Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere in this report. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly in the sections titled Item 1A. "Risk Factors" and "Introductory Notes - Note Regarding Forward-Looking Statements."

Overview

We are a truckload services and solutions provider focused on the recycling export supply chain. We have become a key player in the New Jersey and Pennsylvania regional trucking market for waste paper. In addition to waste paper, our portfolio also includes the shipment of scrap metal and wooden logs from large waste companies, recycling centers and commodity traders to the ports of Newark, NJ, and Philadelphia, PA. We also provide import transportation services at the ports of Newark and Philadelphia, under which we transport cargo-filled containers from the ports to our customers' designated delivery locations. We continue to expand our footprints domestically and internationally and have ventured into the recycling export transport markets in Tampa, Jacksonville, and Miami, FL, and Baltimore, MD, in 2023, and Ensenada, Mexico in 2024, and Houston, Texas in 2025. We intend to explore the international market in Latin America, including Chancay, Peru, in the near future.

Our client base includes some of the largest Fortune 500 waste companies and over 207 recycling centers and commodity traders that operate in nearly 1,077 locations. Our growing client base relies on us as their partner to provide a "white glove service" to ensure their time-sensitive, ultra-high throughput commodities are safely loaded and delivered right to container ships. In addition, capitalizing on our know-how in developing logistics solutions over the years, we are able to propose integrated transportation solutions that cover loading, transport, port drayage and unloading.

Principal Factors Affecting Our Financial Performance

Our operating results are primarily affected by the following factors:

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our ability to acquire new customers or retain existing customers;

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our ability to offer competitive product pricing;

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our ability to broaden product offerings;

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industry demand and competition;

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our ability to leverage technology and use and develop efficient processes;

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our ability to attract and retain talented employees; and

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market conditions and our market position.

Results of Operations

Comparison of Years Ended December 31, 2025 and 2024

		Years Ended December 31:								Increase (Decrease)
		2025				2024*				$				%
Revenue		$	16,548,734				16,039,513				509,221				3	%
Costs and expenses
Costs of revenue			14,621,485				12,389,648				2,231,837				18	%
Cost of revenue-related parties			1,429,524				1,881,265				(451,741	)			-24	%
General and administrative			7,875,263				2,414,351				5,460,912				226	%
Total cost and expenses			23,926,272				16,685,264				7,241,008				43	%
Loss from operations			(7,377,538	)			(645,751	)			(6,731,787	)			(1,042	)%
Other income, net			17,793				711,202				(693,409	)			(97	)%
(Loss) income before income taxes			(7,359,745	)			65,451				(7,425,196	)			(11,345	)%
Provision for income taxes			(15,159	)			(109,420	)			94,261				(86	)%
Net (loss) income		$	(7,344,586	)			174,871				(7,519,457	)			(4,300	)%

*

Certain prior year amounts have been reclassified between cost of revenue and general and administrative expenses to conform to the current period presentation. These reclassifications had no impact on total operating expenses or net income. See Note 2- to the consolidated financial statements for further details.

Revenue

Revenue for the years ended December 31, 2025, and 2024 was $16,548,734 and $16,039,513, respectively, representing an increase of $509,221, or approximately 3%. The increase in revenue during 2025 was primarily attributable to growth in new commodity segments, particularly scrap metal and import freight. The Company's expansion of direct relationships with leading exporters of scrap metal and importers contributed significantly to this increase in revenue.

The market for U.S. recovered paper exports has experienced significant volatility in recent years. According to industry reports citing U.S. Census Bureau trade data, U.S. recovered paper exports declined to approximately 13.3 million short tons in 2024, down 11% from 2023 and among the lowest annual export levels in recent years. Historically, China was the largest importer of U.S. recovered paper; however, following China's restrictions on imports of unsorted waste paper, export demand has shifted to other markets, including India and certain Southeast Asian countries. In 2025, market conditions showed only a modest improvement in export volumes, with U.S. recovered paper exports totaling approximately 7.22 million metric tons during the first seven months of 2025, up about 4% from the comparable prior-year period. However, industry sources continued to characterize the 2025 market as soft, citing uneven overseas demand, weak pricing conditions for key grades such as OCC and mixed paper, and increased domestic consumption by U.S. mills, particularly on the West Coast. For the years ended December 31, 2025 and 2024, approximately 4,152 and 2,576 orders were completed, involving 13,232 and 16,641 loads, which amounted to approximately 496,200 and 465,948 tons of waste paper, respectively. While the number of loads decreased during the period, total volume increased by approximately 6.5%, suggesting a higher average volume per load. Revenue from paper decreased by $1,556,324, or 14.5%, to $9,153,668 for the year ended December 31, 2025 from $10,709,992 for the year ended December 31, 2024. The decrease reflects a combination of changes in load count, shipment volume per load, shipment mix, and pricing during the period.

