Note 7. Income Taxes

The Company recorded a consolidated income tax benefit of $0.1 million and income tax expense of $0.1 million during the three and nine months ended September 30, 2026, respectively. For the three months ended September 30, 2026, the Company recorded Canadian current tax expense and Canadian deferred tax benefit related to provincial and federal operational activity. Additionally, the Company recognized a discrete quarterly withholding deferred tax benefit resulting from a decrease in the Canadian withholding-related deferred tax liability associated with the expected future repatriation of net proceeds from Canadian assets. This quarterly benefit serves to reduce the cumulative year-to-date withholding deferred tax expense recognized during the nine months ended September 30, 2026. No U.S. federal or state current income tax expense was recorded, and no U.S. deferred tax benefit was recognized because the Company maintains a full valuation allowance against its U.S. deferred tax assets. For U.S. reporting under the interim tax provision methodology, tax effects related to ordinary operations are reflected using the year-to-date actual effective tax rate approach in accordance with ASC 740-270-30-18, as a reliable estimate of the full-year annual effective tax rate could not be determined due to uncertainty of forecasted results as a result of recent business shifts, including the sale of its reinsurance business and the exit from the digital assets business. The tax effects of discrete items are recognized in the period in which they occur. As of September 30, 2026, the Company was in an overall U.S. taxable loss position; accordingly, no U.S. current tax provision was required. In addition, although these losses would otherwise give rise to deferred tax assets, no U.S. deferred tax benefit or expense was recognized because such tax attributes remain fully offset by a valuation allowance.

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. The Company considers the scheduled reversal of taxable temporary differences, projected future taxable income and tax planning strategies in making this assessment. A cumulative loss in a particular tax jurisdiction in recent years is a significant piece of evidence with respect to the realizability that is difficult to overcome. Based on the available objective evidence, including recent updates to the taxing jurisdictions generating income, the Company concluded that a valuation allowance should be recorded against all of the Company’s U.S. tax jurisdiction deferred tax assets as of September 30, 2026 and December 31, 2025. The Canadian deferred tax benefit remains recorded for the period ended September 30, 2026, there is no valuation allowance in Canada and the benefit is a result of the decrease in the deferred tax liability during the quarter.

For taxable years beginning after December 31, 2025, the One Big Beautiful Bill Act renamed and modified the GILTI regime as net CFC tested income (“NCTI”). Under Section 951A of the Internal Revenue Code, U.S. shareholders generally include their pro rata share of CFC tested income, without the former deduction for a deemed return on qualified business asset investment. A high-tax exception may be available for income subject to an effective foreign tax rate greater than 18.9%, subject to applicable requirements. Domestic corporations may generally deduct 40% of NCTI under Section 250, subject to limitations. The Company considered these provisions in determining its income tax provision and estimated an NCTI inclusion for the nine months ended September 30, 2026. After giving effect to the estimate, the Company would remain in a net loss position and would have no taxable income for the period.

Changes in tax laws may affect recorded deferred tax assets and liabilities and the Company’s effective tax rate in the future. In July of 2025, the One Big Beautiful Bill Act was enacted and made significant changes to Federal tax laws. The effects of these changes relate to deferred tax assets and net operating losses; all of which are offset by valuation allowance. There were no material income tax consequences of the recently enacted laws on the reporting period of these financial statements.

The Company is subject to possible examinations not yet initiated for Federal purposes for the fiscal years 2023, 2024, or 2025. The returns were filed in October 2024, October 2025, and October 2026, respectively, and generally remain open to assessment until the corresponding filing-date anniversaries in October 2027, October 2028, and October 2029, subject to applicable extensions and statutory exceptions. The Company is also subject to possible examinations for state and local purposes. In most cases, these examinations in the state and local jurisdictions remain open based on the particular jurisdiction’s statute of limitations. There were no material changes to unrecognized tax benefits during the first nine months of 2026.