Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Schedule of Components of Loss Before Tax and Provision for Income Tax Benefit

Loss before tax (after impairment of an equity in loss of equity method investees) and the provision for income tax benefit consists of the following components (in thousands):


	2023		2022
Loss before tax, after impairment of and equity in loss of equity method investees
United States	$	(190,246)	$	(208,155)
PRC/Italy/Hong Kong/Malaysia and other	(46,140)		(81,672)
	(236,386)		(289,827)
Deferred tax expense (benefit) of net operating loss
United States - Federal	—		(261)
United States - State	—		(197)
PRC/Italy/Hong Kong/Malaysia and other	—		(2,143)
	—		(2,601)
Deferred tax (benefit) of a decrease in the beginning of the year
Valuation allowance as a result of a change in circumstances	—		—
United States - Federal	—		—
United States - State	—		—
PRC/Italy/Hong Kong/Malaysia and other	—		—
	—		—
Deferred tax expense (benefit) other than the above two categories
United States - Federal	(3,604)		(116)
United States - State	—		(218)
PRC/Italy/Hong Kong/Malaysia and other	(1,638)		1,060
	(5,242)		726
Total deferred income tax (expense) benefit	(5,242)		(1,875)

Current tax expense (benefit) other than benefit of net operating loss
United States - Federal	—		—
United States - State	—		301
PRC/Hong Kong/Singapore/Malaysia	—		—
Total current income tax (expense) benefit	—		301

Total income tax expense (benefit)	$	(5,242)	$	(1,574)

Schedule of Reconciliation of Expected Income Tax

A reconciliation of the expected income tax derived by the application of the U.S. CIT rate to the Company’s loss before income tax benefit is as follows:


	2023		2022		2021
U. S. statutory income tax rate	21.0	%	21.0	%	21.0	%
Non-deductible expenses:
Non-deductible stock awards	—		(0.8)		(0.6)
Non-deductible impairment or disposal of goodwill	(4.3)		(2.7)		(10.5)
Non-deductible acquisition costs	(0.3)		(0.1)		(0.7)
Non-deductible officers’ compensation	(0.1)		(0.1)		(0.6)
Non-deductible interest expenses	(0.3)		(0.1)		(0.2)
Additional tax cost basis on disposal of subsidiary	—		—		0.4

Expiration of and disposal of subsidiary NOL carryovers	(0.5)		—		(0.5)
Change in state tax rates due to change in state apportionment	(0.2)		(1.1)		1.1
Increase in valuation allowance	(23.3)		(19.8)		(10.3)
Tax rate differential(state and foreign)	3.1		3.7		5.0
Non-taxable gain on remeasurement of previously held equity interest Energica	—		1.4		—
Non-taxable gain Non-deductible (loss) on contingent consideration	6.6		—		0.9
Others	0.8		(0.6)		(0.6)
Effective income tax rate	2.5	%	0.8	%	4.4	%

Schedule of Components of Deferred Tax Assets and Liabilities

Deferred income taxes are recognized for future tax consequences attributable to temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and income tax purposes using enacted rates expected to be in effect when such amounts are realized or settled. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2023 and 2022 are as follows (in thousands):


	December 31, 2023		December 31, 2022
U.S. NOL	$	107,626	$	73,209
Foreign NOL	18,920		14,340
U.S. capital loss carryover	6,620		841
U. S. Section 1231 carryover	2,209		2,274
Accrued payroll and expense	1,141		963
Nonqualified options	4,595		3,661
Intangible assets	15,051		3,247
Inventory reserve	1,817		884
Bad debt allowance	654		346
Impaired assets	10,056		28,497
Urealized losses	314		345
Other	714		218
Property and equipment	1,533		—
Equity investment loss and others	4,794		5,505

Total deferred tax assets	176,044		134,330
Less: valuation allowance	(170,841)		(123,310)
Property and equipment	—		(292)
Intangible assets	(6,211)		(12,707)
Outside basis in domestic subsidiary and other	(937)		(1,021)
Total deferred tax liabilities	(7,148)		(14,020)
Net deferred tax assets (liabilities)	$	(1,945)	$	(3,000)

Schedule of Changes in the Valuation Allowance

The following table reflects the changes in the valuation allowance (in thousands):


Valuation allowance - January 1, 2021	$	46,732
Increase - year ended December 31, 2021	28,240
Valuation allowance - December 31, 2021	74,972
Increase - year ended December 31, 2022	48,338
Valuation allowance - December 31, 2022	123,310
Increase - year ended December 31, 2023	47,531
Valuation allowance - December 31, 2023	$	170,841

Schedule of Changes in the Gross Unrecognized Tax Positions

The following table reflects changes in the gross unrecognized tax positions (in thousands):


Unrecognized tax benefits at beginning of year - January 1, 2021	$	256
Gross changes - year ended December 31, 2021	—
Unrecognized tax benefits at end of year - December 31, 2021	256
Gross changes - year ended December 31, 2022	—
Unrecognized tax benefits at end of year - December 31, 2022	256
Gross increases - current year tax positions	—
Unrecognized tax benefits at end of year - December 31, 2023	$	256