16. Income Taxes

The (benefit) provision for income taxes on continuing operations for the years ended December 31, 2025 and 2024 is comprised of the following: 

 Schedule of Components of Income Tax Expense (Benefit)

The Company performs an analysis each year to determine whether the expected future income will more likely than not be sufficient to realize the deferred tax assets. The Company’s recent operating results and projections of future income weighed heavily in the Company’s overall assessment. As of December 31, 2025, the Company is in a cumulative income position for the current year and prior two years. As such, the Company has sufficient positive evidence to project future taxable income. Accordingly, the Company released a significant portion of the valuation allowance against its deferred tax assets as of December 31, 2025 that it determined were more likely than not that these assets would be realized based upon those future projections of taxable income.

The tax effects of significant items comprising the Company’s deferred tax assets and (liabilities) as of December 31, 2025 and 2024 are as follows:

 Schedule of Deferred Tax Assets and Liabilities

The Company’s deferred tax asset as of December 31, 2025 and 2024 periods were $21.3 million and $0, respectively. The net deferred tax assets as of December 31, 2024 was fully offset by a valuation allowance. The NOL carry forwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. During 2021, the Company completed a Section 382 analysis of the available NOLs under Section 382 of the Internal Revenue Code and determined that the Company underwent an ownership change on March 30, 2017 and July 15, 2019. As a result, NOLs attributable to the pre-ownership change are subject to a substantial annual limitation under Section 382. The Company has approximately $102.8 million of federal net operating losses after adjusting for the impact of the Section 382 ownership change. Federal Net Operating Losses of $55.4 million are subject to annual limitation for ownership changes and the Company is utilizing none of the available amount during the current year. The remaining $53.2 million of NOLs incurred post July 15, 2019 may be subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period. These NOLs can be carried forward indefinitely, but the deductibility of such federal NOLs are limited to 80% of Federal Taxable Income. The Company has approximately $78.0 million of state net operating losses carryforwards after adjusting for the impact of the Section 382 ownership change. Current state net operating losses not utilized begin to expire this year.

In December 2023, the FASB issued ASU 2023-09 – Income Taxes: Improvements to Income Tax Disclosures which includes amendments that further enhance income tax disclosures and income taxes paid by jurisdiction. The Company has elected to adopt ASU 2023-09 on a prospective basis. The following table presents the Company’s provisions for Income Taxes and the provisions calculated at the statutory federal tax rate for the year ended December 31, 2025:

Schedule of Provisions for Income Taxes And Statutory Federal Tax Rate

The Company recognized interest and penalties of $0.4 million, and there was no release related to uncertain tax positions in income tax expense during the year ended December 31, 2025. The Company recognized interest and penalties of $0.4 million, and a release of $0.2 million related to uncertain tax positions in income tax expense during the year ended December 31, 2024. At December 31, 2025 and 2024, accrued interest and penalties, net were $4.5 million and $4.2 million, respectively, and are included in the Other long-term liabilities in the consolidated balance sheets.

The Company and its subsidiaries file a U.S. Federal consolidated income tax return and consolidated and separate income tax returns in numerous states and local tax jurisdictions. The following tax years remain subject to examination as of December 31, 2025:

 Schedule of Tax Years Subject to Examination

To the extent there was a failure to file a tax return in a previous year; the statute of limitation will not begin until the return is filed. There were no examinations in process by the Internal Revenue Service as of December 31, 2025.

Income taxes paid, net of refunds, are shown in the following table:

Schedule of Income Taxes Paid, Net of Refunds

* Estimated payment made