Income Taxes

12 Months Ended

Dec. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For the years ended December 31, 2025 and 2024, the Company’s provision for income tax consisted of (in thousands):

	Year Ended December 31,
	2025		2024
Current:
Federal	$	(18)	$	52
State	15		38
Foreign	8		—
Total Current	$	5	$	90
Deferred:
Federal	$	—	$	21
State	124		(151)
Foreign	—		—
Total Deferred	$	124	$	(130)
Provision for income taxes	$	129	$	(40)

Net income tax payments in 2025 were as follows:

	Year Ended December 31,
	2025
Federal	$	—
State	38
Foreign	—
Total net income tax payments	$	38

The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:

	Year Ended December 31, 2025
	Rate		Amount
U.S. federal statutory tax rate	21.0	%	$	(96)
State taxes, net of federal income tax effect (a)	(23.3)		106
Tax credits - Research and development credits	40.6		(184)
Changes in valuation allowances	53.8		(245)
Nontaxable or nondeductible items
Stock-based compensation	(47.4)		216
IRC Section 162(m) limitation	(55.0)		251
Other adjustments	(3.8)		17
Changes in unrecognized tax benefits	(14.0)		64
Provision for income taxes	(28.1)	%	$	129

(a) State taxes in Indiana and Minnesota made up the majority (greater than 50%) of the tax effect in this category.

	Year ended December 31,
		2024
Tax at statutory federal rate		21.0	%
State taxes, net of federal benefit		3.6
Stock-based compensation		34.8
IRC section 162(m) limitation		29.0
R&D tax credits		(564.7)
Change in valuation allowance		486.1
Other		(15.1)
Provision for income taxes		(5.3)	%

The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets are as follows (in thousands):

	Year Ended December 31,
	2025		2024
Deferred tax assets:
Net operating loss carryforwards	$	21,832	$	20,564
Inventory	260		462
Accruals	614		366
Depreciation and amortization	4		9
Research and experimental credits	4,304		3,995
Research and experimental expenditures	4,374		6,412
Stock-based compensation	397		428
Right of use liability	735		1,045
Gross deferred tax assets	32,520		33,281
Valuation allowance	(31,337)		(31,343)
Deferred tax assets	1,183		1,938
Deferred tax liabilities:
Right of use asset	(716)		(1,024)
Other	(322)		(646)
Deferred tax liabilities	(1,038)		(1,670)
Net deferred tax assets	$	145	$	268

The Company is required to reduce its deferred tax assets by a valuation allowance if it is more likely than not that some or all of its deferred tax assets will not be realized. Management must use judgment in assessing the potential need for a valuation allowance, which requires an evaluation of both negative and positive evidence. The weight given to the potential effect of negative and positive evidence should be commensurate with the extent to which it can be objectively verified. In determining the need for and amount of the valuation allowance, if any, the Company assesses the likelihood that it will be able to recover its deferred tax assets using historical levels of income, estimates of future income and tax planning strategies. As a result of projected taxable income, the Company determined that, based on all available evidence, there was substantial certainty as to whether it will recover recorded net deferred taxes for certain state jurisdictions in future periods. However, as it pertains to the federal, Arizona, and Colorado net deferred tax assets, based on all the available evidence, there is substantial uncertainty as to whether it will recover recorded net deferred taxes in future periods. Accordingly, the Company recorded a partial valuation allowance against its net deferred tax assets as of December 31, 2025 and 2024, respectively. The net valuation allowance decreased by less than $0.1 million in 2025, as reflected below (in thousands).

	Year Ended December 31,
	2025	2024
Valuation Allowance at beginning of year	(31,343)	(27,748)
Current Year Change	6	(3,595)
Valuation Allowance at end of year	(31,337)	(31,343)

As of December 31, 2025, the Company has federal net operating loss carryforwards of approximately $95.2 million, of which $53.2 million will expire in 2030 through 2037 if not utilized, and $42.0 million that will carryover indefinitely. In addition, the Company has state net operating loss carryforwards of approximately $48.4 million, of which $45.4 million will expire in 2030 through 2045 if not utilized, and $3.0 million that will carryover indefinitely.

The Tax Reform Act of 1986 (the Act) provides for a limitation on the annual use of net operating loss carryforwards following certain ownership changes (as defined by the Act and codified under IRC Section 382) that could limit the Company’s ability to utilize these carryforwards. Further, a portion of the carryforwards may expire before utilized to reduce future income tax liabilities as a result of the annual limitation. The Company experienced an ownership change in

October 2016 and as a result, $43.8 million ($9.2 million tax effected) of the federal NOLs are expected to expire unutilized due to limitation under IRC Section 382. Consistent with prior years, the NOLs expected to expire unutilized are included in the NOL carryforward amounts disclosed, subject to a valuation allowance.

The Company files income tax returns in the U.S. federal and various state jurisdictions. The Company is generally subject to U.S. federal and state income tax examination for all tax years beginning in 2008, due to the net operating losses that are carried forward.

A summary of changes in the Company’s gross unrecognized tax benefits for the years ended December 31, 2025 and 2024 was as follows (in thousands):

	Year Ended December 31,
	2025		2024
Unrecognized tax expense, beginning of the year	$	1,389	$	473
Decrease related to prior year tax positions	(126)		—
Increase related to prior year tax positions	—		662
Increase related to current year tax positions	184		254
Unrecognized tax expense, end of year	$	1,447	$	1,389

Included in the balance of unrecognized tax benefits as of December 31, 2025, are $0.1 million of tax benefit that, if recognized, would affect the effective tax rate. Included in the balance of uncertain tax benefits as of December 31, 2025 is $1.3 million of tax benefits that, if recognized, would result in adjustments to deferred taxes.

The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefit as a component of income tax expense. The Company has accrued penalties and interest of $0.2 million, as of both December 31, 2025 and 2024.

On July 4, 2025, the President signed into law the OBBBA. The OBBBA maintains the 21 percent corporate tax rate and makes permanent many of the beneficial expired and expiring tax provisions originally enacted in the Tax Cuts and Jobs Act of 2017, including the immediate expensing of domestic research and development expenditures, more favorable interest deductibility and 100 percent bonus depreciation with effective dates in 2025. Revisions to the international tax framework are effective in 2026. In the fourth quarter of 2025, the Company elected to immediately expense new domestic research and development expenditures, but continue amortizing the existing capitalized and unamortized expenditures as of December 31, 2024.