Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Loss before income taxes was as follows (in thousands):

	Year Ended December 31,
	2024		2023		2022
Domestic	$	(62,368)	$	(46,602)	$	(50,611)
Foreign	1,500		3,954		(3,624)
Loss before income taxes	$	(60,868)	$	(42,648)	$	(54,235)

Income tax (benefit) expense was as follows (in thousands):

	Year Ended December 31,
	2024		2023		2022
Current tax expense (benefit):
State	$	(7)	$	53	$	73
Foreign	557		(985)		264
Current tax expense (benefit)	550		(932)		337
Deferred tax expense (benefit):
Foreign	(626)		(46)		7
Deferred tax expense (benefit)	(626)		(46)		7
Income tax expense (benefit)	$	(76)	$	(978)	$	344

The income tax (benefit) expense differs from the amount computed by applying the statutory federal income tax rate of 21% to the loss before income taxes as a result of the following differences (in thousands):

	Year Ended December 31,
	2024		2023		2022
Tax computed at federal statutory rate	$	(12,782)	$	(8,956)	$	(11,436)
State tax, net of federal tax benefit	(1,066)		(800)		(842)
Permanent items	175		(364)		(522)
Stock-based compensation	287		1,923		4,005
Foreign dividends and unremitted earnings	56		104		(231)
Foreign rate differential	35		146		(360)
Federal credits	(920)		(988)		(445)
Tax contingencies, net of reversals	(1,215)		(1,177)		256
Transfer pricing adjustment	1,091		—		—
Return to provision	441		(429)		(523)
Expiration of net operating loss carryforwards	4,115		1,810		—
Other	660		49		(324)
Valuation allowance	9,047		7,704		10,766
Income tax (benefit) expense	$	(76)	$	(978)	$	344

The income tax (benefit) expense recorded primarily relates to operations in China and Finland, which have income tax rates of 25% and 20%, respectively.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (in thousands):

	Year Ended December 31,
	2024		2023		2022
Deferred tax assets:
Net operating loss carryforwards	$	42,058	$	39,714	$	39,998
Research and alternative minimum tax credits	8,432		7,822		6,658
Accrued expenses and other	5,240		4,365		4,999
Lease liabilities	2,534		2,854		3,270
Inventory	3,712		3,283		3,305
Property and equipment	707		387		293
Intangible assets	21,720		16,612		9,184
Total gross deferred tax assets	84,403		75,037		67,707
Less: valuation allowance	(81,480)		(72,461)		(64,796)
Total deferred tax assets	2,923		2,576		2,911
Deferred tax liabilities:
Right-of-use assets	(2,213)		(2,487)		(2,869)
Total deferred tax liabilities	(2,213)		(2,487)		(2,869)
Net deferred tax assets	$	710	$	89	$	42

Net deferred tax assets are included in Other assets, net in our Consolidated Balance Sheets.

In evaluating our valuation allowance, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Due to uncertainty with respect to ultimate realizability of deferred tax assets, we have provided a full valuation allowance against the U.S. deferred tax assets and a partial valuation allowance against the China deferred tax assets. The net change in the total valuation allowance for the years ended December 31, 2024, 2023 and 2022 were increases of $9.0 million, $7.7 million and $10.6 million, respectively.

At December 31, 2024, we had U.S., China, and state net operating loss (NOL) carryforwards of $169.6 million, $8.4 million, and $52.9 million, respectively. These carryforwards will expire from 2025 to 2044 if not used by us to reduce taxable income in future periods. We have U.S. research and development credit carryforwards of $9.9 million. These carryforwards will expire from 2025 to 2044 if not used by us to reduce income taxes payable in future periods.

Utilization of NOL carryforwards, credit carryforwards and certain deductions have been subject to annual limitations due to ownership change limitations provided by the Internal Revenue Code of 1986, as amended. We have had three "change in ownership" events that limit the utilization of NOL carryforwards, which occurred twice in August of 2000 and once in January of 2001, and resulted in NOL carryforward limitations totaling $528 thousand. Additional limitations on the use of these tax attributes could occur in the event of possible disputes arising in examination from various taxing authorities.

The following table presents a reconciliation of the changes in the unrecognized tax benefit (in thousands):

Balance at December 31, 2021	$	8,435
Additions based on tax positions related to the current year	822
Reductions for tax positions of prior years	(53)
Reductions as a result of a lapse of applicable statute of limitations	(183)
Other	(437)
Balance at December 31, 2022	8,584
Additions based on tax positions related to the current year	416
Reductions for tax positions of prior years	(70)
Reductions as a result of a lapse of applicable statute of limitations	(371)
Other	(84)
Balance at December 31, 2023	8,475
Additions based on tax positions related to the current year	150
Reductions for tax positions of prior years	(30)
Reductions as a result of a lapse of applicable statute of limitations	(33)
Other	(75)
Balance at December 31, 2024	$	8,487

At December 31, 2024, we had $2.7 million of unrecognized tax benefits (excluding interest and penalties) in Non-Current Income Taxes Payable and $5.8 million of unrecognized tax benefits as an offset to our long-term deferred tax assets embedded in Other Assets, Net on the accompanying Consolidated Balance Sheets. The $5.8 million of unrecognized tax benefits in non-current deferred tax assets is entirely offset by a valuation allowance in both the U.S. and China. Of our unrecognized tax benefits, $2.7 million, if recognized, would impact the effective tax rate. At December 31, 2023, we had $2.8 million of unrecognized tax benefits (excluding interest and penalties) in Non-Current Income Taxes Payable and $5.7 million of unrecognized tax benefits as an offset to our long-term deferred tax assets embedded in Other Assets, Net on the accompanying Consolidated Balance Sheets. We do not expect a significant decrease to the total amount of unrecognized tax benefits within the next twelve months.

We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. We recognized a net increase (decrease) in penalties and interest during the years ended December 31, 2024, 2023 and 2022, of $0.2 million, $(1.0) million, and $0.3 million, respectively. At December 31, 2024 and 2023, interest and penalties associated with unrecognized tax benefits were $1.1 million and $0.9 million, respectively.

At December 31, 2024, our tax years 2021 through 2024, 2020 through 2024, and 2014 through 2024, remain open for examination in the federal, state and foreign jurisdictions, respectively. However, to the extent allowed by law, the taxing authorities may have the right to examine prior periods where net operating losses and credits were generated and carried forward, and to make adjustments up to the net operating loss and credit carryforward amounts. We are not currently under federal, state, or foreign tax examination.