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Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Taxes [Abstract]  
INCOME TAXES

NOTE 26 — INCOME TAXES

 

Income Before Income Taxes

 

The below table presents the jurisdictional composition of our income from continuing operations before income taxes for the years ended December 31, 2025, 2024 and 2023:

 

   2025   2024   2023 
United States  $46,075,823   $38,850,318   $15,544,735 
Non-US   (877,343)   (50,900,893)   4,633,359 
(Loss) income from continuing operations, before income taxes  $45,198,480   $(12,050,575)  $20,178,094 

 

Income Tax Provision

 

For the years ended December 31, 2025, 2024 and 2023, the current and deferred tax expense allocated to continuing operations were as follows:

 

   2025   2024   2023 
Current:            
US Federal  $6,155,323   $12,771,794   $5,663,364 
US State   1,430,382    5,022,876    2,928,137 
Non-US   10,209,056    3,772,288    8,632,303 
Total current tax expense   17,794,761    21,566,958    17,223,804 
                
Deferred:               
US Federal   (114,007)   (3,750,091)   (863,989)
US State   129,731    (1,074,479)   (281,452)
Non-US   3,021,966    (2,919,033)   62,208 
Total deferred tax expense   3,037,690    (7,743,603)   (1,083,233)
                
Total:               
US Federal   6,041,316    9,021,703    4,799,375 
US State   1,560,113    3,948,397    2,646,685 
Non-US   13,231,022    853,255    8,694,511 
Total provision for income taxes  $20,832,451   $13,823,355   $16,140,571 

 

Income Tax Paid

 

For the years ended December 31, 2025, 2024 and 2023, the US and Non-US income tax paid was as follows:

 

   2025   2024   2023 
US Federal  $6,600,000   $5,820,000   $4,900,000 
US State and Local:               
Florida   679,000    625,000    * 
Georgia   *    618,618    * 
Other States   1,289,252    986,652    2,357,000 
Total US Income Tax Paid   8,568,252    8,030,270    7,257,000 
                
Non-US:               
China   3,463,789    4,897,239    12,217,921 
Singapore   *    3,037,861    * 
Other Non-US   6,058    
–
    
–
 
Total Non-US Income Tax Paid   3,469,846    7,935,100    12,217,921 
Total Income Tax Paid  $12,038,098   $15,965,370   $19,474,921 

 

* The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.

Tax Rate Reconciliation

 

Our effective tax rate was 46.09%, (114.71)% and 79.99% for the years ended December 31, 2025, 2024 and 2023. A reconciliation between the income tax expense computed by applying the Cayman Island’s statutory income tax rate of 0% to income from continuing operations before income taxes and actual income tax expense were as follows:

 

   December 31, 2025   December 31, 2024   December 31, 2023 
   Amount   Percent   Amount   Percent   Amount   Percent 
Cayman Islands statutory income tax rate  $
–
    0.00%  $
–
    0.00%  $
–
    0.0%
                               
