Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The Company files federal, state and foreign income tax returns in jurisdictions with varying statutes of limitations. The Company uses the asset and liability method in accordance with FASB ASC 740, “Income Taxes”, under which deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. Deferred taxes are measured using provisions of currently enacted tax laws. A valuation allowance against deferred tax assets is recorded when it is more likely than not that such assets will not be fully realized. The Company's valuation allowance offsets substantially all its net deferred tax assets as it is more likely than not that the benefit of the deferred tax assets will not be recognized in future periods.

The Company’s provision for income taxes for each of the years ended December 31 is as follows:

	2023		2022		2021
Current tax expense
Federal	$	—	$	—	$	—
State	389		142		42
Foreign	217		118		125
Total current tax expense	606		260		167
Deferred tax expense
Federal	$	(2,972)	$	(8,351)	$	(30,925)
State	(928)		(459)		(4,803)
Foreign	(3,671)		(1,636)		(826)
Change in valuation allowance	7,556		10,454		36,575
Total deferred tax expense	(15)		8		21
Total tax expense	$	591	$	268	$	188

The detail of deferred tax assets and liabilities at December 31 is as follows:

	2023		2022
Deferred tax assets:
Net operating loss carryforwards	$	129,744	$	138,263
Research and development credit carryforwards	15,171		13,205
Research and experimental expenditures	20,193		10,104
Equity compensation	10,599		8,287
Finance and operating lease liabilities	3,083		3,395
Deferred interest	—		2,411
Inventories	2,822		1,896
Accruals and reserves	1,131		1,332
Property and equipment	219		(2,568)
Total deferred tax assets	182,962		176,325
Deferred tax liabilities:
Intangible assets	(8,568)		(9,278)
Right-of-use assets	(2,160)		(2,626)
Other	(444)		506
Total deferred tax liabilities	(11,172)		(11,398)
Valuation allowance	(171,766)		(164,918)
Net deferred tax assets	$	24	$	9

Provisions enacted in the Tax Cut and Jobs Act of 2017 related to the capitalization of research and experimental expenditures for tax purposes became effective on January 1, 2022. These provisions require the Company to capitalize and amortize research and experimental expenditures for tax purposes over five or fifteen years, depending on where research is conducted. The Company has federal net operating loss carryforwards of $276,866 which expire between 2024 and 2037 and $175,758 which have no expiration. The Company has state and local net operating loss carryforwards of $301,639 which expire between 2024 to 2043. A portion of the Company’s federal and state net operating loss carryforwards are subject to certain limitations under Internal Revenue Code Sections 382 and 383. The Company has federal research and development credit carryforwards of $15,171 which expire between 2024 and 2043. Additionally, the Company has foreign net operating loss carryforwards of approximately $75,355 which have no expiration.

The Company’s 2023, 2022 and 2021 effective income tax rates differ from the federal statutory rate as follows:

	2023				2022				2021
Federal tax at statutory rate	21.0	%	$	(6,268)	21.0	%	$	(9,701)	21.0	%	$	10,580
Permanent differences	(10.4)		3,092		(1.9)		876		(80.3)		(40,439)
Valuation allowance	(25.3)		7,556		(22.6)		10,454		72.6		36,575
State income taxes	1.8		(539)		0.7		(317)		(9.4)		(4,760)
Federal R&D credit	6.6		(1,966)		4.2		(1,936)		(3.7)		(1,878)
Foreign income taxes	3.4		(1,012)		(0.5)		215		0.7		344
Federal deferred adjustments	0.9		(272)		(1.5)		677		(0.5)		(234)
Effective tax rate	(2.0)	%	$	591	(0.6)	%	$	268	0.4	%	$	188

The Company’s pre-tax book (loss) income for domestic and international operations was $(17,822) and $(12,025) for 2023, $(38,008) and $(8,190) for 2022, and $55,666 and $(5,279) for 2021.

The Company had undistributed earnings of foreign subsidiaries of approximately $444 at December 31, 2023. The Company does not consider these earnings as permanently reinvested and has determined that no current and deferred taxes are required on such amounts.

Federal, state and local tax returns of the Company are routinely subject to examination by various taxing authorities. Federal income tax returns for periods beginning in 2020 are open for examination. Generally, state and foreign income tax returns for periods beginning in 2019 are open for examination. However, taxing authorities have the ability to audit net operating loss and tax credit carryforwards from years prior to these periods. The Company has not recognized certain tax benefits because of the uncertainty of realizing the entire value of the tax position taken on income tax returns upon review by the taxing authorities.

A reconciliation of the change in federal and state unrecognized tax benefits for 2023, 2022 and 2021 is presented below:

	2023		2022		2021
Balance at the beginning of the year	$	1,762	$	1,798	$	1,798
Increases (decreases) for prior year tax positions	(90)		(36)		—
Increases (decreases) for current year tax positions	—		—		—
Increases (decreases) related to settlements	—		—		—
Decreases related to statute lapse	—		—		—
Balance at the end of the year	$	1,672	$	1,762	$	1,798

The balance of unrecognized tax benefits at December 31, 2023, 2022 and 2021 includes $1,672, $1,762 and $1,798 of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes and valuation allowance. The Company does not expect that its unrecognized tax benefits for research credits will significantly change within twelve months of December 31, 2023.