v3.25.2
INCOME TAXES
 12 Months Ended
Mar. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Loss before income taxes consists of the following (in thousands):

Year Ended
December 31,		Three Months Ended
March 31,		Year Ended March 31,
2022202320242025
U.S. operations$(10,303)$(16,494)$(7,990)$(46,935)
Foreign operations4,421 11,443 (162)483 
$(5,882)$(5,051)$(8,152)$(46,452)

The provision for income taxes consists of the following for the periods presented (in thousands):

Year Ended
December 31,		Three Months Ended
March 31,		Year Ended March 31,
2022202320242025
Current:
Federal$— $— $— $— 
State93 68 25 110 
Foreign69 519 220 6,174 
Total current provision$162 $587 $245 $6,284 
Deferred:
Federal$— $— $— $— 
State— — — (85)
Foreign708 2 107 (1,682)
Total deferred provision$708 $2 $107 $(1,767)
Total provision for income taxes$870 $589 $352 $4,517 
The difference between income taxes at the statutory federal income tax rate and income taxes reported in the Consolidated Statement of Operations for the years ended December 31, 2022 and 2023, the three months ended March 31, 2024, and the year ended March 31, 2025 is attributable to the following (in thousands):

Year Ended
December 31,		Three Months Ended
March 31,		Year Ended March 31,
2022202320242025
Income tax benefit at the federal statutory rate$(1,236)$(1,061)$(1,712)$(9,755)
State and local income taxes, net of federal taxes(313)(298)(145)(1,094)
Increase (decrease) in valuation allowance(1,105)1,488 1,570 7,173 
Remeasurement of deferred tax adjustments35948542
Permanent differences and other810 678 222 6,343 
Non-deductible (non-taxable) foreign exchange movements
— — — (509)
Over (Under) provision prior years
— — — 378 
Foreign rate differential(151)(1,924)396 819 
GILTI inclusion2,425 1,586 — 120 
Foreign tax paid
— — — 381 
Other81 57 13 119 
Acquisition fees— 59 — — 
$870 $589 $352 $4,517 
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at March 31, 2024 and 2025 are presented below (in thousands):

March 31,
2024		March 31,
2025
Deferred tax assets:
Net operating loss carryforwards$28,135 $48,572 
Capital loss carryforwards10,377 9,388 
Deferred revenue2,265 4,184 
Stock-based compensation230306 
Federal research and development tax credits1,058 1,058 
Capitalized research1,524 1,832 
Inventories383 1,062 
Bad debt reserve639 1,588 
Deferred lease liability388 167 
Acquisition costs1,455 1,004 
Interest limitation
— 4,831 
Other deductible temporary differences2,859 8,818 
Total gross deferred tax assets49,313 82,810 
Set-off of deferred tax balances— (25,569)
Net deferred tax assets before valuation allowance49,313 57,241 
Less: valuation allowance(46,532)(53,307)
Net deferred tax assets$2,781 $3,934 
Deferred tax liabilities:
Intangible amortization(3,958)(65,025)
Right-of-use assets
(348)(650)
Deferred foreign currency gains
— (8,031)
Deferred commissions
— (1,623)
Other deductible temporary differences(159)(7,952)
Total deferred tax liabilities(4,465)(83,281)
Set-off of deferred tax balances— 25,569 
Net deferred tax liabilities(4,465)(57,712)
Net deferred tax liabilities$(1,684)$(53,778)
A reconciliation of the beginning and ending amount of unrecognized tax positions for the periods ended March 31, 2024 and 2025 is as follows (in thousands):

Balance at December 31, 2023
$294 
Additions based on tax provisions taken related to current period
27 
Reductions related to expiration of statute of limitations
— 
Balance at March 31, 2024
$321 
Additions based on tax provisions taken related to current period116 
Reductions related to expiration of statute of limitations(119)
Balance at March 31, 2025
$318 

The unrecognized tax benefits, if recognized, would reduce the Company’s annual effective tax rate. The Company does not expect any significant changes to its unrecognized tax positions during the next 12 months.

At March 31, 2025, the Company had an aggregate net operating loss (“NOL”) carryforward of approximately $83,930 for U.S. federal income tax purposes. At March 31, 2025, the Company had an aggregate NOL carryforward of approximately $37,775 for state income tax purposes and a foreign NOL carryforwards of approximately $101,519. Substantially all of the NOL carryforwards expire from 2024 through 2037 for pre-2018 federal NOL carryforwards and from 2024 through 2044 for state purposes. The NOL carryforwards may be limited to use in any particular year based on Section 382 of the Internal Revenue Code of 1986, as amended (“IRC”), related to change of ownership restrictions. Section 382 of the IRC imposes an annual limitation on the utilization of NOL carryforwards based on long-term bond rates and the value of the corporation at the time of a change in ownership as defined by Section 382 of the IRC. In 2019 and 2024, the Company incurred a change in ownership under Section 382 of the IRC and this change of ownership is not expected to materially impact the Company’s ability to utilize its NOL carryforward amounts in the future. In addition, future stock issuances may subject the Company to further limitations on the utilization of its NOL carryforwards under the same IRC provision.

At March 31, 2025, the Company has New Jersey NOL carryforwards included above in the approximate amount of $6,528, expiring through 2044, which are available to reduce future earnings which would otherwise be subject to state income tax.

The Company is asserting permanent reinvestment of all accumulated undistributed earnings of its foreign subsidiaries as of March 31, 2025, in excess of annual debt service costs requirements.

For the year ended March 31, 2025, the Company’s valuation allowance increased to $53,307, compared to $46,532 as of March 31, 2024, primarily due to the increase of NOLs and other timing differences. The Company has provided a valuation allowance against the full amount of its domestic net deferred tax assets and the majority of the foreign net deferred tax assets. The valuation allowance was established because of the uncertainty of realization of the deferred tax assets due to lack of sufficient history of generating taxable income. Realization is dependent upon generating sufficient taxable income prior to the expiration of the NOL carryforwards in future periods. The valuation allowance increased in 2025 by $6,775.

Audits for federal income tax returns are closed for the years through 2020. However, the Internal Revenue Service (“IRS”) can audit the NOLs generated during those years in the years that the NOLs are utilized. State income tax returns are generally subject to examination for a period of three to six years after the filing of the respective tax return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. Foreign income tax returns are generally subject to examination based on the tax laws of the respective jurisdictions.