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Income Taxes
 3 Months Ended
Mar. 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes
9.
Income Taxes

The components of income (loss) before income taxes, as shown in the accompanying Financial Statements, consisted of the following for the three months ended March 31, 2026 and 2025:

 

 

Three Months Ended
March 31,

 

 

2026

 

 

2025

 

 

(Amounts in thousands)

 

Income (loss) before income taxes:

 

 

 

 

 

 

Domestic

 

$

136

 

 

$

(2,586

)

Foreign

 

 

521

 

 

 

824

 

Income (loss) before income taxes

 

$

657

 

 

$

(1,762

)

 

The Company has foreign subsidiaries that generate revenues from non-U.S. clients and provide services to the Company’s U.S. operations. As a result, a portion of the Company’s earnings is subject to 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 months ended March 31, 2026 and 2025:

 

 

Three Months Ended
March 31,

 

 

2026

 

 

2025

 

 

(Amounts in thousands)

 

Current provision (benefit):

 

 

 

 

 

 

Federal

 

$

(353

)

 

$

(576

)

State

 

 

(58

)

 

 

(106

)

Foreign

 

 

169

 

 

 

356

 

Total current provision (benefit)

 

 

(242

)

 

 

(326

)

Deferred provision (benefit):

 

 

 

 

 

 

Federal

 

 

558

 

 

 

22

 

State

 

 

98

 

 

 

4

 

Foreign

 

 

(21

)

 

 

(23

)

Total deferred provision (benefit)

 

 

635

 

 

 

3

 

Change in valuation allowance

 

 

-

 

 

 

-

 

Total provision (benefit) for income taxes

 

$

393

 

 

$

(323

)

 

The reconciliation of income taxes computed using the statutory U.S. income tax rate and the provision (benefit) for income taxes for the three months ended March 31, 2026 and 2025 were as follows (amounts in thousands):

 

 

Three Months Ended
March 31, 2026

 

 

Three Months Ended
March 31, 2025

 

Income taxes computed at the federal statutory rate

 

$

138

 

 

 

21.0

%

 

$

(370

)

 

 

(21.0

)%

State income taxes, net of federal tax benefit

 

 

40

 

 

 

6.1

 

 

 

(102

)

 

 

(5.8

)

Stock-based compensation shortfalls

 

 

85

 

 

 

12.9

 

 

 

(22

)

 

 

(1.2

)

Non-deductible executive compensation

 

 

76

 

 

 

11.6

 

 

 

—

 

 

 

—

 

Difference in income tax rate on foreign
   earnings/other

 

 

54

 

 

 

8.2

 

 

 

171

 

 

 

9.7

 

 

$

393

 

 

 

59.8

%

 

$

(323

)

 

 

(18.3

)%

 

The Company evaluates deferred income taxes on a quarterly basis to determine whether valuation allowances are required or should be adjusted. Accounting guidance requires the Company to assess whether valuation allowances should be established against deferred tax assets based on all available evidence, both positive and negative, using a “more likely than not” standard. This assessment considers, among other factors, the nature of cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, and available tax planning strategies.

At March 31, 2026 and 2025, the Company’s valuation allowance relates primarily to net operating losses in Ireland and the United Kingdom, totaling approximately $435,000 and $452,000, respectively. These valuation allowances reflect uncertainties regarding the Company’s ability to realize these deferred tax assets in future periods.