Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provision for income taxes consists of the following (amounts in thousands):
December 31,
2025 2024
Current provision:
Federal $ —  $ — 
State 91  85 
Total current 91  85 
Deferred expense (benefit):
Federal 45  (998)
State (51) (109)
Total deferred (6) (1,107)
Income tax expense (benefit) $ 85  $ (1,022)
A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate consists of the following (amounts in thousands):
For the Years Ended December 31,
2025 2024
Provision for federal income taxes at statutory rates $ (4,246) 21  % $ (4,761) 21  %
Provision for state income taxes, net of federal benefit* 31 —  % (19) —  %
Change in valuation allowance 2,479 (12) % 252 (1) %
Nondeductible expenses 0 —  % 350 (2) %
Nondeductible book goodwill disposed 875 (4) % 0 —  %
Nondeductible meals and entertainment 18 —  % 0 —  %
Other nondeductible expenses 1 —  % 0 —  %
Stock compensation adjustments 927 (5) % 3,287 (14) %
Other —  —  % (131) 1  %
Income tax expense (benefit) $ 85  —  % $ (1,022) 5  %
Effective Tax Rate (0.4)% 4.5%  
*The jurisdiction that contributes to the majority of the tax effect in this category is Texas.
The tax effects of the temporary differences and carryforwards that give rise to the deferred tax assets consist of the following (amounts in thousands):
December 31,
2025 2024
Deferred tax assets
Net operating loss carryforward $ 13,682  $ 12,564 
Property and equipment 167  139 
Reserves 1,029  587 
Share-based compensation 369  1,229 
Interest expense carryforward 300  173 
Research and development credits 35  35 
Lease liability 1,151  1,095 
Basis in partnership 13  2 
Internally developed software 910  12 
Charitable contributions carryover 34  34 
Total deferred tax assets 17,690  15,870 
Deferred tax liabilities    
Intangibles (580) (1,512)
Right-of-Use assets (970) (870)
Prepaid expenses (379) (374)
Total deferred tax liabilities (1,929) (2,756)
Valuation allowance (15,803) (13,162)
Deferred tax liability, net $ (42) $ (48)
The income taxes paid (net of refunds) by jurisdiction are set forth below:
Year Ended December 31,
2025 2024
Federal $ —  $ — 
State* 68  2 
Total $ 68  $ 2 
*For the year ended December 31, 2025, all income tax payments related to state income taxes. The majority of state income tax payments were made to the State of Texas.
As of December 31, 2025, and December 31, 2024, the Company had federal net operating loss carryforwards of approximately $59.2 million and $54.6 million and state net operating loss carryforwards of approximately $33.5 million and $28.9 million, respectively. Federal net operating losses in the amount of $58.2 million carryforward indefinitely; the remainder are subject to expiration beginning in 2035. Unused state net operating losses will begin to expire in 2032. Utilization of the net operating loss carryforwards may be subject to an annual limitation according to Section 382 of the Internal Revenue Code of 1986 as amended, and similar provisions.
The Company applies the standards on uncertainty in income taxes contained in ASC Topic 740, Accounting for Income Taxes. The adoption of this interpretation did not have any impact on the Company’s consolidated financial statements, as the Company did not have any significant unrecognized tax benefits during the years ended December 31, 2025 and 2024. Due to the Company's carryforward of net operating losses the statute of limitations remains open subsequent to and including the year ended December 31, 2015.