Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 13. INCOME TAXES

Total provision (benefit) for income taxes for the years ended December 31, 2024, 2023 and 2022:

	December 31,
	2024		2023		2022
Loss before taxes
Domestic	$	(53,871)	$	(56,342)	$	(64,071)
Foreign		391		(979)		(1,642)
Total loss before taxes		(53,480)		(57,321)		(65,713)
Current tax expense:
Federal		—		105		—
State		89		58		96
Foreign		1,358		730		315
Total current tax expense		1,447		893		411
Deferred tax expense (benefit):
Federal		(10,204)		(11,309)		(15,900)
State		(868)		(1,402)		(1,939)
Foreign		(885)		(1,099)		(909)
Change in valuation allowance		11,669		13,129		18,273
Total deferred tax expense (benefit)		(288)		(681)		(475)
Total tax expense (benefit):
Federal		(10,204)		(11,204)		(15,900)
State		(779)		(1,344)		(1,843)
Foreign		473		(368)		(594)
Change in valuation allowance		11,669		13,129		18,273
Total income tax expense (benefit)	$	1,159	$	213	$	(64)

The Company files tax returns in the U.S. federal jurisdiction, various state jurisdictions and applicable foreign jurisdictions. We are no longer subject to U.S. federal or state tax examinations for the years prior to 2021.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred taxes as of December 31, 2024 and 2023 were:

	December 31,
	2024		2023
Deferred tax assets:
Receivable allowances	$	63	$	253
Accrued expenses		1,020		1,262
S263A capitalizable costs		1,944		2,923
Inventory reserves		6,677		4,635
Research and development credits		5,047		3,974
Net operating losses		28,969		25,176
Interest expense		4,614		2,407
Stock-based Compensation		5,486		4,496
Lease Liability		397		356
R&D IRC 174(b) capitalized costs		7,176		5,161
Other		601		764
Total deferred tax assets		61,994		51,407
Valuation allowance		(53,340)		(41,671)
Net deferred tax assets		8,654		9,736
Deferred tax liabilities:
Property and Equipment		(5,833)		(6,808)
Section 481 adjustment		(410)		(821)
Patents and trademarks		(1,387)		(1,343)
Right of use asset		(345)		(292)
Total deferred tax liabilities		(7,975)		(9,264)
Total net deferred tax asset	$	679	$	472

A valuation allowance is established when it is “more likely than not” that all, or a portion, of net deferred tax assets will not be realized. As a result, the Company has concluded based on all available evidence and determined that valuation allowances of $53,340 and $41,671 should be provided for certain deferred tax assets at December 31, 2024, and 2023, respectively. As of December 31, 2024 and 2023 we had federal US net operating loss carryforwards of $110,620 and $97,490, respectively, which have an indefinite carryforward period and $65,428 of combined state net operating loss carryforwards in various states that will begin to expire in 2034. Additionally, the Company has foreign net operating loss carryforwards of $11,963 that will begin to expire in 2028.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2024		2023
Gross unrecognized tax benefits - beginning of period	$	1,523	$	1,431
Increases related to current year tax positions		153		92
Increases related to prior year tax positions		118		—
Gross unrecognized tax benefits - end of period	$	1,794	$	1,523

The unrecognized tax benefits of $1,794, if recognized, will impact the Company’s effective tax rate. In accordance with the Company’s accounting policy, accrued interest and penalties are recognized related to unrecognized tax benefits as a component of tax expense. As of December 31, 2024, we have accrued $106 of interest or penalties associated with unrecognized tax benefits. The Company expects the total amount of tax contingencies will not decrease in 2025 based on statute of limitation expiration.

A reconciliation of the provision for income taxes at the federal statutory rate compared to the effective tax rate for the years ended December 31, 2024, 2023 and 2022 is:

	2024		2023		2022
Statutory U.S. federal tax rate	$	(11,230)	$	(12,037)	$	(13,800)
State taxes net of federal benefit		(797)		(1,356)		(1,863)
Non-U.S. earnings taxed at rates different than the U.S. statutory rate		(2)		5		(80)
Foreign source earnings, net of associated foreign tax credits		1,237		628		486
Benefit of tax credits		(1,342)		(501)		(458)
Stock based compensation		739		27		(2,852)
Section 162(m) excess compensation		609		694		8
Change in valuation allowance		11,669		13,129		18,273
Change in unrecognized tax benefits		268		175		92
Other		8		(551)		130
Total provision (benefit) for income taxes	$	1,159	$	213	$	(64)

As of December 31, 2024, our foreign operations held cash totaling $5,672. We have not provided for a U.S. deferred tax liability or foreign withholding tax on the undistributed earnings from our non-U.S. subsidiaries that are considered to be indefinitely reinvested. If such earnings were to be distributed, any U.S. deferred tax liability or foreign withholding tax would not be significant.