U.S. scrap metal export markets, particularly for non-ferrous commodities such as aluminum and copper, experienced continued demand in recent years despite periodic volatility driven by global pricing, trade policy changes and shifts in destination markets. Industry data indicates that U.S. aluminum scrap exports increased approximately 17% year over year in 2024 to about 2.4 million metric tons, reflecting sustained international demand for recycled metals, while copper scrap exports remained significant at approximately 957,000 metric tons with an estimated value of $4.5 billion. In 2025, export markets for non-ferrous scrap continued to exhibit volatility due to evolving trade policies and increased domestic demand for secondary metals; however, global demand for recyclable feedstock remained an important driver of export activity. Against this industry backdrop, the Company experienced substantial growth in its scrap metal export business during 2025, primarily attributable to the expansion of direct client relationships with leading scrap metal exporters. As a result of these relationships and continued demand for non-ferrous scrap exports, the Company increased export shipping volumes by 1,170 loads in 2025 compared to 2024, representing an approximate 94.1% increase year over year. This growth in shipment volume contributed to a 77.4% increase in revenue from scrap metal export activities, representing an additional $890,996, year-over-year, rising from $1,150,794 in 2024 to $2,041,790 in 2025. While global scrap metal export markets may continue to experience fluctuations due to economic conditions, trade policies and shifts in domestic consumption, the Company believes that its direct relationships with major scrap metal exporters and participation in the non-ferrous export supply chain position to benefit from continued demand for recycled metals in international markets.

U.S. containerized import markets experienced significant volatility in 2025 due in part to shifting tariff policies, changes in global sourcing patterns and uncertainty surrounding U.S. trade policy. Industry reports indicate that U.S. container import volumes fluctuated throughout 2025 as importers accelerated shipments earlier in the year to avoid anticipated tariffs, followed by periods of weaker demand as higher duties and inventory adjustments affected cargo flows. Overall, U.S. container imports in 2025 were estimated at approximately 25.4 million TEUs, slightly below 2024 levels, reflecting the impact of tariff uncertainty and cautious inventory management by importers. These conditions contributed to uneven monthly import volumes throughout the year, particularly for shipments originating from Asia.

Despite this volatility in import volumes, the Company experienced substantial growth in its import freight business during 2025. Import loads increased by 2,218 containers, rising to 6,275 loads in 2025 compared to 4,057 loads in 2024, representing growth of approximately 54.7% year over year. Correspondingly, import revenue increased to $4,837,876 in 2025 from $3,556,824 in 2024, representing a 36% increase and additional revenue of $1,281,052. The Company believes this growth was primarily driven by the expansion of direct relationships with importers and a strategic focus on working directly with cargo owners rather than entering rate-sensitive arrangements with price-cutting brokerage intermediaries. As a result, even during periods of tariff-driven market volatility and fluctuating container volumes, the Company was able to expand its share of import-related trucking activity and generate meaningful growth in both shipment volumes and revenue.

Our revenue from the "Others" vertical, where we hire "outside trucks" in markets our fleet does not service. Utilizing "outside trucks" allows us to scale our operations and serve our national clients in emerging markets with low risk.

