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NOTE 14 - INCOME TAXES | 12 Months Ended
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Dec. 31, 2025
INCOME TAXES |
INCOME TAXES | NOTE 14 — INCOME TAXES The Company’s pre-tax loss from continuing operations before income taxes for the years ended December 31, 2025 and 2024 from domestic and foreign operations are as follows:
|  | Year Ended December 31, |
(in thousands) |  | 2025 |  | 2024 |
Domestic |  | $ | (1,492) |  | $ | (4,891) |
Foreign |  |  | (760) |  |  | (3,720) |
Loss before income taxes |  | $ | (2,252) |  | $ | (8,611) |
The components of income tax expense for the years ended December 31, 2025 and 2024 are summarized as follows:
|  | Year Ended December 31, |
|  | 2025 |  | 2024 |
(in thousands) |  |  |  |  |  |  |
Current income taxes: |  |  |  |  |  |  |
Federal |  | $ | 14 |  | $ | — |
State and local |  |  | — |  |  | — |
Foreign |  |  | 107 |  |  | — |
|  |  | 121 |  |  | — |
Deferred income taxes: |  |  |  |  |  |  |
Federal |  |  | — |  |  | — |
State and local |  |  | — |  |  | — |
Foreign |  |  | (3,063) |  |  | 7 |
|  |  | (3,063) |  |  | 7 |
Income tax expense (benefit) |  | $ | (2,942) |  | $ | 7 |
Total cash taxes paid net of refunds received in 2025 was $22 k paid to Malta. Beginning in 2025 annual reporting, we adopted ASU 2023-09 prospectively. Reconciliations of income tax expense computed at the U.S. federal statutory income tax rate of 21% to the recognized income tax expense pursuant to the disclosure requirements of ASU 2023-09, as codified under ASC 740-10-50-12A, for the year ended December 31, 2025 is as follows:
|  | Year Ended December 31, |  |  | Year Ended December 31, |
|  | 2025 |  |  | 2024 |
($ in thousands) |  |  | Amount |  |  | Percent |  |  |  | Amount |  |  | Percent |
U.S. federal statutory income tax rate |  | $ | (33) |  |  | 1.47 | % |  | $ | (1,242) |  |  | 14.42 | %
Statutory tax rate difference between Malta and United States |  |  | 284 |  |  | (12.61) | % |  |  | — |  |  | — | %
Change in valuation allowance |  |  | (4,203) |  |  | 186.63 | % |  |  | 985 |  |  | (11.44) | %
Sale of asset |  |  | 472 |  |  | (20.96) | % |  |  | — |  |  | — | %
Write off balances |  |  | (32) |  |  | 1.42 | % |  |  | — |  |  | — | %
Non-trading expenses |  |  | 27 |  |  | (1.20) | % |  |  | — |  |  | — | %
Other |  |  | (3) |  |  | 0.13 | % |  |  | 50 |  |  | (0.58) | %
Curacao |  |  |  |  |  |  |  |  |  |  |  |  |  |
Statutory tax rate difference between Curacao and United Stated |  |  | (8) |  |  | 0.36 | % |  |  | — |  |  | — | %
Change in valuation allowance |  |  | 227 |  |  | (10.08) | % |  |  | — |  |  | — | %
Extraterritorial gross profit adjustment |  |  | (17) |  |  | 0.75 | % |  |  | — |  |  | — | %
Cyprus |  |  |  |  |  |  |  |  |  |  |  |  |  |
Statutory tax rate difference between Cyprus and United Stated |  |  | (2) |  |  | 0.09 | % |  |  | — |  |  | — | %
Change in valuation allowance |  |  | (4) |  |  | 0.18 | % |  |  | — |  |  | — | %
British Virgin Islands |  |  |  |  |  |  |  |  |  |  |  |  |  |
Statutory tax rate difference between British Virgin Islands and United Stated |  |  | 8 |  |  | (0.36) | % |  |  | — |  |  | — | %
Change in valuation allowance |  |  | (96) |  |  | 4.26 | % |  |  | — |  |  | — | %
Nontaxable or nonincludible items: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other permanent items |  |  | 22 |  |  | (0.98) | % |  |  | — |  |  | — | %
Forfeiture of stock options |  |  | 71 |  |  | (3.15) | % |  |  | — |  |  | — | %
tax shortfalls from equity award vestings |  |  | 16 |  |  | (0.71) | % |  |  | — |  |  | — | %
Meals & entertainment |  |  | 9 |  |  | (0.40) | % |  |  | — |  |  | — | %
Sale of asset |  |  | (840) |  |  | 37.30 | % |  |  | — |  |  | — | %
Effect of cross-border tax laws |  |  |  |  |  |  |  |  |  |  |  |  |  |
GIL TI |  |  | 1,077 |  |  | (47.82) | % |  |  | — |  |  | — | %
Provision to return differences |  |  | 82 |  |  | (3.64) | % |  |  | (21) |  |  | 0.24 | %
Statutory to US GAAP adjustments |  |  | 1 |  |  | (0.04) | % |  |  | (28) |  |  | 0.33 | %
Foreign tax rate differential |  |  | — |  |  | — | % |  |  | 263 |  |  | (3.05) | %
Income tax expense (benefit) |  | $ | (2,942) |  |  | 130.64 | % |  | $ | 7 |  |  | (0.08) | %
Deferred Tax Assets and Liabilities The components of deferred income tax assets and liabilities as of December 31, 2025 and 2024 are summarized as follows:
|  | December 31, |
(in thousands) |  | 2025 |  | 2024 |
Deferred tax assets - noncurrent: |  |  |  |  |  |  |
Net operating loss carryforward |  | $ | 5,455 |  | $ | 5,526 |
Unrealized gain or loss |  |  | 286 |  |  | 434 |
Intangible assets |  |  | (1) |  |  | 197 |
Share-based compensation |  |  | 311 |  |  | 247 |
Other |  |  | 5 |  |  | 6 |
PPE |  |  | 26 |  |  | — |
Less: valuation allowance net of release |  |  | (2,897) |  |  | (6,410) |
Total deferred tax assets |  |  | 3,185 |  |  | — |
Deferred tax liabilities: |  |  |  |  |  |  |
Gaming License |  |  | (829) |  |  | — |
Net deferred tax assets (liabilities) |  | $ | 2,356 |  | $ | — |