Foreign reconciling items                              
Australia                              
Effect of rates different than statutory   (830,439)   (1.84)%   (868,483)   7.21%   (4,597,208)   (22.78)%
Change in valuation allowance   958,773    2.12%   754,550    (6.26)%   4,556,194    22.58%
Other   (128,334)   (0.28)%   113,934    (0.95)%   41,013    0.2%
Brazil                              
Effect of rates different than statutory   (1,700,080)   (3.76)%   (1,087,518)   9.02%   (195,695)   (0.97)%
Change in valuation allowance   1,786,766    3.95%   1,087,518    (9.02)%   195,695    0.97%
Other   (86,686)   (0.19)%   
–
    0.00%   22    0.00%
Canada                              
Effect of rates different than statutory   (4,510,980)   (9.98)%   (2,067,863)   17.16%   (88,634)   (0.44)%
Change in valuation allowance   4,389,378    9.71%   2,078,632    (17.25)%   190,127    0.94%
Other   2,876    0.01%   (10,770)   0.09%   21,466    0.11%
China                              
Effect of rates different than statutory   8,305,566    18.38%   5,641,659    (46.82)%   6,674,686    33.08%
Stock Compensation   696,723    1.54%   1,660,545    (13.78)%   1,594,630    7.90%
R&D Benefit   (4,938,161)   (10.93)%   (3,884,711)   32.24%   (3,521,525)   (17.45)%
Change in valuation allowance   384,304    0.85%   246,334    (2.04)%   29,606    0.15%
Other   (32,196)   (0.07)%   169,029    (1.40)%   327,305    1.62%
Hong Kong                              
Effect of rates different than statutory   (3,746,657)   (8.29)%   (2,604,265)   21.61%   (3,004,452)   (14.89)%
Change in valuation allowance   982,476    2.17%   611,473    (5.07)%   1,332,639    6.60%
Other   12,909    0.03%   127,135    (1.06)%   
–
    0.00%
Indonesia                              
Effect of rates different than statutory   (506,592)   (1.12)%   (547,059)   4.54%   (286,635)   (1.42)%
Change in valuation allowance   506,592    1.12%   547,059    (4.54)%   286,635    1.42%
Japan                              
Effect of rates different than statutory   (1,699,449)   (3.76)%   (2,252,006)   18.69%   (2,794,360)   (13.85)%
Change in valuation allowance   1,409,196    3.12%   2,064,953    (17.14)%   2,713,231    13.45%
Other   296,667    0.66%   193,339    (1.60)%   88,037    0.44%
Malaysia                              
Effect of rates different than statutory   (1,731,969)   (3.83)%   (748,416)   6.21%   (147,842)   (0.73)%
Change in valuation allowance   1,343,335    2.97%   748,416    (6.21)%   123,608    0.61%
Other   388,634    0.86%   
–
    0.00%   24,234    0.12%
   December 31, 2025   December 31, 2024   December 31, 2023 
   Amount   Percent   Amount   Percent   Amount   Percent 
Mexico                        
Effect of rates different than statutory   (899,771)   (1.99)%   (2,242,286)   18.61%   8,278    0.04%
Change in valuation allowance   (406,639)   (0.90)%   5,280,980    (43.82)%   
–
    0.00%
Net operating loss adjustment   1,306,410    2.89%   (3,047,167)   25.29%   
–
    0.00%
Netherlands                              
Effect of rates different than statutory   (403,733)   (0.89)%   (138,981)   1.15%   (30,980)   (0.15)%
Change in valuation allowance   378,816    0.84%   145,663    (1.21)%   30,980    0.15%
Other   24,917    0.06%   (6,682)   0.06%   
–
    0.00%
Singapore                              
Effect of rates different than statutory   8,913,127    19.72%   (3,931,725)   32.63%   3,411,957    16.91%
Change in valuation allowance   (112,184)   (0.25)%   967,651    (8.03)%   (755,125)   (3.74)%
Net operating loss adjustment   (6,054)   (0.01)%   (27,204)   0.23%   730,899    3.62%
Other   132,208    0.29%   13,865    (0.12)%   20,514    0.10%
Thailand                              
Effect of rates different than statutory   (1,258,993)   (2.79)%   (537,787)   4.46%   (75,854)   (0.38)%
Change in valuation allowance   1,666,654    3.69%   552,978    (4.59)%   81,640    0.40%
Other   (407,661)   (0.90)%   (15,191)   0.13%   (5,785)   (0.03)%
United Kingdom                              
Effect of rates different than statutory   (46,558)   (0.10)%   (413,213)   3.43%   (879,032)   (4.36)%
Rate change   (14,702)   (0.03)%   (130,488)   1.08%   (277,589)   (1.38)%
Change in valuation allowance   211,062    0.47%   461,868    (3.83)%   979,941    4.86%
Other   (149,802)   (0.33)%   81,833    (0.68)%   176,681    0.88%
United States                              
Effect of rates different than statutory   10,591,302    23.43%   8,527,088    (70.76)%   4,753,341    23.56%
State and local taxes, net of federal benefit (1)   1,274,317    2.82%   2,909,776    (24.15)%   2,003,421    9.93%
Stock compensation windfall   (7,329,379)   (16.22)%   
–
    0.00%   
–
    0.00%
Officer Limitation   2,968,616    6.57%   
–
    0.00%   
–
    0.00%
Change in valuation allowance   362,513    0.80%   499,262    (4.14)%   308,464    1.53%
Provision to return differences   (240,384)   (0.53)%   1,077,065    (8.94)%   379,322    1.88%
                               
Other jurisdictions   
–
    0.00%   
–
    0.00%   (1)   0.0%
                               
Changes in Unrecognized Tax Benefits   2,725,717    6.01%   1,822,565    (15.14)%   1,716,722    8.51%
Total  $20,832,451    46.09%  $13,823,355    (114.71)%  $16,140,571    79.99%

 

(1)In 2025, state and local income taxes in California and Florida comprise the majority of the domestic state and local income taxes, net of federal benefit. In 2024, state and local income taxes in California, Florida, and Pennsylvania comprise the majority of the domestic state and local income taxes, net of federal effect category. In 2023, state and local income taxes in California, Florida, and New York City comprise the majority of the domestic state and local income taxes, net of federal effect category.