Our revenue consisted of the following during the years ended December 31, 2025, and 2024:

		2025				2024
Commodity
Paper		$	9,153,668			$	10,709,992
Import			4,837,876				3,556,824
Metal			2,041,790				1,150,794
Log			345,700				293,645
Plastic			169,700				328,258
		$	16,548,734			$	16,039,513

Cost and expenses

Costs of revenue

Our cost of revenue includes all directly related costs to deliver our services, which includes independent contractor drivers, insurance, truck maintenance costs, equipment rental, parking rent expense, dispatch service fees, depreciation and amortization and other directly related costs. Our costs of revenue for the years ended December 31, 2025 and 2024 was $16,051,009 and $14,270,913, respectively, representing an increase of 12%. Of these amounts, approximately $1,429,524 and $1,881,265 were related to transactions with related parties. Such increase was in line with our increased revenue. The increase was primarily attributable to higher depreciation expenses, additional dispatch service costs incurred during the year, and higher parking rent expenses related to our leased parking facilities. Changes in trade policies and tariffs may also have an indirect impact on market conditions, including shipment volumes and input cost dynamics; however, no material impact was identified for the period presented.

Gross profit

As a result of the foregoing, our gross profit decreased by $1,270,875 to $497,725 for the year ended December 31, 2025 from $1,768,600 for the year ended December 31, 2024. Gross margin decreased to 3% from 11% in the prior year. The decrease was primarily attributable to the increase in cost of revenue, which increased at a faster pace than revenue, primarily driven by higher depreciation expenses, increased dispatch service costs, and higher parking rent expenses related to our leased parking facilities.

General and administrative

Our general and administrative expenses consist primarily of automobile, office, insurance, payroll, rent expenses and stock compensation expenses. Our general and administrative expenses increased by $5,460,912 or 226% to $7,875,263 for the year ended December 31, 2025 from $2,414,351 for the year ended December 31, 2024. This change primarily results from an increase in professional fees from going public, travel expenses related to business development and depreciation expense, as well as the recognition of stock-based compensation in the amount of $5,363,550.

Income tax expense (benefit)

We recorded a provision for (benefit from) income taxes of $15,159 for the year ended December 31, 2025, as compared to $109,420 for the year ended December 31, 2024, a decrease of $94,261 or 86%. The change was primarily attributable to the change in pre-tax results during the year.

Net (loss) income

Net (loss) income for the years ended December 31, 2025 and 2024 was $(7,344,586) and $174,871, respectively. The change of net income was due to the decrease in gross profit as well as increased stock-based compensation.

Other Performance Indicator

We use Number of Loads Completed, or NLC, as a key performance indicator to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions. This measure may be used by other companies in our industry who may calculate it differently than we do, limiting its usefulness as a comparative measure. Therefore, NLC may have limitations as an analytical tool.

We define NLC as the total number of loads delivered during a period. As our fleet exclusively offers full truckload shipping, tracking NLC is straightforward. We recognize a completed load when our dispatch team receives the receipt paperwork from the driver at the port or other destination. We simultaneously notify the client of the delivery. We use our proprietary analytics system to record NLC. As we ship both 40-foot and 20-foot shipping containers, the total tonnage transported represents the sum of the weight of the loads included in NLC for the period presented, based on an average weight of 28 tons per load. The average weight of 28 tons per load is an estimate made by the management based on historical data.

The NLC information, including the related estimated total tonnage, has been prepared by, and is the responsibility of, the Company's management. Our principal accountant has not audited, reviewed, examined, compiled or applied agreed-upon procedures with respect to such NLC information and, accordingly, our principal accountant does not express an opinion or any other form of assurance with respect thereto. The report of our principal accountant relates to the Company's previously issued financial statements, and it does not extend to the NLC information and should not be read to do so.

The table below shows both the total NLCs and a breakdown of NLCs by business vertical during the fiscal years ended December 31, 2025 and 2024. Our revenue generation directly corresponds to NLC but is also impacted by the rates charged to customers.

		Year ended December 31, 2025								Year ended December 31, 2024
		Number of Loads Completed				Percentage in Total NLC				Number of Loads Completed				Percentage in Total NLC
Waste Paper			13,232				59.0	%			16,641				73.4	%
Waste Metal			2,413				10.7	%			1,243				5.5	%
Forestry			315				1.4	%			271				1.2	%
Import			6,275				28.0	%			4,057				17.9	%
Others			208				0.9	%			453				2.0	%
Total			22,443				100	%			22,665				100	%

For the year ended December 31, 2025, the NLC for Waste Paper decreased by 3,409, or 20.5%, to 13,232, from 16,641 for the year ended December 31, 2024. The decrease primarily reflected continued softness in export demand for recovered paper and increased domestic mill consumption, which reduced the number of export shipments during the period.

