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Note 6 - Income Taxes
 3 Months Ended
Mar. 31, 2025
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

6.

Income taxes

 

Income tax expense was $20 and $0 for the three months ended March 31, 2025 and 2024. The income tax expense for the three months ended March 31, 2025 was primarily attributable to interest accrued related to unrecognized tax benefits in income tax expense.

 

The effective tax rate for the three months ended March 31, 2025 of (0.8)% decreased compared to the effective tax rate of 0.0% for the three months ended March 31, 2024, primarily due to the accrual of interest related to unrecognized tax benefits. The primary component of the Company’s effective rate for both periods that drive 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, 2024 and March 31, 2025, the Company maintained a full valuation allowance against its net deferred tax assets.

 

As of March 31, 2025, the Company had gross unrecognized tax benefits of $4,359. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly change within the next 12 months.