidence that the existing deferred tax assets will be realizable, the impact of any Section 382 limitation on the existing tax attributes would not change the Balance Sheet and income tax footnote as currently reported. In addition, the Company has evaluated the impact of the aforementioned ownership change that occurred on October 14, 2025 and the resulting potential limitation under Section 382 of the Internal Revenue Code on its uncertain tax positions. As of the reporting date, the Company has not recorded any changes to its unrecognized tax benefits related to the Section 382 limitation. The Company is currently in a book plus permanent deduction loss position of $6.3 million for the three months ended March 31, 2026, and expects to remain in a book plus permanent deduction loss position for the full year ending December 31, 2026. As a result, the potential limitation of net operating loss carryforwards under Section 382 is not expected to affect the timing or amount of cash tax payments or tax positions taken in the current period. The Company will continue to reassess the impact of the Section 382 limitation on its uncertain tax positions as taxable income is generated or additional information becomes available. |