For the year ended December 31, 2025, the NLC for Waste Metal increased by 1,170, or 94.1%, to 2,413, from 1,243 for the year ended December 31, 2024. The increase was primarily attributable to higher demand for non-ferrous scrap exports and growth in shipments from existing and new customers.

For the year ended December 31, 2025, the NLC for Forestry increased by 44, or 16.2%, to 315, from 271 for the year ended December 31, 2024. The increase reflected higher customer shipping activity during the year due to volatility caused by implication of tariffs.

For the year ended December 31, 2025, the NLC for Import increased by 2,218, or 54.7%, to 6,275, from 4,057 for the year ended December 31, 2024. The increase was primarily attributable to growth in direct relationships with import customers despite volatility in import container demand influenced by trade tariffs.

For the year ended December 31, 2025, the NLC for Others decreased by 245, or 54.1%, to 208, from 453 for the year ended December 31, 2024. The decrease was primarily attributable to lower volumes from customers shipping plastics and other materials.

For the year ended December 31, 2025, total NLC decreased by 222, or 1.0%, to 22,443, from 22,665 for the year ended December 31, 2024. The decrease was primarily due to lower Waste Paper loads, partially offset by increases in Waste Metal and Import loads.

Liquidity and Capital Resources

As of December 31, 2025 and December 31, 2024, we had cash of $1,202,395 and $557,619, respectively. To date, we have financed our operations primarily through its operations, the proceeds from the issuance of common stock, as well as strategic financing.

During the year ended December 31, 2025, we had a net loss of $7,344,586 and net cash used in operations of $1,781,512, which resulted primarily from an increase in professional fees resulting from our IPO, non cash stock-based compensation expense of $5,363,550, as well higher cost of revenue, mainly driven by increased depreciation and amortization, facility-related expenses such as parking rent and increased current income tax expense from prior years liabilities. Subsequent to December 31, 2025, we have expanded our business operations to certain new territories and have raised service prices in response to market changes. Additionally, approximately of $2 million of our outstanding loan receivable are expected to be collected in 2026 and will be used in our operations. Currently, we are working to improve our liquidity and capital sources. In order to fully implement our business plan and sustain continued growth. We may, however, in the future require additional cash resources due to changing business conditions, implementation of our strategy to expand our business, or other investments or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional loans. The sale of additional equity securities could result in dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. At the present time, however, we do not have commitments of funds from any lenders or potential investors. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.

Summary of Cash Flow

The following table provides detailed information about our net cash flow for the fiscal years ended December 31, 2025 and 2024:

		Years Ended
		December 31, 2025				December 31, 2024
Net cash used in operating activities		$	(1,781,512	)		$	(593,734	)
Net cash used in investing activities			(5,855,370	)			(1,211,981	)
Net cash provided by financing activities			8,281,657				907,358
Net increase (decrease) in cash			644,776				(898,357	)
Cash at beginning of year			557,619				1,455,976
Cash at end of year		$	1,202,395			$	557,619

Operating activities used net cash of $1,781,512 during the year ended December 31, 2025, and $593,734 during the year ended December 31, 2024. Cash used in operating activities increased by $1,187,778 primarily due to a decrease in net income (loss) of $7,519,457, the recognition of stock-based compensation of $5,363,550, and an overall decrease of $1,109,896 from the change in operating assets and liabilities, for the year ended December 31, 2025 in comparison of the year ended December 31, 2024.

Investing activities used net cash of $5,855,370 during the year ended December 31, 2025, and $1,211,981 during the year ended December 31, 2024. Cash used in investing activities increased by $4,643,389 as compared to prior year. This change was primarily due to $5,000,000 in notes receivable activities during the year ended December 31, 2025.

Financing activities provided net cash of $8,281,657 during the year ended December 31, 2025 and $907,358 during the year ended December 31, 2024. Cash used in financing activities increased by $7,374,299. The increase in December 31, 2025, amount is due to $8,459,232 in proceeds from the issuance of common stock, offset by $1,124,039 in repayments of loans payable.

