Income Taxes

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 16: INCOME TAXES

The Company's quarterly provision for income taxes is measured using an estimated annual effective tax rate adjusted for discrete items that occur within the quarter. For the three months ended September 30, 2022, the effective tax rate was (10.5)% compared to 6.3% for the three months ended September 30, 2021. The decrease in the effective tax rate was primarily due to the establishment of a valuation allowance against the Company's net deferred tax assets. For the nine months ended September 30, 2022, the effective tax rate was (12.7)% compared to 11.9% for the nine months ended September 30, 2021. The decrease in the effective tax rate was primarily due to the establishment of a valuation allowance against the Company's net deferred tax assets. 

A full valuation allowance was established in the second quarter of 2022 due to the uncertainty of the utilization of deferred tax assets in future periods. In evaluating the Company’s ability to realize the deferred tax assets, management considered all available positive and negative evidence, including cumulative historic earnings, reversal of temporary difference, projected taxable income and tax planning strategies. The Company’s negative evidence, largely related to the Company's historical net losses, currently outweighs its positive evidence of future taxable income therefore it is more-likely-than-not that the Company will not realize a significant portion of our deferred tax assets. The amount of the deferred tax asset to be realized in the future could however be adjusted if objective negative evidence is no longer present.