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Note 12 - Income Taxes
 12 Months Ended
Mar. 31, 2025
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 12. Income Taxes

 

Provision for Income Taxes

 

Earnings (loss) before income taxes were as follows:

 

  

Year Ended March 31,

 
  

2025

  

2024

  

2023

 

Domestic

 $12,615  $(233,853) $1,887 

Foreign

  (6,654)  (41,795)  (2,276)

Total earnings (loss) before income taxes

 $5,961  $(275,648) $(389)

 

The components of our provision for income taxes were as follows:

 

  

Year Ended March 31,

 
  

2025

  

2024

  

2023

 

Current tax provision:

            

U.S. Federal

 $3,994  $3,002  $593 

U.S. State

  1,212   1,678   538 

Foreign

  2,790   2,330   1,070 

Total current tax expense

  7,996   7,010   2,201 

Deferred tax provision:

            

U.S. Federal

  63   (20,387)  (1,432)

U.S. State

  13   (1,853)  (210)

Foreign

  (137)  (6,172)  (1,878)

Total deferred tax (benefit)

  (61)  (28,412)  (3,520)

Total income tax expense (benefit)

 $7,935  $(21,402) $(1,319)

 

A reconciliation of our income tax provision and the amounts computed by applying statutory rates to earnings (loss) before income taxes was as follows (percentages may not perfectly sum due to rounding): 

 

  

Year Ended March 31,

 
  

2025

  

2024

  

2023

 
  

Amount

  

 

% 

Amount

  

 

% 

Amount

  

 

%

Earnings (loss) before income taxes

 $5,961      $(275,648)     $(389)    

Federal income taxes at statutory rates

  1,251   21.0%  (57,886)  21.0%  (82)  21.0%

State income taxes, net of federal benefit

  317   5.3%  (2,508)  0.9%  (1,075)  276.3%

Compensation adjustments

  2,283   38.3%  2,738   (1.0%)  1,506   (387.1%)

Research and development credit

  (1,054)  (17.7%)  (1,093)  0.4%  (1,010)  259.6%

Return to provision adjustment

  516   8.7%  (182)  0.1%  (125)  32.1%

Subpart F, GILTI, & FDII

  (484)  (8.1%)  (412)  0.1%  (127)  32.6%

Foreign rate differential

  2,047   34.3%  (566)  0.2%  (313)  80.5%

Permanent difference

  47   0.8%  479   (0.2%)  33   (8.5%)

Goodwill impairment

  -   -%  32,594   (11.8%)  -   -%

Valuation allowance

  3,019   50.6%  5,398   (2.0%)  (126)  32.4%

Other

  (7)  (0.1%)  36   -%  -   -%

Total income tax expense (benefit)

 ($7,935   133.1% $(21,402)  7.8% $(1,319)  339.1%

Effective income tax rate

  133.12%      7.76%      339.07%    

 

Deferred Tax Assets and Liabilities

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Components of our deferred tax assets (liabilities) were as follows:

 

  

2025

  

2024

 

Deferred tax assets:

        

Capitalized research expenditures

 $8,148  $5,116 

Credits

  2,774   2,528 

Allowances and reserves

  2,687   3,033 

Stock compensation deductible differences

  1,632   1,346 

Operating lease liabilities

  1,860   2,182 

Inventories

  1,153   668 

Net operating loss

  3,219   6,633 

Other

  265   187 

Deferred tax assets, gross

  21,738   21,693 

Valuation allowance

  (8,999)  (5,975)

Deferred tax assets, net

  12,739   15,718 

Deferred tax liabilities:

        

Operating lease right-of-use assets

  (1,843)  (2,120)

Goodwill and intangible assets

  (26,854)  (28,694)

Property, plant and equipment

  (2,273)  (2,813)

Other

  (579)  (579)

Total deferred tax liabilities

  (31,549)  (34,206)

Deferred tax asset/(liabilities)

  (18,810)  (18,488)

 

Valuation Allowance

 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. In evaluating the need for a valuation allowance, management takes into account various factors, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. Based on this evaluation, we have concluded that a valuation allowance is necessary on our U.S. and certain German operations and we do not expect to fully realize our deferred tax assets as of March 31, 2025.

