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 Company’s loss from operations before benefit for income taxes for the years ended December 31, 2025 and 2024 consisted of the following:

For the Year Ended December 31,
(in thousands) 2025 2024
United States $ (55,441) $ (108,848)
Foreign (9,114) (43,165)
Total loss before income taxes $ (64,555) $ (152,013)

The components of the provision (benefit) from income taxes consisted of the following:
For the Year Ended December 31,
(in thousands) 2025 2024
Current:
Federal $ 905  $ 3,488 
State 379  402 
Foreign (96) 282 
Total current provision $ 1,188  $ 4,172 
Deferred:
Federal (3,750) (5,779)
State 505  (902)
Foreign 478  (3,428)
Total deferred benefit (2,767) (10,109)
Total income tax benefit $ (1,579) $ (5,937)

The reconciliation between income taxes computed at the U.S. statutory income tax rate to the Company’s benefit from income taxes for the years ended December 31, 2025 and 2024 is set forth in the table below as follows:

For the Year Ended December 31,
2025 2024
(in thousands) $ % $ %
U.S. Federal statutory tax rate $ (13,556) 21.0  % $ (31,923) 21.0  %
State and local income taxes, net of federal income tax effects (1)
319  (0.5) % (360) 0.2  %
Foreign tax effects
Switzerland
Statutory tax rate difference between Switzerland and United States 1,025  (1.6) % 992  (0.7) %
Net operating loss adjustment (324) 0.5  % (1,832) 1.2  %
Changes in valuation allowances 1,667  (2.6) % 131  (0.1) %
Other —  —  % (11) 0.0  %
Netherlands
Goodwill impairment —  —  % 2,195  (1.4) %
Other (19) —  % 905  (0.6) %
Other foreign jurisdictions (462) 0.7  % 3,105  (2.0) %
Effect of cross-border tax laws
Income or loss from a foreign disregarded entity (2,391) 3.7  % (2,047) 1.3  %
Tax credits (173) 0.3  % (188) 0.1  %
Changes in valuation allowances 4,083  (6.3) % 5,960  (3.9) %
Nontaxable or nondeductible items
Shortfall on share-based payment awards 422  (0.7) % 1,640  (1.1) %
Goodwill impairment —  —  % 9,880  (6.5) %
Preferred stock dividend 5,063  (7.8) % 4,466  (2.9) %
Other 573  (0.9) % (367) 0.2  %
Changes in unrecognized tax benefits 2,027  (3.1) % 1,591  (1.0) %
Other adjustments 167  (0.3) % (74) 0.1  %
Effective tax rate $ (1,579) 2.4  % $ (5,937) 3.9  %
(1) During the year ended December 31, 2025, state taxes in California and Pennsylvania made up the majority of the tax effect in this category. During the year ended December 31, 2024, state taxes in California, Illinois and New York made up the majority of the tax effect in this category.

Significant components of the Company’s deferred tax assets (liabilities) as of December 31, 2025 and 2024 are set forth as follows:

December 31,
(in thousands) 2025 2024
Deferred tax assets:
Net operating loss carryforward $ 25,350  $ 20,515 
Credit carryforward 1,782  1,329 
Interest expense limitation carryforward 28,759  26,889 
Non-deductible reserves 1,770  2,052 
Accruals and other temporary differences 3,268  2,757 
Stock compensation 367  782 
Capitalized research and development costs 1,111  1,916 
Lease liability 698  2,532 
Property and equipment 1,161  3,264 
Gross deferred tax assets $ 64,266  $ 62,036 
Less: valuation allowance (53,913) (44,178)
Total deferred tax assets (after valuation allowance) $ 10,353  $ 17,858 
Deferred tax liabilities:
Property and equipment (1,090) (1,210)
Intangible assets (3,539) (12,428)
Goodwill (3,510) (2,317)
Change in accounting method —  (153)
Right-of-use operating lease asset (599) (2,208)
Research and development costs (2,502) (3,230)
Total deferred tax liabilities $ (11,240) $ (21,546)
Net deferred tax liabilities $ (887) $ (3,688)

The valuation allowance increased by $9.8 million during 2025, primarily due to an increase in U.S. disallowed interest expense carryover and U.S. state tax attributes deemed not realizable partially offset by a decrease as a result of the One Big Beautiful Bill Act (the “OBBBA”). In determining the need for a valuation allowance, the Company has given consideration to its worldwide cumulative loss position when assessing the weight of the sources of taxable income that can be used to support the realization of deferred tax assets. The Company has assessed, on a jurisdictional basis, the available means of recovering deferred tax assets, including the ability to carry back net operating losses, the existence of reversing temporary differences, the availability of tax planning strategies and available sources of future taxable income. The Company has also considered the ability to implement certain strategies that would, if necessary, be implemented to accelerate taxable income and use expiring deferred tax assets. The Company believes it is able to support the deferred tax assets recognized as of the end of the year based on all of the available evidence.

