v3.26.3
Income Taxes
 6 Months Ended
Jun. 30, 2026
Income Taxes  
Income Taxes

21. Income Taxes

 

The components of the Company’s income (loss) before income taxes and income (loss) from operations for the three and six months ended June 30, 2026 and 2025 are as follows:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2026

 

 

2025

 

 

2026

 

 

2025

 

 

 

 

 

(Unaudited)

 

Domestic (U.S.)

 

$

(130,283)

 

$(2,024,052)

 

$56,076

 

 

$(3,242,880)

Foreign (PRC)

 

 

(4,551,455)

 

 

19,058

 

 

 

(5,050,819)

 

 

(121,990)

Income (loss) before income taxes

 

 

(4,681,738)

 

 

(2,004,994)

 

 

(4,994,743)

 

 

(3,364,870)

Income tax expense (benefit)

 

 

(26,039)

 

 

(106,217)

 

 

(32,360)

 

 

(169,851)

Income (loss) from operations

 

$(4,655,699)

 

$(1,898,777)

 

$(4,962,383)

 

$(3,195,019)

Effective tax rate

 

 

0.6%

 

 

5.3%

 

 

0.6%

 

 

5.0%

 

The Company is subject to taxation in the U.S. and various states jurisdictions. The Company is also subject to taxation in China. The Company’s effective tax rate is determined quarterly, reflecting actual activities and various tax-related items.

 

The Company’s effective income tax rate for the three months ended June 30, 2026 and 2025 was 0.6% and 5.3%, respectively. The Company’s effective income tax rate for the six months ended June 30, 2026 and 2025 was 0.6% and 5.0%, respectively. The variance from the U.S. federal statutory rate of 21% for the six months ended June 30, 2026 was primarily attributable to losses not benefitted for U.S. federal and state income tax purposes. Also, the Company used foreign net operating losses to partially offset foreign taxable income. The decrease in the effective income tax rate for the six months ended June 30, 2026, compared with the corresponding period in 2025 primarily reflected a valuation allowance true-up recorded in the prior-year period that did not recur in the current year. In 2026, the Company's net deferred tax liability position did not change materially.                   

 

As of June 30, 2026, the Company determined that, based on an evaluation of its history of net losses and all available evidence, both positive and negative, including the Company’s latest forecasts and cumulative losses in recent years, it was more likely than not that all or substantially all of its deferred tax assets would not be realized and, therefore, the Company continued to record a valuation allowance on against U.S. federal and state net deferred tax assets and a partial valuation allowance against foreign deferred tax assets.