Note 11 - Income Taxes |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Notes to Financial Statements | |
| Income Tax Disclosure [Text Block] |
NOTE 11: INCOME TAXES
The Company’s deferred tax assets are primarily related to net federal and state operating loss carryforwards (“NOLs”). The Company has substantial NOLs that are limited in usage by IRC Section 382. IRC Section 382 generally imposes an annual limitation on the amount of NOLs that may be used to offset taxable income when a corporation has undergone significant changes in stock ownership within a statutory testing period. The Company has performed a preliminary analysis of the annual NOL carryforwards and limitations that are available to be used against taxable income. Deferred tax assets are evaluated quarterly for recoverability based on available positive and negative evidence. Based on the history of losses the Company continues to maintain a full valuation allowance against U.S. deferred tax assets with definite lives as management determined that realization of such assets does not meet the more-likely-than-not threshold. In Canada, while CDM is in an overall net deferred tax liability position, a partial valuation allowance has been established against specific net operating loss carryforwards that are not expected to be realized due to statutory restrictions and limitations on future utilization.
For interim periods, the Company has historically utilized the estimated annual effective tax rate method under which the Company determined its provision for income taxes based on the current estimate of its annual effective tax rate. For the six months ended June 30, 2026, the Company utilized the discrete effective tax rate method, as allowed under ASC 740, Income Taxes—Interim Reporting when the application of the estimated annual tax rate method is impractical and does not provide a reliable estimate of the annual effective tax rate. The discrete method treats the year-to-date period as if it were the annual period and determines the interim income taxes on that basis. The Company determined that since small changes in estimated annual pre-tax (loss) income would result in significant changes in the estimated annual effective tax rate and significant variations in the customary relationship between the benefit (expense) from income taxes and pre-tax accounting (loss) income, the historical method would not provide a reliable estimate of the effective tax rate for the six months ended June 30, 2026. The Company will reevaluate the use of this method until the Company believes a return to the estimated annual effective tax rate method is deemed appropriate.
For the three months ended June 30, 2026 and 2025, the Company recorded income tax benefit of $315 and $26, respectively. For the six months ended June 30, 2026 and 2025, the Company recorded income tax benefit (expense) of $845 and ($73), respectively. At June 30, 2026, the net deferred tax liabilities were $627 after valuation allowance, compared to net tax liabilities of $3,541 at December 31, 2025.
|