The Company regularly reviews its deferred tax assets, including net operating loss carryovers, for recoverability, and a valuation allowance is provided when it is more-likely-than-not that some portion or all of a deferred tax asset may not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences are deductible. In assessing the need for a valuation allowance, the Company makes estimates and assumptions regarding projected future taxable income, its ability to carry back operating losses to prior periods, the reversal of deferred tax liabilities and the implementation of tax planning strategies. Based on the Company’s cumulative earnings history and unpredictable nature of the gaming industry, among other things, the Company has determined it is not more-likely-than-not to realize existing deferred tax assets and thus has recorded a valuation allowance for High Roller Technologies, Inc, Ellmount Entertainment Ltd, Wowly N.V. Ltd, High Roller Solutions Limited, HR Entertainment Solutions Limited, InterStellar Entertainment N.V, and Deepdive Holdings Ltd. As the Company reassesses these assumptions in the future, changes in forecasted taxable income may alter this expectation and may result in changes to the valuation allowance and the effective tax rate. During the year ended December 31, 2025, the Company released the valuation allowance related to the deferred tax assets of Ellmount Entertainment Ltd., resulting in a income tax benefit of $3,159,769. This release was based on positive evidence, including a cumulative history of earnings, management’s updated financial projections, recent operating results, and executed revenue contracts that support expectations of continued profitability. In evaluating the realizability of deferred tax assets of Ellmount Entertainment Ltd., management also considered negative evidence such as historical operating losses; however, management concluded that the positive evidence outweighed the negative evidence. The remaining valuation allowance for the Company and its other subsidiaries continues to be maintained where management believes it is not more-likely-than-not that the deferred tax assets will be realized. The Company has determined that undistributed earnings of its non-U.S. subsidiaries will be reinvested for an indefinite period of time. The Company has both the intent and ability to indefinitely reinvest these earnings. Given its intent to reinvest these earnings for an indefinite period of time, the Company has not accrued a tax liability on these earnings. A determination of an unrecognized tax liability related to these earnings is not practical at this time. As of December 31, 2025 and 2024, the Company has U.S. federal net operating loss carryforwards of $4.2 million and $4.6 million, respectively, which are available to offset future taxable income and do not expire. U.S. federal net operating loss carryforwards are limited to offsetting 80% of taxable income in any given tax year. As of December 31, 2025 and 2024, the Company has foreign net operating loss carryforwards of $0.0 million and $15.7 million, respectively, which are available to offset future foreign taxable income. As of December 31, 2025, and 2024, the Company’s foreign net operating loss carryforwards of $7.2 million and $5.8 million, respectively, expire at various times from 2025 to 2035, while the remainder of the Company’s foreign net operating loss carryforwards do not expire. The federal and foreign net operating loss as of December 31, 2025 and 2024 are summarized as follows:
|  | Year Ended December 31,
(in thousands) |  | 2025 |  |  | Expiration |  |  | 2024 |  |  | Expiration
US net operating loss carryforwards |  | $ | 4,210 |  |  | Indefinite |  |  | $ | 4,639 |  |  | Indefinite
Foreign net operating loss carryforwards (Malta) |  |  | 8,078 |  |  | Indefinite |  |  |  | 9,867 |  |  | Indefinite
Foreign net operating loss carryforwards (Curacao) |  |  | 7,163 |  |  | 2025-2035 |  |  |  | 5,797 |  |  | 2024-2034
Foreign net operating loss carryforwards (Cyprus) |  |  | 10 |  |  | 2027-2030 |  |  |  | 42 |  |  | 2027-2029
|  | $ | 19,461 |  |  |  |  |  | $ | 20,345 |  |  |
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which includes provisions that impact corporations. OBBBA retroactively permits the immediate expensing of domestic research and experimental expenditures while continuing to require capitalization and amortization of foreign research and experimental expenditures over 15 years under I.R.C. Section 174. The Company did not have any capitalized Section 174 expenditures that would be deductible retroactively by filing amended returns. The Company has evaluated the impact of other OBBBA provisions on its income tax provision and overall tax position and determined there are no material impact on the financial statements. Uncertain Tax Positions The Company evaluates its tax positions and recognizes tax benefits that, more-likely-than-not, will be sustained upon examination based on the technical merits of the position. The Company did not have any unrecognized tax benefits as of December 31, 2025 or 2024.

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