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Income Taxes | 12 Months Ended
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Oct. 31, 2024
Income Taxes |
Income Taxes | Note 17. Income Taxes The components of loss before income taxes for the years ended October 31, 2024, 2023, and 2022 were as follows (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023 |  | 2022
U.S. | ​ | $ | (140,713) | ​ | $ | (95,910) | ​ | $ | (145,439)
Foreign |  | ​ | (16,040) |  | ​ | (11,565) |  | ​ | (974)
Loss before income taxes | ​ | $ | (156,753) | ​ | $ | (107,475) | ​ | $ | (146,413)
​ The Company recorded an income tax provision totaling $0.03 million, $0.6 million and $0.8 million for the years ended October 31, 2024, 2023 and 2022, respectively. The income tax expense primarily relates to foreign income and withholding taxes in South Korea. Franchise tax expense, which is included in administrative and selling expenses, was $0.5 million, $0.9 million and $1.0 million for the years ended October 31, 2024, 2023 and 2022, respectively. The reconciliation of the federal statutory income tax rate to our effective income tax rate for the years ended October 31, 2024, 2023 and 2022 was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023 |  | 2022 |
Statutory federal income tax rate |  | (21.0) | % | (21.0) | % | (21.0) | %
Increase (decrease) in income taxes resulting from: |  | ​ | ​ | ​ | ​ | ​ | ​
State taxes, net of Federal benefits |  | (4.4) | % | (3.2) | % | (3.6) | %
Foreign withholding tax |  | 0.1 | % | 0.5 | % | 0.6 | %
Net operating loss expiration, impairment and true-ups |  | (1.1) | % | 6.1 | % | 8.7 | %
Nondeductible expenditures |  | 0.2 | % | 2.1 | % | 1.4 | %
Change in tax rates |  | (0.4) | % | 2.8 | % | 0.3 | %
Other, net |  | 0.3 | % | 0.6 | % | 0.7 | %
Deferred only adjustment |  | (0.4) | % | (0.1) | % | (0.1) | %
Valuation allowance |  | 26.8 | % | 12.7 | % | 13.6 | %
Effective income tax rate |  | 0.1 | % | 0.5 | % | 0.6 | %
​ Our deferred tax assets and liabilities consisted of the following as of October 31, 2024 and 2023 (in thousands): ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2024 |  | 2023
Deferred tax assets: |  | ​ |  |  | ​ |
Compensation and benefit accruals | ​ | $ | 7,344 | ​ | $ | 6,026
Bad debt and other allowances | ​ |  | 2,695 | ​ |  | 1,945
Capital loss and tax credit carry-forwards | ​ |  | 16,296 | ​ |  | 14,701
Net operating losses (domestic and foreign) | ​ |  | 170,780 | ​ |  | 139,900
Deferred license revenue | ​ |  | 871 | ​ |  | 1,148
Accumulated depreciation | ​ |  | 15,969 | ​ |  | 14,051
Grant revenue | ​ |  | 210 | ​ |  | 323
Excess business interest | ​ |  | 5,860 | ​ |  | 6,406
Operating lease liabilities | ​ |  | 1,840 | ​ |  | 1,879
Capitalized research and development | ​ | ​ | 18,305 | ​ | ​ | 9,729
Mark-to-market | ​ | ​ | 1,702 | ​ | ​ | 987
Other | ​ | ​ | 150 | ​ | ​ | 4
Gross deferred tax assets: | ​ |  | 242,022 | ​ |  | 197,099
Valuation allowance | ​ |  | (228,139) | ​ |  | (193,477)
Deferred tax assets after valuation allowance | ​ |  | 13,883 | ​ |  | 3,622
Deferred tax liability: | ​ |  | ​ | ​ |  | ​
Net loss attributable to noncontrolling interests | ​ | ​ | (7,567) | ​ | ​ | —
In process research and development | ​ |  | (2,322) | ​ |  | (2,293)
Right of use assets | ​ |  | (1,556) | ​ |  | (1,600)
Other | ​ | ​ | (2,745) | ​ | ​ | (9)
Net deferred tax liability | ​ | $ | (307) | ​ | $ | (280)
​ We continually evaluate our deferred tax assets as to whether it is “more likely than not” that the deferred tax assets will be realized. In assessing the realizability of our deferred tax assets, management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies. Based on the projections for future taxable income over the periods in which the deferred tax assets are realizable, management believes significant uncertainty exists surrounding the recoverability of the deferred tax assets. As a result, we recorded a valuation allowance against our net deferred tax assets. As of October 31, 2024, we had $1.06 billion of federal net operating loss (“NOL”) carryforwards, $549.0 million of which expire in the fiscal years 2025 through 2037, and $506.0 million of which do not expire. Due to limitations on the Company’s ability to utilize the federal NOL carryforwards, the Company has only recognized $588.0 million for financial statement purposes. As of October 31, 2024, we also had $585.1 million of state NOL carryforwards that expire in the fiscal years 2025 through 2043. Additionally, as of October 31, 2024, we had $13.7 million of state tax credits available that will expire from tax years 2025 through 2043. During the 2020 tax year, the Company experienced an “ownership change” as defined by Internal Revenue Code Section 382. As a result, the utilization of federal and state NOLs generated prior to October of 2020 is subject to limitation and a reduction was made in fiscal year 2020 to the carrying balance of the federal and state NOLs to reflect the future limitation on utilization. The Company has updated its analysis of potential ownership changes through October 31, 2024 and concluded that no additional ownership changes have occurred subsequent to October 2020. In addition, the acquisition of Versa Power Systems Ltd. in fiscal year 2013 triggered a Section 382 ownership change at the level of Versa Power Systems Ltd. which will limit the future usage of some of the federal and state NOLs that we acquired in that transaction. Accordingly, a valuation allowance has been recorded against the deferred tax asset associated with these attributes to reflect the future limitation on utilization. The Company’s financial statements reflect expected future tax consequences of uncertain tax positions that the Company has taken or expects to take on a tax return (including a decision whether to file or not file a return in a particular jurisdiction) presuming the taxing authorities’ full knowledge of the position and all relevant facts. The Company did not have any unrecognized tax benefits as of October 31, 2024 and 2023. It is our policy to record interest and penalties on unrecognized tax benefits as income taxes; however, because of our significant NOLs, no provision for interest or penalties has been recorded. We file income tax returns in the U.S. and certain states, primarily Connecticut, California and New York, as well as income tax returns required internationally for South Korea, Germany, Japan and Canada. We are open to examination by the IRS and various states in which we file for fiscal year 2004 to the present.

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