TAX |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| TAX | |
| TAX | NOTE 15 – TAX Management estimates the Company’s 2026 effective tax rate to be 0% based on the Company’s year-to-date pretax loss, cumulative loss position, historical operating losses, and other available evidence supporting the continued need for a full valuation allowance against its net deferred tax assets. Although the Company reported net income for the second quarter of 2026, such income was the direct result of an unrealized gain on an equity investment that is reflected as a temporary difference for tax purposes. Accordingly, no income tax expense or benefit has been recorded for the three- and six-month periods ended June 30, 2026. Mexico Tax Assessment In 2015, the Mexican tax authority (“SAT”) initiated an audit of USAMSA’s 2013 income tax return. In October 2016, as a result of its audit, SAT assessed the Company $13.8 million pesos, which was approximately $666,400 in U.S. Dollars (“USD”) as of December 31, 2016. SAT’s assessment was based on the disallowance of specific costs that the Company deducted on the 2013 USAMSA income tax return. The assessment was settled in 2018 with no assessment due from the Company. In 2019, the Company was notified that SAT re-opened its assessment of USAMSA’s 2013 income tax return and, in November 2019, SAT assessed the Company $16.3 million pesos, which was approximately $865,000 USD as of December 31, 2019. Management reviewed the 2019 assessment notice from SAT and, similar to the earlier assessment, believed the findings have no merit. An appeal was filed by the Company in November 2019 suspending SAT from taking immediate action regarding the assessment. In August 2020, the Company filed a lawsuit against SAT for resolution of the process and, in December 2020, filed closing arguments. In 2022, the Mexican court ruled against the Company in the above matter, which was subsequently appealed by the Company. In March 2024, Mexico’s appellate court ruled in favor of the Company with no assessment due related to this audit of USAMSA’s 2013 income tax return by SAT and instructed the lower court to issue a new ruling. In May 2024, Mexico’s lower court issued a final ruling on this matter in favor of the Company but left open the possibility for the SAT to re-open their audit. Subsequent to this judgment, the Company requested a final ruling on whether SAT can re-open this matter. In January 2026, the Federal Administrative Justice Court (Tribunal Federal de Justicia Administrativa, “TFJA”) issued a final judgment in favor of the Company with respect to the SAT’s reassessment of USAMSA’s 2013 income tax return. The TFJA declared both the underlying tax credit and the related administrative appeal resolution invalid, including prior assessments and associated interest, penalties, and additional employee profit sharing. The ruling addressed the substantive merits of the case and determined that the Company was not subject to the obligations asserted by SAT. As a result of this final judgment, the matter is considered resolved with no amounts due from the Company. This resolution had no impact on the Company’s consolidated financial statements, as no liability had been recorded in connection with this matter. Mexico Import Value Added Tax USAMSA recorded a receivable of $2,955,899 and $1,875,771 at June 30, 2026 and December 31, 2025, respectively, for the Import Value Added Tax (“IVA tax” or “VAT”) it pays on certain goods and services representing amounts to be reimbursed from the Mexican government. USAMSA recorded full reserves against its IVA tax receivable balances at June 30, 2026 and December 31, 2025, respectively, resulting in net IVA tax receivables of zero at both period ends. |