Note 9 - Income Taxes |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2025 | |||
| Notes to Financial Statements | |||
| Income Tax Disclosure [Text Block] |
During the three months ended March 31, 2025, the Company recorded a non-cash credit to its valuation allowance of $20,000, increasing its valuation allowance against deferred tax assets to $8.3 million as of March 31, 2025. The primary assets covered by this valuation allowance are net operating losses, which approximate $35.8 million at March 31, 2025. The Company did make any cash payments for income tax in the three-month periods ended March 31, 2025 and 2024 due to its net operating loss carryforwards.
The Company maintains a valuation allowance against deferred tax assets that currently exceeds our deferred tax liabilities. The primary assets covered by this valuation allowance are net operating loss carry-forwards. The valuation allowance was calculated in accordance with the provisions of FASB Accounting Standards Codification ("ASC") 740, Income Taxes, which requires an assessment of both positive and negative evidence when measuring the need for a valuation allowance. The Company’s results over the most recent four-year period were heavily affected by business restructuring activities. The Company’s cumulative loss represented sufficient negative evidence to require a valuation allowance. The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support its reversal, resulting in no deferred tax asset balance being recognized.
As of March 31, 2025, the Company has a valuation allowance that covers all deferred tax assets, net of deferred tax liabilities. The Company’s effective tax rate for the three-month period ended March 31, 2025 was 1.8%, primarily related to a taxable loss at all jurisdictions. The Company's effective tax rate for the three-month period ended March 31, 2024 was 142%, primarily related to state income tax paid in jurisdictions without prior net operating loss carryforwards available to offset taxable income.
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