FORUM MARKETS Inc Income Taxes Disclosure

NOTE 12 – INCOME TAXES

 

The components of income (loss) before income taxes were attributable to the following regions (in thousands):

 

		Year Ended December 31,
		2025				2024
Domestic		$	(443,531	)		$	(2,614	)
Foreign			-				-
Total income (loss) before income taxes		$	(443,531	)		$	(2,614	)

The provision for (benefit from) income taxes for continuing operations consisted of the following (in thousands):

  

		Year Ended December 31,
		2025				2024
Current:
Federal		$	-			$	-
State			-				-
Foreign			-				-
Total Current		$	-			$	-
Deferred:
Federal			-				2
State			-				-
Foreign			-				-
Total deferred		$	-			$	2
Total provision for (benefit from) income taxes		$	-			$	2

  

The table below provides the updated requirements of ASU 2023-09 for 2025. See Note 3 – Summary of Significant Accounting Policies—Recent accounting pronouncements for additional details on the adoption of ASU 2023-09.

 

The effective income tax rate differs from the statutory federal income tax rate as follows (in thousands, except percentages):

 

			Year Ended December 31, 2025
			$				%
Provision for income taxes at U.S. federal statutory rate		$	(93,142	)			(21.00	)%
State and local income taxes, net of federal benefit1			-				0.00
Foreign tax effects			-				0.00
Changes in valuation allowance			73,355				16.54
Non-taxable or non-deductible items:
Convertible Note – Redemption Premium			18,426				4.15
Other			1,108				0.25
Adjustment to prior period provision			253				0.06
Other adjustments			-				-
Total tax provision and effective tax rate		$	-				-

 

(1)	State income taxes attributable to Florida represented more than 50% of the tax effect in this category.

As previously disclosed, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:

 

		Year Ended December 31,
		2024
US Federal statutory rate			21.00	%
Difference between domestic and foreign federal rates			0.00
State and provincial taxes, net of federal benefits			0.00
Permanent differences:
Stock-based compensation			(1.00	)
Change in fair value of derivatives and accrued issuable equity			0.0
Other			0.0
Change in valuation allowance			(19.92	)
Effective income tax rate			0.08	%

  

The effective tax rate for the year ended December 31, 2025 reflects the impact of changes in tax laws and statutory tax rates enacted during the period.

 

Deferred tax assets and liabilities consist of the following (in thousands):

 

		Years Ended December 31,
		2025				2024
Deferred tax assets:
Net operating loss carryforwards		$	29,733			$	17,521
Amortization			2,392				568
Capital Loss Carryforward			10,138				-
Stock compensation			60,963				2,099
Accrued interest			-				16
Reserve for uncollectible notes receivable			-				28
Crypto			16,826				-
Other			39				510
Total deferred tax assets			120,091				20,742
Valuation allowance			(119,451	)			(19,532	)
Net deferred tax assets			640				1,210
Deferred tax liabilities:
Difference between book and tax basis related to:			-				-
Technology license			-				-
Other			(640	)			(1,210	)
Total deferred tax liabilities			(640	)			(1,210	)
Total of deferred tax assets and liabilities, net		$	-			$	-

  

As of December 31, 2025, the Company had net operating loss (“NOL”) carryforwards that may be available to offset future taxable income in various jurisdictions as follows:

 

●

Approximately $89,434 of domestic federal NOLs. The federal NOLs have no expiration date and are subject to 80% of taxable income; the state NOLs will begin to expire in 2040;

 

●

Approximately $91,435 of domestic state NOLs. The state NOLs will begin to expire in 2039;

 

●

Approximately $8,590 each of Canadian federal and provincial NOLs. Those NOLs will begin to expire in 2038; and

 

●

Approximately $11,823 of United Kingdom federal NOLs. Those NOLs have no expiration date.

 

The Company does not have any pre-2018 federal NOL carryfowards.

The utilization of the domestic NOLs to offset future taxable income may be subject to annual limitations under Section 382 of the Internal Revenue Code and similar state statutes as a result of ownership changes.

 

The Company has assessed the likelihood that deferred tax assets will be realized in accordance with the provisions of ASC 740. ASC 740 requires that such review considers all available positive and negative evidence, including the scheduled reversal of deferred tax assets, projected future taxable income, and tax planning strategies. ASC 740 requires that a valuation allowance be established when it is “more likely than not” that all, or a portion of, deferred tax assets will not be realized. After the performance of such reviews as of December 31, 2025 and 2024, management believes that uncertainty exists with respect to future realization of its deferred tax assets, primarily due to cumulative historical losses, and has, therefore, established a full valuation allowance. The Company recorded increases in the valuation allowance of $73.4 million and $0.9 million in connection with the tax provisions for the years ended December 31, 2025 and 2024, respectively.

 

Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s Consolidated Financial Statements as of December 31, 2025 and 2024.

 

No tax audits were commenced or were in process during the years ended December 31, 2025 and 2024, nor were any tax related interest or penalties incurred during those periods. The Company’s tax returns filed in the United States (including the state of Florida), Canada, and the United Kingdom since inception remain subject to examination.