Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes

Income Taxes

(11) Income Taxes

The Company has incurred losses since inception. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect for years in which differences are expected to reverse.

Components of the Company’s current and deferred income tax expense or benefit for the period consisted of a tax

benefit of $0.1 million recorded related to its foreign jurisdiction recognized in the year ended December 31, 2024. No

benefit or expense was recognized during the years ended December 31, 2023 or 2022.

Significant components of the Company’s deferred tax assets for federal income taxes consisted of the following (in thousands):

	December 31,
	2024		2023
Deferred tax assets
Net operating loss carryforwards	$	66,265	$	61,427
Capitalized research and development expenses		6,185		4,845
Stock-based compensation		1,604		2,300
Accrued expenses and other		1,193		1,235
Lease liability		478		557
Research and development credits		830		830
Inventory reserve		432		289
Interest expense carryforward		691		523
Gross deferred tax asset before valuation allowance		77,678		72,006
Less: valuation allowance		(76,782)		(71,086)
Total deferred tax asset		896		920
Deferred tax liabilities
Depreciation and amortization		(326)		(436)
Right of use asset		(430)		(484)
Gross deferred tax liability		(756)		(920)
Net deferred tax asset	$	140	$	—

The Company does not have unrecognized tax benefits as of December 31, 2024 and 2023. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

The Company’s net operating loss (“NOL”) carryforwards for federal and state income tax purposes consisted of the following (in thousands):

	December 31,
	2024		2023
NOL carryforwards
Federal	$	266,655	$	239,417
State		218,944		196,132

The NOL carryforwards begin expiring in 2032 for federal purposes and in 2026 for state income tax purposes yet $187.3 million of the federal NOL carryforwards have no expiration. The Company recorded a valuation allowance on the majority of its deferred tax assets as of December 31, 2024 and 2023 because of the uncertainty of their realization. The valuation allowance increased by $5.7 million and $10.9 million for the years ended December 31, 2024 and 2023, respectively, mainly due to losses incurred.

Utilization of the net operating losses and general business tax credits carryforwards may be subject to a substantial limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if changes in ownership of the company have occurred previously or occur in the future. Ownership changes may limit the amount of net operating losses and general business tax credits carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of 5% shareholders in the stock of a corporation by more than 50 percentage points over a three-year period. If the Company experiences a Section 382 ownership change, the tax benefits related to the NOL carryforwards may be further limited or lost. The Company has not performed an analysis under Section 382 and cannot predict or otherwise determine whether there would be any limitation to the amount of net operating losses and general business tax credits carryforwards that can be utilized.

A reconciliation of income tax benefit at the statutory federal income tax rate and as reflected in the consolidated financial statements is as follows:

	Year ended December 31,
	2024		2023		2022
Rate reconciliation
Federal tax benefit at statutory rate	(21.0)	%	(21.0)	%	(21.0)	%
State rate, net of federal benefit	2.0		(3.1)		(3.1)
Permanent differences	0.9		0.7		0.6
Research and development	—		(0.4)		—
Change in valuation allowance	15.0		23.4		23.4
Stock compensation true-up	3.1		—		—
Other	(0.4)		0.4		0.1
Total tax provision	(0.4)	%	—	%	—	%

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and the United Kingdom. Tax years 2021 and forward remain open for examination for federal and the Company’s more significant state tax jurisdictions. Carryforward attributes from prior years may be adjusted upon examination by taxing authorities if used in an open period.