The components of income (loss) before taxes, as shown in the accompanying Financial Statements, consisted of the following for the three and six months ended June 30, 2026 and 2025:
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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(Amounts in thousands) |
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Income (loss) before income taxes: |
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Domestic |
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$ |
(446 |
) |
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$ |
(418 |
) |
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$ |
(309 |
) |
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$ |
(3,004 |
) |
Foreign |
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444 |
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628 |
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|
964 |
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1,452 |
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Income (loss) before income taxes: |
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$ |
(2 |
) |
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$ |
210 |
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$ |
655 |
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$ |
(1,552 |
) |
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The Company has foreign subsidiaries that generate revenues from non-U.S.-based clients and provide services to the Company’s U.S. operations. As a result, a portion of the Company's earnings is subject to the foreign tax jurisdictions, which may have tax rates that differ from those in the United States. The provision (benefit) for income taxes, as shown in the accompanying Financial Statements, consisted of the following for the three and six months ended June 30, 2026 and 2025:
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
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2026 |
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2025 |
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2026 |
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2025 |
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(Amounts in thousands) |
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Current provision (benefit): |
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Federal |
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$ |
(94 |
) |
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$ |
313 |
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$ |
(447 |
) |
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$ |
(263 |
) |
State |
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37 |
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58 |
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(21 |
) |
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(48 |
) |
Foreign |
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125 |
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|
83 |
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|
294 |
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|
439 |
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Total current provision (benefit) |
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68 |
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454 |
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(174 |
) |
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128 |
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Deferred provision (benefit): |
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Federal |
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47 |
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(383 |
) |
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|
605 |
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(361 |
) |
State |
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5 |
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(71 |
) |
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103 |
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(67 |
) |
Foreign |
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(22 |
) |
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81 |
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(43 |
) |
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58 |
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Total deferred provision (benefit) |
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30 |
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(373 |
) |
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665 |
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(370 |
) |
Change in valuation allowance |
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- |
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(6 |
) |
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- |
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(6 |
) |
Total provision (benefit) for income taxes |
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$ |
98 |
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$ |
75 |
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$ |
491 |
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$ |
(248 |
) |
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The reconciliation of income taxes computed using the statutory U.S. income tax rate and the provision (benefit) for income taxes for the three and six months ended June 30, 2026 and 2025, were as follows (amounts in thousands):
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(Amounts in thousands) |
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Three Months Ended
June 30, 2026 |
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Three Months Ended
June 30, 2025 |
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Income taxes computed at the federal statutory rate |
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$ |
(1 |
) |
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(21 |
)% |
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$ |
44 |
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21.0 |
% |
State income taxes, net of federal tax benefit |
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43 |
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1,784* |
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(13 |
) |
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(6.2 |
) |
Stock-based compensation shortfalls |
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31 |
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1,287* |
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14 |
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6.7 |
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Non-deductible executive compensation |
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67 |
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2,777* |
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— |
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— |
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Difference in income tax rate on foreign
earnings/other |
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(42 |
) |
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(1,745)* |
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36 |
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17.1 |
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Change in valuation allowance |
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— |
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— |
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(6 |
) |
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(2.9 |
) |
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$ |
98 |
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4,082% |
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$ |
75 |
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35.7 |
% |
*The % for the Three months period ended June 30, 2026 is not comparable with June 30, 2025 on account of near break-even pre-tax loss during the three months period ended June 30, 2026. |
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(Amounts in thousands) |
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Six Months Ended
June 30, 2026 |
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Six Months Ended
June 30, 2025 |
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Income taxes computed at the federal statutory rate |
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$ |
138 |
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21.0 |
% |
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$ |
(326 |
) |
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(21.0 |
)% |
State income taxes, net of federal tax benefit |
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82 |
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12.5 |
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(115 |
) |
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(7.4 |
) |
Stock-based compensation shortfalls |
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116 |
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17.7 |
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(8 |
) |
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(0.5 |
) |
Non-deductible executive compensation |
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143 |
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21.8 |
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— |
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— |
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Difference in income tax rate on foreign
earnings/other |
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12 |
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2.0 |
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207 |
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13.3 |
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Change in valuation allowance |
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— |
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— |
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(6 |
) |
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(0.4 |
) |
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$ |
491 |
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75.0 |
% |
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$ |
(248 |
) |
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(16.0 |
)% |
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The effective tax rate for the three months ended June 30, 2026, was significantly greater than (100)% due to non-deductible executive compensation and excess tax expense arising from stock-based compensation combined with a near break-even pre-tax loss. As of June 30, 2026 and June 30, 2025, the Company maintained a valuation allowance of approximately $452,000 against net operating losses in Ireland and the United Kingdom that may not be realized.
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