 

The following table summarizes the changes in our valuation allowance for deferred tax assets: 

 

  

Year Ended March 31,

 
  

2025

  

2024

 

Beginning balance

 $5,975  $582 

Additions charged to income tax expense and other accounts

  3,657   5,398 

Deductions from reserves

  (637)  (5)

Cumulative translation adjustment

  4   - 

Ending balance

 $8,999  $5,975 

 

Net Operating Loss Credit and Carryforwards

 

As of March 31, 2025, we had U.S. and Foreign net operating loss (“NOL”) carryforwards consisting of the following: 

 

  

March 31, 2025

  

Expiration Date

 

Pre-2018 federal NOL carryforwards

 $-   N/A 

Post-2018 federal NOL carryforwards

  -  

Indefinite

 

State NOL carryforwards

  9,094  

March 31, 2030

 

Foreign NOL carryforwards

  11,671  

Indefinite

 

 

As of March 31, 2024, we had U.S. and Foreign NOL carryforwards consisting of the following: 

 

  March 31, 2024  

Expiration Date

 

Pre-2018 federal NOL carryforwards

 $-   N/A 

Post-2018 federal NOL carryforwards

  -  

Indefinite

 

State NOL carryforwards

  8,709  

March 31, 2035

 

Foreign NOL carryforwards

  22,595  

Indefinite

 

 

As of March 31, 2025, we had U.S. tax credit carryforwards consisting of the following:

 

  

March 31, 2025

  

Expiration Date

 

Federal research tax credit carryforwards

 $-   N/A 

State research tax credits carryforwards

  3,492  

March 31, 2036

 

Federal foreign tax credit carryforwards

  15  

March 31, 2037

 

 

As of March 31, 2024, we had U.S. tax credit carryforwards consisting of the following:

 

  March 31, 2024  

Expiration Date

 

Federal research tax credit carryforwards

 $-   N/A 

State research tax credits carryforwards

  3,181  

March 31, 2036

 

Federal foreign tax credit carryforwards

  15  

March 31, 2037

 

 

Undistributed earnings in foreign subsidiaries

 

For the year ended March 31, 2025, provisions have not been made for income taxes on $59,873 of undistributed earnings that were deemed permanently reinvested in foreign subsidiaries at March 31, 2025. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because such liability, if any, depends on certain circumstances existing if and when remittance occurs. A deferred tax liability will be recognized if and when we no longer plan to permanently reinvest these undistributed earnings.

 

Uncertain Tax Positions

 

Uncertain tax positions, if ever recognized in the financial statements, would be recorded in the consolidated statements of operations as part of the income tax provision. A reconciliation of the beginning and ending amount of unrecognized tax benefits, exclusive of interest and penalties, included in the deferred tax liability on our accompanying Consolidated Balance Sheets is as follows:

 

  

Year Ended March 31,

 
  

2025

  

2024

 

Beginning balance

 $-  $92 

(Decrease) increase related to prior period tax positions

  -   (92)

Increases related to current period tax positions

  -   - 

Ending balance

 $-  $- 

 

As of March 31, 2025, we have not recorded any gross unrecognized tax benefits. We recognize interest and penalties accrued on uncertain income tax positions in other expense and general and administrative expense, respectively. Interest and penalties included in other long-term liabilities on our accompanying Consolidated Balance Sheets were $0 for each of the years ended March 31, 2025, 2024 and 2023. We do not expect a material change in unrecognized tax benefits or interest in the next 12 months.

 

We file income tax returns in the U.S. various states and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world. The following tax years remain subject to examination:

 

Significant Jurisdictions

  Open Years 

U.S. Federal

  2021-2023 

U.S. States

  2021-2023 

Foreign

  2017-2023