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INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The Company’s deferred tax assets and liabilities are measured using the enacted tax rates that the Company believes will apply in the years in which temporary differences are expected to be recovered or paid. The Company is subject to federal and state income taxes as a Subchapter C corporation.

The Company’s deferred tax assets are primarily the result of net operating losses (or NOLs). The Company has recorded a valuation allowance against its net deferred tax assets at December 31, 2025 and 2024, as it is more likely than not that not all of the deferred tax assets will be realized. This determination reflects management's assessment that it is more likely than not that the deferred tax assets will not be realized in the foreseeable future..
For financial reporting purposes, the net pre-tax book income and/or loss for the U.S. entity, in the aggregate was:
20252024
United States $1,331 $(885)
Total1,331 (885)
The provision for income taxes as of December 31, 2025 and 2024 consists of the following:
20252024
Current:
    Federal$— $— 
    State58 33 
Total current tax expense58 33 
Deferred:
    Federal— — 
    State— — 
Total deferred tax expense——
      Provision for income taxes$58 $33 

A reconciliation of the statutory U.S. Federal rate to the Company’s effective tax rate as of December 31, 2025 and 2024 is as follows:
20252024
Current tax at U.S. statutory rate $280 21.00 %$(186)21.00 %
     State income taxes, net of federal tax effect (a)59 4.46 35 (3.95)
Tax credits26 1.97 
Change in valuation allowance(992)(74.56)107 (12.10)
Nondeductible Items
     Stock-based compensation(52)(3.87)15 (1.68)
     Lobbying expense40 3.00 42 (4.73)
Other nondeductible items4 0.31 27 (3.01)
Change in unrecognized tax benefits682 51.25 
Other12 0.88 (6)0.70 
Effective income tax rate
58 4.44 %33 (3.77)%
(a) State taxes in Texas made up the majority (greater than 50 percent) of the tax effect in this category.
Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of net deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain.
The following items comprise the Company's net deferred tax assets and liabilities as of December 31, 2025 and 2024:
20252024
Deferred tax assets:
Net operating loss carryforwards$6,641 $6,128 
Payroll related accruals264 157 
Stock-based compensation99 91 
Intangible assets89 97 
Sec. 174 capitalized costs— 365 
Sales tax accrual26 61 
Other27 24 
Depreciation— 20 
Research and development tax credits— 708 
Total deferred tax assets7,145 7,651 
Net deferred tax assets7,145 7,651 
Less: Valuation allowance(6,677)(7,651)
Deferred tax assets, net of allowance$468 $— 
Deferred tax liabilities
Depreciation(5)— 
Capitalized R&D Costs(463)— 
Total deferred tax liabilities(468)— 
Total net deferred tax asset (liability)— — 
The Company recorded an income tax expense of approximately $58 and $33 for the years ended December 31, 2025 and 2024, respectively, related to state taxes.
The Company files numerous tax returns in various jurisdictions. The Company is not currently under examination by any taxing authority, nor has the Company signed any waiver of the statute of limitations with any taxing authority. The Company remains open to examination by major taxing jurisdictions from 2021 to date. ASC 740 requires evaluation of uncertain tax positions and as of December 31, 2025, the Company has recorded a full reserve against the R&D credits. There were no tax interest or penalties recorded in the financial statements for the years ended December 31, 2025 and 2024.
Our unrecognized tax benefits at December 31, 2025 relate entirely to research and development tax credits. The total amount of tax benefits at December 31, 2025 is $682. If recognized, none of the unrecognized tax benefits would impact our effective tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
20252024
Uncertain Tax Benefits - January 1$— $— 
Gross increases - tax positions in prior period682 — 
Gross decreases - tax positions in prior period— — 
Gross increases - tax positions in current period— — 
Uncertain Tax Benefits - December 31682 — 
Our policy is to recognize interest and penalties related to income taxes as components of income taxes. We incurred no interest or penalties related to unrecognized tax benefits in the years ended December 31, 2025 or 2024. We do not anticipate any significant changes in our uncertain tax positions within twelve months of this reporting date.
Valuation Allowance
The Company assesses the realizability of its deferred tax assets on a quarterly basis by evaluating the available positive and negative evidence in accordance with ASC 740. Significant weight is given to evidence that is objectively verifiable, particularly the Company’s cumulative results over the most recent three-year period.
As of December 31, 2025, the Company was in a three-year cumulative loss position after adjusting for permanent differences between book and taxable income, which constitutes significant negative evidence. While the Company generated pre-tax income of approximately $1,331 for the year ended December 31, 2025, this was insufficient to offset the cumulative losses of approximately $2,042 in 2023 and $885 in 2024. Accordingly, the Company determined that a full valuation allowance against its net deferred tax assets remained appropriate as of December 31, 2025.

The valuation allowance was approximately $6,677 and $7,651 as of December 31, 2025 and 2024, respectively. The net decrease of approximately $975 during 2025 was primarily attributable to the acceleration of deductions related to research and development costs..

If the Company achieves sustained profitability in future periods and the three-year cumulative result transitions to a positive position, the Company may conclude that sufficient positive evidence exists to support a partial or full release of the valuation allowance. Such a release would result in the recognition of a non-cash deferred income tax benefit in the period the determination is made. Based on gross deferred tax assets of approximately $7,145 as of December 31, 2025, a full release of the valuation allowance would result in a non-cash income tax benefit of up to approximately $6,677, although the actual amount recognized would depend on the circumstances and timing of any such determination.

Net Operating Loss and Tax Credit Carryforwards
As of December 31, 2025, the Company had federal net operating loss carryforwards of approximately $30,520 of which $10,892 was generated prior to 2018 and will expire between 2035 and 2037. The remaining $19,628 was generated after 2017 and may be carried forward indefinitely, subject to an annual limitation of 80% of taxable income under the Tax Cuts and Jobs Act of 2017.

The Company also had state net operating loss carryforwards of approximately $3,670 as of December 31, 2025, which expire at various dates depending on the jurisdiction.

The Company had federal research and development tax credit carryforwards of approximately $682 as of December 31, 2025, which expire at various dates through 2041 if not utilized.

Utilization of the Company’s net operating loss and tax credit carryforwards may be subject to annual limitations in the event of a change in ownership as defined under Section 382 of the Internal Revenue Code and similar state provisions. The Company has not completed a formal Section 382 analysis to determine whether any ownership changes have occurred since inception. If such a change has occurred, or occurs in the future, the Company’s ability to utilize its net operating loss and tax credit carryforwards could be materially limited, potentially resulting in a significant portion of the carryforwards expiring unused. The Company intends to evaluate whether a formal analysis is warranted in connection with future tax planning activities.

The following summarizes the cash taxes paid in for the periods ending December 31, 2025 and 2024:
20252024
Federal$— $— 
State
Texas28 — 
Other states5 — 
Total33 —