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Income taxes (Tables)

12 Months Ended

Dec. 31, 2024

Income taxes [Abstract]

Components of Income Tax Expense

The components of the income tax expense are as follows:

		December 31,
(In thousands)		2024				2023
Current:
Federal		$	(154	)		$	(1	)
State			37				51
Foreign			108				85
			(9	)			135
Deferred:
Federal			5,991				825
State			293				132
Foreign			20				63
			6,304				1,020
Income tax expense		$	6,295			$	1,155

Deferred Tax Assets and Liabilities

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the Consolidated Financial Statements.  Our deferred tax assets and liabilities were comprised of the following:

		December 31,
(In thousands)		2024				2023
Deferred tax assets:
Federal net operating losses		$	276			$	–
Foreign net operating losses			802				733
State net operating losses			135				84
Accrued severance			20				165
Capitalized R&D expenses			3,708				3,127
Inventory reserves			1,047				896
Deferred revenue			7				31
Warranty reserve			29				24
Stock compensation expense			853				790
Other accrued compensation			165				404
R&D credit carryforward			903				695
Other Assets			379				360
Gross deferred tax assets			8,324				7,309
Valuation allowance			(8,103	)			(719	)
Net deferred tax assets			221				6,590
Deferred tax liabilities:
Depreciation and amortization			179				237
Other			42				49
Net deferred tax liabilities			221				286
Total net deferred tax assets		$	–			$	6,304

Valuation Allowance on Deferred Tax Assets

As of December 31, 2024 and 2023, we had $8.1 million and $719 thousand, respectively, of valuation allowance against our deferred income tax assets. The following table summarizes the activity recorded in the valuation allowance on the deferred tax assets:

	Year Ended December 31,
(In thousands)	2024				2023
Balance, beginning of period		$	719			$	656
Additions charged to income tax provision			7,384				63
Balance, end of period		$	8,103			$	719

Statutory to Effective Tax Rate Reconciliation

Differences between the U.S. statutory federal income tax rate and our effective income tax rate are analyzed below:

		Year Ended December 31,
		2024				2023
Federal statutory rate			21.0	%			21.0	%
R&D credit			8.8				(5.9	)
Foreign-derived intangible income deduction			–				(1.7	)
Stock award excess tax benefit			(0.7	)			0.4
State income taxes, net of federal income taxes			1.0				2.5
Business meals and entertainment			(0.4	)			0.3
Executive compensation limitation			–				0.6
Uncertain tax positions			(0.2	)			0.5
Stock option cancellations			(2.0	)			0.6
Change in valuation allowance			(206.9	)			1.0
Other			3.0				0.3
Effective tax rate			(176.4	%)			19.6	%

Unrecognized Tax Benefits

We had $203 and $197 thousand of total gross unrecognized tax benefits at December 31, 2024 and 2023, respectively that, if recognized, would favorably affect the effective income tax rate in any future periods.  We are not aware of any events that could occur within the next twelve months that could cause a significant change in the total amount of unrecognized tax benefits.  A tabular reconciliation of the gross amounts of unrecognized tax benefits at the beginning and end of the year is as follows:

		December 31,
(In thousands)		2024				2023
Balance, beginning of period		$	197			$	142
Tax positions taken during the current period			31				83
Reductions for tax positions in prior years			(25	)			–
Lapse of statute of limitations			–				(28	)
Balance, end of period		$	203			$	197

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