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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Components of Provision for Income Taxes

The components of the Company’s provision for income taxes for the years ended December 31, 2024 and 2023 consist of the following (in thousands):

	Year Ended December 31,
	2024				2023
Current income tax provision:
Federal	$	—			$	—
State		2				6
Foreign - PRC		6,320				9,343
Total current income tax provision	$	6,322			$	9,349
Deferred income tax provision:
Federal	$	—			$	—
State		—				—
Foreign - PRC		(1,002	)			(834	)
Total deferred income tax provision	$	(1,002	)		$	(834	)
Total income tax provision	$	5,320			$	8,515

Reconciliation of Federal Statutory Income Tax Rate to Company's Effective Tax Rate

The reconciliation of the federal statutory income tax rate to the Company’s effective tax rate for the years ended December 31, 2024 and 2023 are as follows:

	Year Ended December 31,
	2024		2023
Tax computed at federal statutory rate	21.00%		21.00%
Rate difference due to different jurisdiction	3.87%		-2.43%
Preferential income tax rate for HNTE	-9.48%		3.19%
Non-deductible expense – Operating	6.64%		-6.28%
Non-deductible expense – acquisition related	0.00%		-22.16%
R&D Super-deduction	-3.40%		1.45%
Valuation allowance change	3.13%		-4.37%
ESOP	1.13%		-0.55%
Other	0.02%		-0.76%
Effective tax rate	22.91%		-10.91%

Significant Components of the Company's Deferred Tax Assets

Significant components of the Company’s deferred tax assets as of December 31, 2024 and 2023 consist of the following (in thousands):

	Year Ended December 31,
	2024				2023
Deferred tax assets:
Accruals and reserves	$	407			$	2,811
Contract liabilities		153				39
Net operating loss carry forwards		41,714				40,669
Tax credit carry forwards		4,463				4,463
Fixed and intangible assets		15,385				15,332
Impact from foreign corporations		8,754				4,590
Capitalized transaction costs		430				658
Lease liabilities		288				98
Deferred income tax assets before valuation allowance		71,594				68,660
Deferred tax liability – ROU assets		(296	)			(108	)
Deferred tax liability – Fixed assets		(74	)			(84	)
Less: valuation allowance		(65,605	)			(63,773	)
Deferred tax assets, net	$	5,619			$	4,695

Movement of Valuation Allowance

The movements of the valuation allowance are as follows (in thousands):

	2024				2023
Balance at the beginning of the year	$	(63,773	)		$	—
Changes of valuation allowances		(1,832	)			(63,773	)
Balance at the end of the year	$	(65,605	)		$	(63,773	)

Reconciliation of Beginning and Ending Balance of Unrecognized Tax Benefits

A reconciliation of the beginning and ending balance of the unrecognized tax benefits is as follows (in thousands):

Beginning Balance on January 1, 2023	$	—
Increase related to business combination on October 30, 2023		1,883
Increase/(Decrease) of unrecognized tax benefits taken in prior years		—
Increase/(Decrease) of unrecognized tax benefits related to current year		—
Ending Balance on December 31, 2023		1,883
Increase/(Decrease) of unrecognized tax benefits taken in prior years		—
Increase/(Decrease) of unrecognized tax benefits related to current year		—
Ending Balance on December 31, 2024	$	1,883

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of the change in unrecognized tax benefits.

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Tabular disclosure of valuation allowances to reduce deferred tax assets to net realizable value, including identification of the deferred tax asset more likely than not will not be fully realized and the corresponding amount of the valuation allowance.

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