Company: AIP
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001628280-25-048977
Chunk: 262

Company: Arteris, Inc.
Filing Date: 2025-11-04
Form: 10-Q
Item: Part I, Item 8
Chunk 262
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 in a dilution of the Company’s ownership in Transchip. The Company did not provide funding under this agreement.The Company reviews its investment in Transchip for impairment if and when circumstances indicate that a decline in fair value below its carrying amount may have occurred. Since Transchip’s formation, it has incurred losses financed primarily through investor capital. Transchip's ability to continue its operations is dependent upon raising additional capital, which it is currently expected to be able to raise. After completing an impairment assessment based on the prevailing facts and circumstances, the Company determined that the impairment condition was not considered other than temporary. As such, no impairment charge was recognized during the three months ended September 30, 2025.

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13. INCOME TAXES

The Company’s effective tax rate was (6.0)% and (5.2)% for the nine months ended September 30, 2025 and 2024, respectively. The Company’s income tax provision was $1.5 million and $1.3 million for the nine months ended September 30, 2025 and 2024, respectively. The change in forecasted foreign withholding tax, changes in the geographic mix of worldwide earnings which are taxed at different rates, and the impact of losses in jurisdictions with full valuation allowances, has resulted in a decrease in the income tax provision for the period ended September 30, 2025 compared to the period ended September 30, 2024.The Company’s management continuously evaluates the need for a valuation allowance and, as of September 30, 2025, concluded that a full valuation allowance on its federal, state, and certain foreign jurisdictions deferred tax assets was still appropriate.As of September 30, 2025 and 2024, the Company’s gross liability for unrecognized tax benefits was $3.6 million and $3.5 million, respectively. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of September 30, 2025 and 2024, the Company had immaterial accrued interest or penalties related to its unrecognized tax benefits. If any unrecognized tax benefits are realized, it would not result in any income tax benefit as the Company currently has a full valuation allowance against the deferred tax assets in which there is currently an uncertain tax benefit. On July 4, 2025, the U.S. enacted a budget reconciliation package, One Big Beautiful Bill Act of 2025. In accordance with GAAP, the Company accounted for the tax effects