Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
Note L – Income Taxes
Income (loss) before income taxes consisted of the following:
Year Ended
December 31, 2025 December 31, 2024 December 31, 2023
Domestic income (loss)
 $ (190,676) $ (108,886) $ (20,310)
Foreign income (loss)
 (60,890) (7,445) (7,440)
Income (loss) before income taxes
 $ (251,566) $ (116,331) $ (27,750)

Income tax provision (benefit) consisted of the following:
Year Ended
December 31, 2025 December 31, 2024 December 31, 2023
Current:
Federal $ (64) $ —  $ — 
State (5) 67  (73)
Foreign (44) (284) 512 
Total current income tax expense (benefit) (113) (217) 439 
Deferred:
Federal (19,423) (122) 48 
State (5,135) 271  62 
Foreign (343) (1,952) (1,035)
Total deferred income tax expense (benefit) (24,901) (1,803) (925)
Total income tax expense (benefit) $ (25,014) $ (2,020) $ (486)

A reconciliation of the U.S. federal statutory income tax expense to actual income tax expense is as follows:
Year Ended
December 31, 2025
Amount
Rate
Income (loss) before income taxes $ (251,566)
Federal statutory income tax rate 21.0  %
Expected federal provision (benefit) for income taxes at the federal statutory income tax rate (52,829) 21.0  %
State and local income taxes, net of federal income tax effect* (6,685) 2.7  %
Foreign tax effects:
Belgium:
Impairment of goodwill 5,175  (2.1) %
Statutory tax rate difference
 (2,172) 0.9  %
Changes in valuation allowance 8,450  (3.4) %
Other (33) —  %
Other foreign jurisdictions:
Statutory tax rate difference
 59  —  %
Change in valuation allowance
 481  (0.2) %
Other 438  (0.2) %
Nontaxable or nondeductible items:
Change in fair value of warrants (3,383) 1.3  %
Tax (benefits) / non-deductible expenses related to equity-based compensation (4,371) 1.7  %
Acquisitions costs
 2,377  (0.9) %
Non-deductible compensation costs related to the Edge Incentive Units 9,224  (3.7) %
Effect of cross-border tax laws:
Global intangible low-taxed income 1,156  (0.5) %
Change in valuation allowance
 16,449  (6.5) %
Other 650  (0.3) %
Total income tax expense (benefit) $ (25,014) 9.9  %
Effective tax rate 9.9  %
*State taxes in California make up the majority (greater than 50%) of the tax effect in this category for the year ended December 31, 2025.
A reconciliation of the U.S. federal statutory income tax expense to actual income tax expense is as follows:
Year Ended
December 31, 2024 December 31, 2023
Amount
Rate
 Amount Rate
Income (loss) before income taxes $ (116,331) $ (27,750)
Federal statutory income tax rate 21.0  % 21.0  %
Expected federal provision (benefit) for income taxes at the federal statutory income tax rate (24,430) 21.0  % (5,828) 21.0  %
State income tax (benefit), net of federal tax benefit (3,159) 2.7  % (1,190) 4.3  %
Change in fair value of warrants 10,912  (9.4) % 422  (1.5) %
Permanent differences 314  (0.3) % 136  (0.5) %
Tax (benefits) / non-deductible expenses related to equity-based compensation (636) 0.5  % 984  (3.5) %
Acquisition costs 219  (0.2) % —  —  %
Change in valuation allowance 16,153  (13.9) % 4,808  (17.3) %
Other (1,393) 1.2  % 182  (0.7) %
Total income tax expense (benefit) $ (2,020) 1.7  % $ (486) 1.8  %
Effective tax rate 1.7  % 1.8  %

The table below presents the components of deferred tax assets, net and deferred tax liabilities:
December 31, 2025 December 31, 2024
Deferred tax assets:
Accrued expenses and reserves $ 7,287  $ 456 
Capitalized research and development expenses 8,722  4,528 
Tax credit carryforwards 618  243 
Deferred revenue 3,652  1,367 
Net operating loss carryforwards 80,436  38,676 
Interest disallowance 18,164  10,007 
Equity-based compensation 4,430  2,643 
Lease liability 9,183  4,956 
Other assets 50  62 
Total deferred tax assets 132,542  62,938 
Less: valuation allowance (70,704) (45,324)
Deferred tax assets, net of valuation allowance 61,838  17,614 
Deferred tax liabilities:
Right-of-use asset $ (8,425) $ (4,291)
Tax on undistributed profits
 (8,741) — 
Depreciation and amortization (79,471) (13,616)
Other (3,559) (217)
Deferred tax liabilities (100,196) (18,124)
Total net deferred tax assets (liabilities) $ (38,358) $ (510)
In assessing the realizability of deferred tax assets, the Company evaluates whether it is more-likely-than-not that a portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which the net operating loss (“NOL”) carryforwards are available. During the year ended December 31, 2025, and in connection with the acquisition of Edge Autonomy, the Company determined that a portion of its deferred tax assets would, more-likely-than-not, be realized and, as a result, the Company recognized a tax benefit of $25.0 million,
substantially all of which relates to the recognition of deferred tax assets and the corresponding reduction of the valuation allowance.

The table below presents the change in valuation allowance for the following periods:
Valuation allowance as of December 31, 2023 $ (23,821)
Acquired deferred tax assets  (5,350)
  Income tax expense
 (16,153)
Valuation allowance as of December 31, 2024 (45,324)
Income tax expense (25,380)
Valuation allowance as of December 31, 2025 $ (70,704)

As of December 31, 2025, the Company had $80.4 million of total net operating losses (“NOL”) resulting in deferred taxes assets consisting of U.S. federal, state (net), and foreign NOLs of $54.1 million, $16.1 million, and $10.2 million, respectively. The $54.1 million in U.S. federal net operating loss carryforwards may be carried forward indefinitely to reduce future taxable income for U.S. federal tax purposes, while certain state and foreign net operating loss carryforwards will begin to expire in 2039.


The table below presents changes in reserves for unrecognized income tax benefits for the following periods:
Year Ended
December 31, 2025 December 31, 2024 December 31, 2023
Unrecognized tax benefits, beginning of period $ 1,380  $ 1,380  $ 1,380 
Increase (decrease) for tax positions taken related to a prior period —  —  — 
Unrecognized tax benefits, end of period $ 1,380  $ 1,380  $ 1,380 

During the years ended December 31, 2025, 2024 and 2023, the Company did not recognize certain tax benefits from uncertain tax positions within the provision for income taxes. As of December 31, 2025, the Company’s estimated gross unrecognized tax benefits were $1.4 million, of which $1.3 million, if recognized, would favorably impact the Company’s future earnings. The Company believes there will be no material changes to unrecognized tax benefits within the next twelve months. Due to uncertainties in any tax audit outcome, estimates of the ultimate settlement of our unrecognized tax positions may change and the actual tax benefits may differ from the estimates. During the years ended December 31, 2025, 2024 and 2023, the Company did not recognize any interest and penalties in the consolidated statements of operations and comprehensive income (loss).

The Company and its subsidiaries file income tax returns in various U.S. and foreign jurisdictions. As of December 31, 2025, the Company is subject to examination by the IRS for tax years beginning in 2022. The Company is open to state income tax examinations until the applicable statute of limitations expires, generally four years after tax return filing; however, the ability for the taxing authority to adjust tax attribute carryforwards will continue until the applicable statute of limitations expires after tax attribute utilization or expiration.