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INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Pretax income (loss) for the years ended December 31, 2025, 2024, and 2023 consisted of the following (in thousands):
202520242023
US$(5,639)$3,664 $125,230 
Foreign— 123 3,567 
Total$(5,639)$3,787 $128,797 
Income tax expense for the years ended December 31, 2025, 2024, and 2023 consisted of the following (in thousands):
202520242023
Current tax expense (benefit)
US Federal
$195 $7,059 $25,170 
US State
1,378 2,040 3,001 
Foreign
— — — 
Total current tax expense
1,573 9,099 28,171 
Deferred tax expense (benefit)
US Federal
7,973 (6,325)1,523 
US State
3,487 (1,078)(312)
Foreign— — — 
Total deferred tax expense (benefit)
11,460 (7,403)1,211 
Total provision for income taxes
$13,033 $1,696 $29,382 
The total provision for income taxes for the years ended December 31, 2025, 2024, and 2023 was $13.1 million, $1.6 million, and $29.5 million, respectively. Those amounts have been allocated to the following financial statement items (in thousands):
202520242023
Provision for income taxes
$13,033 $1,696 $29,382 
Stockholders' equity, unrealized (losses) gains on investment securities & foreign currency17 (52)112 
Total provision for income taxes$13,050 $1,644 $29,494 
The total income tax paid or refunded for the tax years ended December 31, 2025, 2024, and 2023 was a $10.5 million payment, a $1.6 million refund, and a $34.3 million payment, respectively (in thousands):
202520242023
Income tax paid (refunded), net
US Federal$2,704 $(2,946)$30,750 
US state and local
  Texas*565 
*
  California7,350 **
  Other411 764 3,505 
Total US state and local7,761 1,329 3,505 
Foreign— — — 
Total income tax paid (refunded), net$10,465 $(1,617)$34,255 
*Jurisdiction below the threshold for the period presented
The reconciliation of the United States federal statutory tax provision to the Company’s provision for income taxes for the years ended December 31, 2025, 2024, and 2023 (in thousands, except percentages):
202520242023
Statutory federal tax$(1,184)21.0 %$795 21.0 %$27,048 21.0 %
State income taxes, net of federal benefit3,284 (58.3)%486 12.8 %1,693 1.3 %
Foreign tax effects
Hong Kong— — %(22)(0.6)%296 0.2 %
Singapore— — %— — %— — %
Valuation allowance— — %(3)(0.1)%(846)(0.7)%
Other
— — %(1)— %(199)(0.1)%
Research and development and jobs credits(602)10.7 %(589)(15.5)%(1,170)(0.9)%
Changes to valuation allowances, federal only9,383 (166.4)%— — %— — %
Unrecognized tax benefit590 (10.4)%269 7.1 %440 0.3 %
Nontaxable or nondeductible items
Executive compensation543 (9.7)%52 1.4 %1,895 1.5 %
Charitable donations— — %(236)(6.2)%(1,094)(0.8)%
Intercompany loan restructuring— — %— — %1,167 0.9 %
Share-based compensation626 (11.1)%889 23.4 %143 0.1 %
Meals and entertainment210 (3.7)%314 8.3 %255 0.2 %
Other adjustments183 (3.2)%(258)(6.8)%(246)(0.2)%
Provision for income taxes$13,033 (231.1)%$1,696 44.8 %$29,382 22.8 %
The makeup of the majority of the state income tax expense is comprised of state income taxes in Maryland, California, New York, Pennsylvania, Illinois, and Texas for the year ended December 31, 2025; Texas for the year ended December 31, 2024; and Texas, Pennsylvania, and Maryland for the year ended December 31, 2023.
Significant components of the Company’s deferred tax assets (liabilities) consisted of the following (in thousands):
December 31, 2025December 31, 2024
Reserves on inventory and sales$1,124 $472 
Credit and loss carryforwards6,406 2,730 
Stock compensation2,699 2,055 
Accrued expenses and deferred costs1,294 2,235 
Inventory capitalization309 708 
Lease obligations2,685 4,047 
Capitalized research costs6,832 7,028 
Charitable donations77 83 
State taxes1,093 1,594 
Unrealized loss on investment
44 967 
Other166 183 
Valuation allowance(13,690)(1,624)
Total deferred tax assets9,039 20,478 
Right-of-use assets(1,816)(2,800)
Prepaid expenses(1,569)(1,590)
Depreciation(5,654)(4,628)
Total deferred tax liabilities(9,039)(9,018)
Net deferred tax assets$— $11,460 
On July 4, 2025, tax legislation entitled an Act to provide for reconciliation pursuant to title II of H. Con. Res. 14 (“the “Act”) and commonly referred to as the One Big Beautiful Bill Act (“OBBBA”). The primary provisions of the Act do not impact the Company’s effective tax rate but do impact the timing of tax deductions related to research and development costs and fixed asset expenditures after January 19, 2025.
Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to utilize our existing deferred tax assets. A significant piece of objective negative evidence evaluated is our current year loss, declining financial performance in recent years, and our projections of short-term future losses. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. We have determined that the reversal of future taxable temporary differences corresponding to our deferred tax liabilities will provide a sufficient source of income for realization of a portion of our deferred tax assets. In 2025, we recorded an additional valuation allowance of $12.1 million.
We file income tax returns in the United States and various states and foreign jurisdictions. The Company has separate federal, state, and foreign net operating loss ("NOL") carry forwards totaling $49.2 million with $13.3 million of the state NOLs that start expiring in 2029. The federal NOLs do not have an expiration as do a significant portion of the state NOLs. The Company has recorded a valuation allowance for the net operating loss carry forwards which are not expected to be realized.
As of December 31, 2025, the Company had $5.6 million of gross unrecognized tax benefits, which would have a net $4.5 million impact on the effective tax rate, if recognized. As of December 31, 2024, the Company had $7.4 million of gross unrecognized tax benefits, which would have a net $6.2 million impact on the effective tax rate, if recognized. The change for 2025 primarily relates to a settlement of tax examination and for 2024 primarily relates to additional gross unrecognized benefits for current tax positions and reductions of gross unrecognized benefits for prior year tax positions and lapses in statute of limitations. The amounts of unrecognized tax benefits were as follows (in thousands):
December 31, 2025December 31, 2024
Unrecognized tax benefit at the beginning of the period
$7,433 $7,502 
Increase for current year tax positions
60 71 
(Decrease) increase for prior period tax positions
298 (5)
Settlement with tax authorities
(2,029)— 
Reduction due to lapse in statute of limitations(126)(135)
Unrecognized tax benefit at the end of the period
$5,636 $7,433 
The Company recognizes interest and penalty expenses related to unrecognized tax positions as a component of the income tax provision. As of December 31, 2025, and 2024, interest and penalties accrued were $1.3 million and $1.7 million, respectively. For 2025 and 2024, the Company recorded expenses related to interest and penalties of $0.6 million and $0.4 million, respectively. As of December 31, 2025, the current year reduction primarily relates to the settlement of a tax examination. Our tax returns are subject to examination by various federal, state, and local tax authorities. The Company believes that it has adequately provided for all tax positions; however, amounts asserted by taxing authorities could be greater than our accrued position. Pending the resolution of two examinations, and specific to jurisdictions where the Company has filed tax returns and examination of such returns is constrained by a statute of limitations, we are no longer subject to United States federal, state, and local income tax examinations by tax authorities for years prior to 2022.