Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes

Income Taxes

15. Income Taxes

For financial reporting purpose, income before income taxes includes the following components in millions:

	2024
United States	$	(79.1)
Total	$	(79.1)

As of December 31, 2024, the Company has a federal and state net operating loss carryover of approximately $238.5 million and $208.6 million, respectively, available to offset future income for income tax reporting purposes. Of our Federal net operating loss carryovers, $1.5 million is expiring in year 2037 and $237.0 million has indefinite carryforward periods. Other than the $1.5 million generated in year 2017 and expiring in year 2037, the rest of the loss utilization is limited to 80% of taxable income in the future years. The Company also has state net operating loss carryovers, $205.8 million would expire between the years 2033 and 2044.

We periodically evaluate our net operating loss carryforwards and whether certain changes in ownership have occurred that would limit our ability to utilize a portion of our net operating loss carryforwards pursuant to Internal Revenue Code Section 382. An ownership change may occur, for example, as a result of trading in our stock by significant investors as well as issuance of new equity. As a result of ownership changes in prior years, a portion of our net operating losses have been limited.

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future.

The following table sets forth the tax effects of temporary differences that give rise to significant portions of the Company’s net deferred tax assets (in thousands):

	December 31,
	2024		2023
Deferred tax assets, net:
Net operating loss carryforwards	$	61,024	$	48,638
Operating lease assets		(780)		(405)
Operating lease liabilities		925		545
Depreciation		17,775		11,421
Stock compensation		1,225		2,530
Business interest expense		1,083		1,110
Capitalized research cost		11,070		7,332
Transaction cost		1,308		—
Other temporary differences		1,060		820
Deferred tax assets		94,690		71,991
Valuation allowance		(94,690)		(71,991)
Net deferred tax assets	$	—	$	—

ASC 740, Income Taxes, provides for the recognition of deferred tax assets if realization of such assets is more likely than not to occur. Based on management’s review of both the positive and negative evidence, which includes our historical operating performance, reported cumulative net losses since inception and difficulty in accurately forecasting results, we have concluded that it is not likely that we will be able to realize all of our U.S. deferred tax assets. Therefore, we have provided a full valuation allowance against deferred tax assets at December 31, 2024 and 2023, respectively.

The following table sets forth reconciling items from income tax computed at the statutory federal rate:

	Year Ended December 31,
	2024		2023
Federal income tax at statutory rate	21.0	%	21.0	%
State income taxes, net of federal benefits	8.5	%	6.8	%
Officers compensation limit	1.4	%	(1.8)	%
Stock based compensation	(6.1)	%	(2.5)	%
Other permanent	(0.4)	%	(0.2)	%
Valuation allowance	(28.5)	%	(23.3)	%
Net federal true-up	4.1	%	—	%
Effective tax rate	—	%	—	%

The decrease from the federal statutory rate for the years ended December 31, 2024 is primarily due to the movement in officers compensation, stock-based compensation, state taxes, and valuation allowances.

Accounting literature regarding liabilities for unrecognized tax benefits provides guidance for the recognition and measurement in financial statements of uncertain tax positions taken or expected to be taken in a tax return. The

Company’s evaluation was performed for the tax periods from inception to December 31, 2024. The Company is subject to examination by major tax jurisdictions for the years ended December 31, 2021 to 2024.

The Company recognizes uncertain tax positions net, against any operating losses or applicable research credits as they arise. Currently, there are no uncertain tax positions recognized at December 31, 2024 and 2023, respectively.