As of December 31, 2025. the Company has U.S. federal tax net operating loss carryforwards of approximately $2.7 million, which carryforward indefinitely. As of December 31, 2025, the Company has U.S. state tax net operating loss carryforwards of approximately $64.4 million which may be available to offset future income tax liabilities and expire at various dates beginning in 2033 through 2045. Additionally, the Company has U.S. state tax net operating loss carryforwards of approximately $3.0 million, which carryforward indefinitely. Additionally, the Company has generated net operating loss carryforwards of approximately $12.2 million in Canada, $7.6 million in the United Kingdom, $26.4 million in the Netherlands, $15.3 million in Malta, and $19.9 million in Switzerland as of December 31, 2025. The Company had net operating loss carryforwards of approximately $18.0 million in Canada, $8.0 million in the United Kingdom, $26.1 million in the Netherlands, $13.9 million in Malta, and $19.6 million in Switzerland as of December 31, 2024. The foreign operating loss carryforwards generated in 2025 and 2024 expire at various dates beginning in 2026 and 2025, respectively.

As of December 31, 2025, the Company had $0.2 million of U.S. federal or state research and development tax credit carryforwards expire in 2045 and had $1.9 million of foreign research and development tax credit carryforwards which expire at various dates beginning in 2039.
Due to provisions of the Tax Cuts and Jobs Act of 2017, the Company has a carryforward of U.S. disallowed interest expense of $126.2 million, which has an indefinite carryforward period.

Utilization of the net operating loss (“NOL”) carryforwards may be subject to limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes may limit the amount of NOL and tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. There could be additional ownership changes in the future, which may result in additional limitations on the utilization of the NOL and tax credit carryforwards.

As of December 31, 2025, the Company has not provided U.S. taxes on the undistributed earnings of its foreign subsidiaries that it considers indefinitely reinvested. This indefinite reinvestment determination is based on the future operational and capital requirements of the Company’s domestic and foreign operations. The Company expects that the cash held by its foreign subsidiaries of $6.9 million as of December 31, 2025 will continue to be used for its foreign operations and, therefore, does not anticipate repatriating these funds.

The Company conducts business globally and, as a result, its subsidiaries file income tax returns in U.S. federal and state jurisdictions and various foreign jurisdictions. In the normal course of business, the Company may be subject to examination by taxing authorities throughout the world. The Company is generally subject to U.S. federal state income tax examinations by tax authorities for the years 2016 and forward. For the Company’s foreign jurisdictions, the period of examination generally is for years 2014 and forward.

During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when the Company believes that certain positions might be challenged despite its belief that its tax return positions are fully supportable. The Company adjusts these reserves in light of changing facts and circumstances, such as the outcome of tax examinations.

The following table sets forth a reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, included in accrued liabilities and other noncurrent liabilities in the Company’s consolidated balance sheets:

(in thousands) December 31, 2025 December 31, 2024
Unrecognized tax benefits as of the beginning of the year $ 9,459  $ 8,766 
Additions for tax positions of prior years 647  693 
Unrecognized tax benefits as of the end of the year $ 10,106  $ 9,459 

The Company recognizes interest and penalties accrued related to unrecognized tax benefits as income tax expense. During the years ended December 31, 2025 and 2024, the Company recognized approximately $1.3 million and $1.0 million in interest and penalties, respectively. The Company had accrued approximately $4.1 million and $2.8 million of interest and penalties as of December 31, 2025 and 2024, respectively.

The following table sets forth a summary of income tax payments made and income tax refunds receiving during the years ended December 31, 2025 and 2024:

For the Year Ended December 31,
2025 2024
(in thousands) Payment (Refund) Amount Payment (Refund) Amount
U.S. Federal $ 2,812  $ 1,242 
Pennsylvania 110  123 
Other US States 72  379 
Belgium (269) — 
Netherlands (160) 189 
Mexico 195  — 
Other Foreign 161  171 
Total $ 2,921  $ 2,104 

On July 4, 2025, the OBBBA was signed into law. Key corporate tax provisions include the restoration of 100% bonus depreciation, immediate expensing for domestic research and experimental expenditures, changes to Section 163(j) interest limitations, updates to Global Intangible Low-Taxes Income and Foreign-Derived Intangible Income rules, amendments to energy credits, and expanded Section 162(m) aggregation requirements. In accordance with ASC 740 — Income Taxes, the effects of the new tax law were recognized in the period of enactment. The
impact of these changes required the Company to re-evaluate its deferred taxes and as a result record a decrease in the valuation allowance of $3.6 million during 2025.