Income Taxes

12 Months Ended

Dec. 31, 2025

Income Taxes [Abstract]

Income Taxes

NOTE 12 - INCOME TAXES

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes significant tax law changes, including the permanent extension of certain provisions from the Tax Cuts and Jobs Act, modifications to the international tax framework, and the reinstatement of favorable business tax provisions. These include 100% bonus depreciation, immediate expensing of Section 174 domestic research and experimental expenditures, and revised limitations under Section 163(j) on the deductibility of business interest expense. The legislation has multiple effective dates, with certain provisions effective beginning in 2025, and others implemented through 2027. The OBBBA does not have a material effect on the Company's consolidated financial statements for the year ending December 31, 2025.

Income before income taxes includes the following:

(Dollars in thousands)	2025		2024		2023
United States	$	(18,488)	$	(30,056)	$	(29,986)
Foreign		4,129		(4,974)		(1,065)
Income (loss) before income taxes and equity earnings of unconsolidated joint ventures	$	(14,359)	$	(35,030)	$	(31,051)
Equity earnings of unconsolidated joint ventures:
United States		—		—		—
Foreign		560		(387)		456
Income (loss) before income taxes	$	(13,799)	$	(35,417)	$	(30,595)

Significant components of the provision for income taxes are as follows:

(Dollars in thousands)	2025		2024		2023
Current income tax expense (benefit)
Federal	$	—	$	—	$	(800)
State		40		42		49
Foreign		2,396		1,441		927
Total		2,436		1,483		176
Deferred income tax expense (benefit)
Federal		2		2		2
State		—		—		(2)
Foreign		(1,585)		(1,004)		414
Total		(1,583)		(1,002)		414
Total income tax expense (benefit)	$	853	$	481	$	590

Deferred income taxes reflect the “temporary differences” between the financial statement carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, adjusted by the relevant tax rate. The components of the deferred tax assets and liabilities are as follows:

	December 31,
(Dollars in thousands)	2025		2024
Deferred Tax Assets:
Net operating loss carry-forwards	$	39,979	$	37,162
Foreign Tax Credit		3,743		3,743
Compensation and employee benefits		2,906		3,210
Deferred revenue		3,099		2,863
Accrued expenses		32,442		22,926
Lease obligations		36,245		39,477
Land and property		1,168		3,450
Other		167		51
Total Deferred Tax Assets		119,749		112,882
Deferred Tax Liabilities:
Lease liabilities		(46,074)		(44,363)
Accrued taxes		(613)		(588)
Intangibles		(324)		(450)
Other		—		—
Total Deferred Tax Liabilities		(47,011)		(45,401)
Net deferred tax assets before valuation allowance		72,738		67,481
Valuation allowance		(70,119)		(66,528)
Net deferred tax asset	$	2,619	$	953

We record net deferred tax assets to the extent we believe these assets will more-likely-than-not be realized. In making such determination, we considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial performance. As of December 31, 2025, based on all available evidence, we believe the U.S., state, and New Zealand deferred tax assets do not support a conclusion of being more-likely-than-not to be realized. Accordingly, we recorded an increase to valuation allowance of $70.1 million. We reassess the valuation allowance quarterly and a tax benefit is recorded if future evidence allows for a partial or full release of the valuation allowance.

As of December 31, 2025, we had the following carry-forwards:

approximately $105.4 million in Federal loss carry-forwards with no expiration date;

approximately $77.3 million in California loss carry-forwards expiring in 2045;

approximately $42.8 million in Hawaii loss carry-forwards expiring in 2045;

approximately $4.7 million in New Jersey state loss carry-forwards expiring in 2045;

approximately $57.1 million in New York state loss carry-forwards expiring in 2045;

approximately $48.8 million in New York city loss carry-forwards expiring in 2045; and,

We expect no substantial limitations on the future use of U.S. loss carry-forwards.

