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Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provision for income tax consisted of the following:
(in thousands)
20252024
Current:
Federal$— $— 
State19 (4)
Foreign44 (263)
63 (267)
Deferred:
Federal(54,770)(21,218)
State(24,909)(10,013)
Foreign(435)(504)
(80,114)(31,735)
Valuation allowance80,114 31,735 
— — 
$63 $(267)
The components of losses before income taxes, by taxing jurisdiction, were as follows for the years ended December 31:
(in thousands)20252024
U.S.$(388,275)$(324,929)
Foreign(8,744)(31,185)
$(397,019)$(356,114)
Reconciliation of Statutory Federal Tax Rate to Effective Tax Rate
The provision for income taxes for the years ended December 31, 2025, and 2024 differs from the amount computed by applying the statutory federal corporate income tax rate of 21% to losses before income taxes. The following adjustments account for these differences for the years ended December 31, 2025, and 2024:
Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 1, Nature of Business and Organization, Basis of Presentation, and Summary of Significant Accounting Policies, the reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31, 2025 was as follows (in thousands, except for percentages):
2025
Expected Federal Income Tax (benefit) at Statutory rate$(83,374)21.0 %
State and local income Taxes, net of fed effects1
State income taxes (net of federal benefit)(19,638)5.0 %
Changes in State Valuation Allowance19,651 (5.0)%
Foreign tax effects2
Foreign Tax Rate Difference 198 (0.1)%
Expiration of Tax Attributes866 (0.2)%
Other(470)0.1 %
Changes in Foreign Valuation Allowance1,172 (0.3)%
Changes in Valuation Allowance 59,053 (14.9)%
Nontaxable or Nondeductible Items
Fair value debt adjustments12,142 (3.1)%
Disallowed Interest7,581 (1.9)%
Non-Controlling Interest944 (0.2)%
Goodwill Impairment935 (0.2)%
Other permanent differences868 (0.2)%
Changes in Unrecognized Tax Benefits 135 — %
Effective Tax Rate $63 — %
(1) The tax effect in this category reflects state and local taxes in California.
(2) The tax effect in this category primarily reflects income taxes in China and U.A.E.

The reconciliation of taxes at the federal statutory rate to Company’s provision for (benefit from) income taxes for the year ended December 31, 2024 in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows:
2024
Federal income tax expense21.0%
State income taxes (net of federal benefit)2.3%
Other permanent differences(1.4)%
Fair value debt adjustments (10.3)%
Disallowed interest(1.8)%
Foreign tax rate difference0.1 %
Prior year true-up on deferred taxes(0.2)%
Return-to-provision adjustment(1.3)%
Uncertain tax benefit0.8 %
Expiration of tax attributes(0.3)%
Valuation allowance(9.0)%
0.1%
Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, as described in Note 1, Nature of Business and Organization, Basis of Presentation, and Summary of Significant Accounting Policies, cash paid for income taxes, net of refunds, during the year ended December 31, 2025 was as follows (in thousands):

2025
Federal$— 
State
California14 
Foreign— 
Total cash paid for income taxes, net of refunds$14 
Cash paid for income taxes, net of refunds, during the year ended December 31, 2024 was $— million.
Deferred Tax Assets & Liabilities and Valuation Allowance
The tax effects of temporary differences for the years ended December 31, 2025, and 2024, that give rise to significant portions of the deferred tax assets and deferred tax liabilities are provided below:
(in thousands)20252024
Deferred Tax Assets:
Net operating losses (“NOL”)$479,820 $411,244 
Research and development credits4,239 4,239 
Accrued liabilities and reserves23,063 25,581 
Construction in progress - Impairment3,001 — 
Depreciation & impairment19,748 — 
Amortization7,724 8,803 
Deposits - Impairment2,676 — 
Capitalized R&D expense27,266 53,125 
Stock-based compensation1,186 450 
Transaction costs25 35 
Other275 379 
Gross deferred tax assets569,023 503,856 
Valuation allowance(537,852)(457,738)
Deferred tax assets, net of valuation allowance31,171 46,118 
Deferred Tax Liabilities:
Depreciation— (20,174)
Indefinite-lived Intangible(945)
State taxes(31,133)(25,944)
Gross deferred tax liabilities(32,078)(46,118)
Net deferred tax assets (liabilities)$(907)$— 
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment. During December 31, 2025 and 2024, the Company evaluated the realizability of its net deferred tax assets based on available positive and negative evidence and concluded that the likelihood of realization of the benefits associated with its net deferred tax assets does not reach the level of more likely than not due to the Company’s history of cumulative pre-tax losses and risks associated with the generation of future income given the current stage of the Company’s business. The Company has recognized a full valuation
allowance as of December 31, 2025 and 2024 since, in the judgment of management given the Company’s history of losses, the realization of these deferred tax assets was not considered more likely than not. The Company has recorded a net deferred tax liability of $0.9 million and $— million as of December 31, 2025 and December 31, 2024 respectively in connection with the recognition of identified intangible assets from the business acquisition during the year ended December 31, 2025. Because reversal of the indefinite-lived intangible assets cannot be predicted with reasonable certainty, these liabilities cannot be used as a source of taxable income to support the realization of the deferred tax assets. The valuation allowance was $537.9 million and $457.7 million as of December 31, 2025 and 2024, respectively, with increases attributable primarily to the current year’s provision. and a small portion on account of AIXC acquisition accounting.
Net Operating Loss Carryforwards and R&D tax credit carryforward
As of December 31, 2025, the Company has U.S. federal net operating loss (“NOLs”) carryforwards of $1,589.6 million, California net operating loss carryforwards of $1,494.3 million and foreign net operating loss carryforwards of $58.0 million. The U.S. federal net operating loss carryforwards of $1,508.6 million generated post the Tax Cuts and Jobs Act may be carried forward indefinitely, subject to the 80% taxable income limitation on the utilization of the carryforwards. The U.S. federal net operating loss carryforwards of $81.0 million generated prior to December 31, 2017 may be carried forward for twenty years. The California net operating loss carryforwards will begin to expire in 2034.and foreign net operating loss carryforwards have begun expiring.
The Company has no U.S. federal R&D tax credit carryforwards and a state R&D tax credit carryforward of $4.2 million as of December 31, 2025. The U.S. state tax credits do not expire and can be carried forward indefinitely.