Deferred Tax Assets and Liabilities

 

Deferred tax assets and liabilities reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the deferred tax assets and liabilities are as follows:

 

   2025   2024 
Deferred tax assets        
Net operating loss carryforwards  $49,864,634   $36,533,676 
Compensation accruals   6,836,570    9,058,023 
Lease liabilities   2,114,670    3,022,320 
Other   3,741,161    1,921,076 
Total deferred tax assets   62,557,035    50,535,095 
Less: valuation allowance   (50,600,895)   (34,628,089)
Deferred tax assets, net of valuation allowance   11,956,140    15,907,006 
           
Deferred tax liabilities          
Right of use assets   (1,836,652)   (2,704,189)
Intangibles   (13,455,781)   (5,233,634)
Property and equipment   (682,942)   (886,939)
Total deferred tax liabilities   (15,975,375)   (8,824,762)
           
Net deferred tax asset  $(4,019,235)  $7,082,244 

 

We have income tax net operating loss carryforwards related to our international operations of $197,271,636. The table below presents the expiration of our net operating losses by jurisdiction as of December 31, 2025:

 

Jurisdiction  Net Operating Loss Carryforwards   Expiration 
Australia  $22,128,692    Indefinite 
Brazil   9,154,376    Indefinite  
Canada   26,538,344    2041 - 2045 
Hong Kong   27,967,444    Indefinite  
Japan   34,372,366    2026 - 2035 
Mainland China   2,922,433    2027 - 2030 
Mexico   15,662,780    2031 - 2035 
Singapore   13,836,101    Indefinite 
United Kingdom   8,617,299    Indefinite 
United States – Federal   3,574,039    Indefinite 
Others   32,497,762    * 
Total  $197,271,636    
 
 

 

* Of the other foreign net operating loss carryforwards, $28,574,864 expires between 2027 and 2034 and $3,922,898 have an indefinite expiration term.

 

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2025. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.

 

On the basis of this evaluation, as of December 31, 2025, a valuation allowance of $50,600,895 has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The net change in our valuation allowance for the year ended December 31, 2025 was an increase of $15,972,806. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth.

Tax on Unremitted Foreign Earnings

 

In general, it is our practice and intention to reinvest the earnings of our foreign subsidiaries in those operations. As of December 31, 2025, we have not made a provision for foreign withholding taxes on $404,869,725 of the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that is indefinitely reinvested. The jurisdictions to which this excess is attributable are United States and Mainland China in the amounts of $171,461,993 and $233,407,732 respectively. The estimated unrecorded amount of deferred tax liability related to investments in these foreign subsidiaries was $63,108,985 as of December 31, 2025. The jurisdictions to which the estimated unrecorded deferred tax liability is attributable are United States and Mainland China in the amounts of $51,438,598 and $11,670,387, respectively.

 

Unrecognized Tax Benefit

 

The following is a rollforward of our unrecognized tax benefits:

 

Total unrecognized tax benefit – January 1, 2024  $19,688,166 
Increase for prior year tax positions   (26,739)
Increase for year 2024 tax positions   2,183,671 
Settlements with taxing authorities   (157,542)
Total unrecognized tax benefit - December 31, 2024   21,687,556 
Adjustment to prior year tax positions   (1,669)
Increase for current year tax positions   2,779,223 
Settlements with taxing authorities   
–
 
Total unrecognized tax benefit - December 31, 2025  $24,465,110 

 

Included in the balance of unrecognized tax benefits as of December 31, 2025 are $725,232 of tax benefits that, if recognized, would affect the effective tax rate.

 

We recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense. Related to the unrecognized tax benefits noted above, we accrued penalties of $48,503 and interest of $45,302 during 2025 and, in total, as of December 31, 2025, recognized a liability for penalties of $161,793 and interest of $114,861. During 2024, we accrued penalties and interest of $21,148 and $36,253, respectively, and had recognized, in total, a liability for penalty and interest of $113,290 and $69,559, respectively.

 

We are subject to taxation in the various foreign jurisdictions. The table below outlines the open tax years of the material jurisdictions.

 

Material Jurisdictions  Open Years
Australia  2021-2025
Brazil  2023-2025
Canada  2021-2025
Hong Kong  2018-2025
Indonesia  2023-2025
Japan  2015-2025
Mainland China  2022-2025
Malaysia  2022-2025
Mexico  2023-2025
Netherlands  2022-2025
Singapore  2022-2025
Thailand  2022-2025
United Kingdom  2021-2025
United States  2022-2025