We adopted ASU 2023-09 Income Taxes (Topic 740): Improvements To Income Tax Disclosures on a prospective basis beginning with the year ended December 31, 2025. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025:

(Dollars in thousands)	2025		% of pre-tax income
U.S. Federal Statutory Tax Rate	$	(2,898)	$	21.0%
State and Local Income Taxes, Net of Federal Income Tax Effect
Foreign Tax Effects		33		(0.2)%
Australia
Statutory tax rate difference between Australia and United States		146		(1.1)%
New Zealand
Statutory tax rate difference between New Zealand and United States		215		(1.6)%
Change in Valuation Allowance		(1,050)		7.6%
Effect of Changes in Tax Laws or Rates Enacted in the Current Period		—		—
Effect of Cross-Border Tax Laws		—		—
Tax Credits		—		—
Change in Valuation Allowance		3,449		(25.0)%
Nontaxable or Nondeductible Items		546		(4.0)%
Change in Unrecognized Tax Benefits		252		(1.8)%
Other Adjustments		160		(1.2)%
Total income tax expense (benefit)	$	853	$	(6.2)%

The following table presents the require disclosure prior to our adoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate to the actual global effective income tax rate for the years ended December 31, 2024 and December 31, 2023:

(Dollars in thousands)	2024		2023
Expected tax provision (benefit)	$	(7,276)	$	(6,425)
Foreign tax rate differential		(399)		30
Change in valuation allowance		6,572		6,781
State and local tax provision		42		48
Unrecognized tax benefits		308		(398)
Subpart F		1,049		—
Other		185		554
Total income tax expense (benefit)	$	481	$	590

The undistributed earnings of the Company's Australian and New Zealand subsidiaries are not indefinitely reinvested. Due to the enactment of the Tax Cuts and Jobs Act of 2017, future repatriations of foreign earnings will generally not be subject to U.S. federal taxation but may incur minimal state taxes.

The following table is a summary of the activity related to unrecognized tax benefits, excluding interest and penalties, for the years ended December 31, 2025, 2024, and 2023:

(Dollars in thousands)	2025		2024		2023
Unrecognized tax benefits – gross beginning balance	$	11,114	$	11,114	$	11,454
Gross increase (decrease) - prior year tax positions		—		—		(340)
Gross increase (decrease) - current year tax positions		—		—		—
Settlements		—		—		—
Unrecognized tax benefits – gross ending balance	$	11,114	$	11,114	$	11,114

As of December 31, 2025 and 2024, if recognized, $11.1 million and $11.1 million respectively, of the unrecognized tax benefits would impact the Company’s effective tax rate.

During the year ended December 31, 2025, we recorded an increase to tax interest of $245,000, resulting in a total $1.0 million in interest. During the year ended December 31, 2024, we recorded an increase to tax interest of $310,000, resulting in a total $801,000 in interest.

It is difficult to predict the timing and resolution of uncertain tax positions. Based upon the Company’s assessment of many factors, including past experience and judgments about future events, it is probable that within the next 12 months the reserve for uncertain tax positions will increase within a range of $500,000 to $1.5 million. The reasons for such change include but are not limited to tax positions expected to be taken during 2025, revaluation of current uncertain tax positions, and expiring statutes of limitations.

As of December 31, 2025, federal income tax returns for 2022 and after are open for examination. California worldwide unitary income tax returns for 2021 and after are open for examination. The Company’s net operating loss carry-forwards are subject to examination until they are fully utilized or expired. Some of the tax years which the losses originated from are currently closed. Australia income tax returns for calendar years 2021 and after are open for examination. Generally, New Zealand returns for calendar years 2020 and after remain open for examination.

We adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025 and have included the following table as a result of our adoption, which presents income taxes paid (net of refunds received) for the year ended December 31, 2025:

(Dollars in thousands)	2025
Federal taxes	$	—
State taxes		29
Foreign taxes:
Australia		2,446
New Zealand		77
Total cash taxes paid	$	2,552