In accordance with Internal Revenue Code Section 382 (“Section 382”) and Section 383 (“Section 383”), a corporation that undergoes an “ownership change” (generally defined as a cumulative change (by value) of more than 50% in the equity ownership of certain stockholders over a rolling three-year period) is subject to limitations on its ability to utilize its pre-change NOLs and R&D tax credits to offset post-change taxable income and post-change tax liabilities, respectively. The Company’s existing NOLs and R&D credits may be subject to limitations arising from previous ownership changes, and the ability to utilize NOLs could be further limited by Section 382 and Section 383 of the Code. In addition, future changes in the Company’s stock ownership, some of which may be outside of the Company’s control, could result in an ownership change under Section 382 and Section 383 of the Code. AIXC’s preacquisition NOLs and R&D credits are fully limited under Section 382 and Section 383 and are not included in the deferred tax assets listed in table above.
Reinvestment of Earnings
The Company’s intention is to indefinitely reinvest earnings in all jurisdictions outside the United States. As of December 31, 2025, and 2024, there was no material cumulative earnings outside the United States due to net operating losses and the Company has no earnings and profits in any jurisdiction, that if distributed, would give rise to a material unrecorded liability.
Tax Jurisdictions
The Company is subject to taxation and files income tax returns with the U.S. federal government, the state of California, as well as under the tax laws of the People’s Republic of China, Hong King, and the U.A.E. As of December 31, 2025, the 2022 through 2025 federal income tax returns and 2021 through 2025 state income tax returns are open to exam. However, if loss carryforwards of tax years prior to 2022 (2021 for California) are utilized in the U.S., these tax years, except those closed under previous examinations, may become subject to investigation by the tax authorities. All of the prior year income tax returns, from 2018 through 2025, are open under China tax law. The Company is not under any income tax audits.
Uncertain Income Tax Position
The aggregate change in the balance of unrecognized tax benefits for the years ended December 31, 2025, and 2024, is as follows:
(in thousands)20252024
Beginning balance$10,087 $12,972 
Increase related to current year tax positions135 389 
Decrease related to prior year positions— (3,274)
Ending balance$10,222 $10,087 
In accordance with ASC 740-10, Income Taxes — Overall, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. No interest and penalties related to the Company’s unrecognized tax benefits were accrued as of December 31, 2025 and 2024. The Company does not expect its uncertain income tax positions to have a material impact on its Consolidated Financial Statements within the next twelve months. As of December 31, 2025 and 2024, the realization of uncertain tax positions were not expected to impact the effective rate due to a full valuation allowance on related deferred taxes.
On July 4, 2025, the U.S. H.R.1, an act to provide for reconciliation pursuant to title II of H. Con. Res. 14. (the “OBBBA”) was enacted. The OBBBA introduces multiple tax law and other legislative changes, including modifications to income tax provisions such as domestic research and development expenses, capital expenditures, and U.S. taxation of international earnings. The Company has recognized the effects of the OBBBA provisions in the financial results to the extent they are applicable to the year ended December 31, 2025. The Company will continue to evaluate the impact of these provisions on 2026 and subsequent consolidated financial statements.