Note 6 - Income Taxes |
3 Months Ended | |||
|---|---|---|---|---|
Mar. 31, 2026 | ||||
| Notes to Financial Statements | ||||
| Income Tax Disclosure [Text Block] |
Income tax expense was $20 and $192 for the three months ended March 31, 2025 and 2026. The income tax expense for the three months ended March 31, 2026 was primarily attributable to interest accrued related to uncertain tax positions (“UTP”) in income tax expense.
The effective tax rate for the three months ended March 31, 2026 was (8.9)%, compared with (0.8)% for the corresponding period of 2025. The change was largely attributable to the remeasurement of the FIN 48 liability and interest accrued for UTP. The primary component of the Company’s effective rate for both periods that drives the difference from the U.S. Federal corporate income tax rate of 21% is the impact of the tax rates in the jurisdictions, as well as the increases to the valuation allowance recorded against the deferred tax assets.
On a quarterly basis, the Company evaluates the realizability of deferred tax assets by jurisdiction and assesses the need for a valuation allowance. In assessing the realizability of deferred tax assets, the Company considers historical profitability, evaluation of scheduled reversals of deferred tax liabilities, projected future taxable income and tax-planning strategies. Valuation allowances have been provided on deferred tax assets where, based on all available evidence, it was considered more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. After consideration of all positive and negative evidence, as of December 31, 2025 and March 31, 2026, the Company maintained a full valuation allowance against its net deferred tax assets.
As of March 31, 2026, the Company had gross unrecognized tax positions of $10,658. The Company plans to reassess its UTP during the year, and as a result, the amount of UTP may change within the next 12 months. |