ACCESS Newswire Inc. Income Taxes Disclosure

Note 13: Income Taxes

 

The components of the Company’s loss from continuing operations before income taxes for the years ended December 31, 2025 and 2024 are as follows (in thousands):

Schedule of continuing operations before income taxes
		2025				2024
Loss from continuing operations
United States		$	(2,060	)		$	(18,215	)
International			107				306
Loss from continuing operations before income taxes		$	(1,953	)		$	(17,909	)

 

The provision for income taxes consisted of the following components for the years ended December 31 (in thousands):

Schedule of provision for income taxes
		2025				2024
Current:
Federal		$	(629	)		$	20
State			(117	)			5
Foreign			18				12
Total Current			(728	)			37
Deferred:
Federal			325				(3,611	)
State			2				(590	)
Foreign			6				100
Total Deferred			333				(4,101	)
Total benefit for income taxes		$	(395	)		$	(4,064	)

 

Reconciliation between the statutory rate and the effective tax rate is as follows on December 31 (in thousands, except percentages):

Schedule of effective tax rate
		2025
		Amount				Percentage
Federal statutory tax rate		$	(405	)			21.0%
State and local income taxes, net of federal benefit			(100	)			5.2%
Foreign Tax Effects
Other foreign jurisdictions			2				(0.1)%
Effect of changes in tax law			–				–
Effect of cross-border tax laws
GILTI			45				(2.3)%
Tax Credits
Foreign tax credits			(5	)			0.2%
Changes in valuation allowance			–				–
Nontaxable or nondeductible items
Goodwill Amortization			–				–
Equity-based compensation			45				(2.3)%
Nondeductible parking			19				(1.0)%
Other nontaxable or nondeductible items			4				(0.2)%
Changes in unrecognized tax benefits			–				–
Other adjustments			–				–
Total		$	(395	)			20.5%

  

		2024
		Amount				Percentage
Federal statutory tax rate		$	(3,642	)			21.0%
State tax rate			(586	)			3.3%
Permanent differences – stock-based compensation			56				(0.3	)%
Permanent differences – other			19				(0.1	)%
Foreign tax credit generated			–				–
Tax on foreign earnings – tax reform			40				(0.2	)%
Foreign rate differential			4				(0.1	)%
FDII Deduction			–				—%
Other			45				(0.3	)%
Total		$	(4,064	)			23.4%

 

Cash paid for income taxes, net of refunds, were as follows for the year ended December 31, 2025 (in thousands):

Schedule of cash paid for income taxes
		Year ended December 31, 2025
Federal		$	1,776
State			366
Foreign			66
Total		$	2,208

 

California, New York and New York City make up 50% of the state and local income tax line. No state or foreign jurisdiction makes up 5% of total taxes paid.

 

Components of net deferred income tax assets are as follows on December 31 (in thousands):

Schedule of deferred income tax assets
		2025				2024				Change
Assets:
Deferred revenue		$	124			$	129			$	(5	)
Allowance for doubtful accounts			277				350				(73	)
Stock options			484				385				99
Transaction costs			56				61				(5	)
IRC Section 174 capitalized costs			532				936				(404	)
ROU lease liability			149				279				(130	)
Purchase of intangible assets			2,211				2,144				67
Other			10				12				(2	)
Total deferred tax asset			3,843				4,296				(453	)
Liabilities
Prepaid expenses			(3	)			(3	)			–
Basis difference in fixed assets			(33	)			(88	)			55
Capitalized software			(45	)			(63	)			18
ROU Assets			(80	)			(251	)			171
Other			(77	)			(98	)			21
Total deferred tax liability			(238	)			(503	)			265
Total net deferred tax asset / (liability)		$	3,605			$	3,793			$	(188	)

 

As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. It has been determined that is more likely than not that the Company's deferred tax assets are able to be realized based on future positive earnings and reversal of existing temporary differences.

 

The One Big Beautiful Bill Act (or “OBBB Act”), enacted on July 4, 2025, permits the deduction of certain U.S. research and development expenditures incurred in tax years beginning on or after January 1, 2025. However, expenditures attributable to research and development conducted outside the U.S. must continue to be capitalized and amortized over fifteen years. The OBBB Act also provides the option to accelerate the amortization of any remaining unamortized U.S. research and development expenditures incurred in tax years beginning on or after January 1, 2022, and before January 1, 2025, over a one or two year period beginning with the first taxable year beginning after December 31, 2024. Under US GAAP, the effects of the changes in tax laws are recognized in the period in which the tax laws are enacted. Accordingly, the Company has reflected the impact of provisions of the OBBB Act in the Company’s financial statements for the year ended December 31, 2025, which resulted in a decrease in our deferred tax asset associated with research and development expenditures.

 

The OBBB Act also enacted changes to rules governing global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII). Those changes will go into effect for tax years beginning after December 31, 2025; and thus do not impact current financial statements.

 

The Company had no unrecognized tax benefits as of December 31, 2025 or December 31, 2024. Interest and, if applicable, penalties are recognized related to unrecognized tax benefits in income tax expense. There are no accruals for interest and penalties on December 31, 2025.

 

Undistributed earnings of the Company are insignificant as of December 31, 2025. With the enactment of the 2017 Act, the Company does not consider any of its foreign earnings as indefinitely reinvested.

        

The Company is subject to income taxation by both federal and state taxing authorities. Income tax returns for the years ended December 31, 2024, 2023 and 2022 are open to audit by federal and state taxing authorities.