Material Cash Requirements from Known Contractual and Other Obligations

The following table summarizes our contractual obligations as of December 31, 2025 and as for the 12 months thereafter:

Contractual Obligations		As of December 31, 2025				For the year ending December 31, 2026
Operating lease obligations		$	319,298			$	240,018
Operating lease obligations - related party		$	69,059			$	66,000
Debt obligations (principal repayments)		$	992,005			$	383,827
Debt obligations (principal repayments) -related party		$	84,487			$	84,487
Total Contractual Obligations		$	1,464,849			$	774,332

We intend to fund our contractual obligations with working capital.

Initial Public Offering and Underwriting Agreement

On January 21, 2025, we entered into an Underwriting Agreement (the "Underwriting Agreement"), with A.G.P./Alliance Global Partners ("AGP"), as representative of the underwriters named on Schedule 1 thereto, relating to the Company's initial public offering of 2,500,000 shares of common stock (the "IPO Shares"). Pursuant to the Underwriting Agreement, in exchange for AGP's firm commitment to purchase the IPO Shares, the Company agreed to sell the IPO Shares to AGP at a purchase price of $3.72 (93% of the public offering price per share of $4.00, after deducting underwriting discounts and before deducting a 1% non-accountable expense allowance). The Company also agreed to issue AGP warrants (the "Representative's Warrant") to purchase 5% of the aggregate number of the IPO Shares, at an exercise price equal to $4.80, equal to 120% of the public offering price, subject to adjustment.

On January 22, 2025, the IPO Shares were listed and commenced trading on the NYSE American.

The closing of the initial public offering took place on January 23, 2025. At the closing, the Company sold the IPO Shares for total gross proceeds of $10,000,000. After deducting the underwriting discounts, non-accountable expense allowance, and other expenses from the gross proceeds, the Company received net proceeds of approximately $8.28 million. The Company also issued AGP the Representative's Warrant exercisable for the purchase of 125,000 shares of common stock at an exercise price of $4.80 per share, subject to adjustment. The Representative's Warrant may be exercised by payment of cash or by a cashless exercise provision, and may be exercised at any time for three (3) years following the date of commencement of sales of the initial public offering, in whole or in part.

The offer and sale of the IPO Shares, and the issuance of the Representative's Warrant, were registered pursuant to the Company's Registration Statement on Form S-1 (File No. 333-281474), as amended (the "IPO Registration Statement"), initially filed with the SEC on August 12, 2024, and declared effective by the SEC on January 21, 2025, and by means of the final prospectus, dated January 21, 2025, filed with the SEC on January 22, 2025 pursuant to Rule 424(b)(4) of the Securities Act, or the Final IPO Prospectus.

The IPO Registration Statement included the registration for sale of an additional 375,000 shares of common stock at the public offering price of $4.00 per share upon full exercise of the underwriters' over-allotment option. The additional shares of common stock underlying the Representative's Warrant registered for sale by the IPO Registration Statement included 18,750 shares of common stock that the underwriters had the option to purchase upon exercise of the Representative's Warrant which would be issuable upon full exercise of the underwriters' over-allotment option. The underwriters' over-allotment option expired unexercised.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

The following discussion relates to critical accounting policies for our company. The preparation of financial statements in conformity with GAAP requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management's difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management's current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:

Accounts Receivable, net

Accounts receivable represent revenue earned for which the Company has not yet received payment. Accounts receivable are recorded at the invoiced amount and adjusted for amounts management expects to collect from balances outstanding at period-end. The Company adopt the current expected credit loss model ("CECL model") to estimate the expected credit losses, which is determined by multiplying the probability of default. The Company estimates the allowance for credit loss based on an analysis of specific accounts and an assessment of the customer's ability to pay, among other factors. The allowance for credit losses was $123,371 as of December 31, 2025 and December 31, 2024. The balance of accounts receivable, net as of December 31, 2025 and December 31, 2024 amounted to $1,402,421 and $1,203,001, respectively. As of the date of this report issued, we collected approximately $1.4 million or 91% of accounts receivable outstanding as of December 31, 2025.

Revenue Recognition

The Company's revenue recognition policy is based on the revenue recognition criteria established under the Financial Accounting Standards Board ("FASB") - Accounting Standards Codification 606 "Revenue From Contracts With Customers" ("ASC 606"), which has established a five-step process to govern contract revenue and satisfy each element is as follows: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when or as you satisfy a performance obligation. The Company records the revenue once all the above steps are completed and services are performed.

