INCOME TAXES |
3 Months Ended |
|---|---|
Mar. 31, 2026 | |
| INCOME TAXES | |
| INCOME TAXES | note 13 — Income Taxes
The Company recognized federal, state and foreign income tax expense (benefit) of $16 thousand and $17 thousand for the three months ended March 31, 2026 and 2025, respectively. The effective tax rates for the three months ended March 31, 2026 and 2025, were (0.56)% and (0.45)%. The difference between the Company’s effective tax rate and the U.S. statutory tax rate of 21% was primarily due to the discrete recognition of a deferred tax benefit resulting from the release of the valuation allowance on the deferred tax assets of the Company’s Maltese subsidiary, Ellmount Entertainment Ltd, as well as the valuation allowance recorded on the Company’s net U.S. deferred tax assets and valuation allowances recorded on deferred tax assets in certain foreign jurisdictions where the Company operates. The Company evaluates the realizability of the deferred tax assets on a quarterly basis and establishes a valuation allowance when it is more likely than not that all or a portion of a deferred tax asset may not be realized. 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 March 31, 2026 or December 31, 2025.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted. Key income tax-related provisions of the OBBBA include the repeal of mandatory capitalization of domestic research and development expenditures under Internal Revenue Code (“IRC”) Section 174 (reinstating full expensing beginning in 2025), extension of bonus depreciation, and revisions to international tax regimes. These changes are reflected in the Company’s results for the three months ended March 31, 2026. |