The Company's contracts with customers only include one performance obligation, which is to provide the delivery of truckload services. Revenue is recognized in the gross amount at a point in time when the service is completed and the benefit of our services has been transferred to the customer. This has been determined to be when the goods are delivered to its final destination point. At this point in time, the Company has a present right to payment, and the performance obligation has been met. It is not until delivery is completed that the Company completed its performance obligation. The customer is not simultaneously receiving and consuming the benefit of the performance until the delivery to its final destination. The Company has determined that during transit, which is typically within twenty four hours, it would be impractical for another entity to complete its performance obligation due to various circumstances which would not lend it to be feasible. Additionally, every performance obligation of the Company is related to a unique order number between the customer and the final destination point. If that specific order cannot be completed, the Company or another provider would need to go through a process change of receiving a new order number due to homeland security and customs restrictions which results in the customer not simultaneously receiving benefits during transit time. The Company is primarily responsible for fulfilling the promise to provide the specified service to its customers. In addition, the Company has discretion in establishing the price for the specified services and bears risk of loss of goods until delivery is completed. Transport time from pick up to the delivery of truckloads is typically within the same day. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for those services. Because revenue is recognized at the point in time services are sold to customers, there are no contract liability balances except for when an amount is billed before the service is performed, however there may be contract asset balances for any services provided that were not billed. The Company's revenue recognition is the same for whether the Company engages independent contractors or its brokerage model for owner operators.

Income Taxes

Historically and through December 31, 2021, the Company elected, by consent of its stockholders, to be taxed under the provisions of Subchapter S of the Internal Revenue Code and applicable state statutes. The Company made a qualified Subchapter S subsidiary election with the Internal Revenue Service and accordingly the Company's income is to be included in the Parent's income tax return for Federal tax purposes. The Company has also elected S Corporation status for Pennsylvania State tax purposes. The Company revoked its Subchapter S election with the Internal Revenue Service and Pennsylvania as of January 1, 2022.

As of January 1 2022, the Company accounts for income taxes utilizing the asset and liability approach. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes generally represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from the differences between the financial and tax bases of the Company's assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted.

The calculation of tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for anticipated tax audit issues based on the Company's estimate of whether, and the extent to which, additional taxes will be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when the liabilities are no longer determined to be necessary. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result.

The Company evaluates uncertain income tax positions taken or expected to be taken in a tax return for recognition in its consolidated financial statements. The Company was not required to recognize any amounts from uncertain tax positions for the years ended December 31, 2025 and 2024. The Company's conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analyses of tax laws, regulations and interpretations thereof, as well as other factors. Generally, federal, state and local authorities may examine the Company's tax returns for three years from the date of filing.

Recent Accounting Pronouncements

In January 2025, the FASB issued ASU 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This update clarified that the disaggregation requirements of ASU 2024-03 are effective for public business entities for annual periods beginning after December 15, 2026. The adoption of this clarification had no impact on the Company's financial position or results of operations

In March 2025, the FASB issued ASU 2025-02-Liabilities (405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 122. The amendments in this Update are effective immediately and on a fully retrospective basis to annual periods beginning after December 15, 2024. The Company is currently evaluating the effect of adoption of this standard to its consolidated financial statements and disclosures.

In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquirer in the Acquisition of a Variable Interest Entity. The amendments provide guidance on identifying the accounting acquirer in transactions involving a variable interest entity. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting period within those annual periods. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of this amendment and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations, or cash flows.

In May 2025, the FASB issued ASU 2025-04, Compensation - Stock Compensation (Topic 18) and Revenue from contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer. The amendments provide guidance on identifying the accounting acquirer in transactions involving a variable interest entity. The amendments clarify the accounting for share-based consideration payable to a customer under Topic 718 and Topic 606. The amendments are effective for annual reporting periods, including interim reporting period within those annual periods, beginning after December 15, 2026. Early adoption is permitted. The Company is currently evaluating the impact of this amendment and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations, or cash flows.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide a practical expedient and, if applicable, an accounting policy election to simplify the measurement of credit losses for certain receivables and contract assets. The amendments are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in any interim or annual period in which financial statements have not been issued or made available for issuance. The Company is currently evaluating the impact of this amendment and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations, or cash flows.