Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Loss before income before income taxes are as follows (in thousands):

	Year ended December 31, 2024		Year ended December 31, 2023
United Kingdom	$	(27,510)	$	(50,534)
United States	(32,833)		(24,507)
Other foreign	(884)		(1,481)
Loss before income taxes	$	(61,227)	$	(76,522)

The components of income tax benefit are as follows (in thousands):

	Year ended December 31, 2024		Year ended December 31, 2023
Current income tax benefit/(expense):
United States	$	(70)	$	(28)
Other Foreign	(22)		(45)
Deferred income tax benefit:
United States	136		3,148
Total income tax benefit	$	44	$	3,075

A reconciliation of the U.K. statutory income tax rate to the Company's effective tax rate as reflected in the consolidated financial statements is as follows:

	Year ended December 31, 2024		Year ended December 31, 2023
Statutory tax rate	25.00	%	23.52	%
Increase (decreases) resulting from:
Permanent differences	(4.82)		1.03
Provision to return adjustments	(4.55)		(4.09)
Research and development credits	(5.75)		(4.94)
Foreign rate differential	1.18		1.23
Change in valuation allowance	(9.99)		(11.84)
Share based compensation	(1.00)		(0.84)
Effective tax rate	0.07	%	4.07	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income and for tax carryforwards. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

	December 31, 2024		December 31, 2023
Deferred tax assets:
Net operating loss carryforwards	$	26,040	$	23,589
Research and development credit carryforwards	47		40
Share based compensation	4,753		4,226
Lease liability	3,156		3,404
Intangible assets	452		745
Capitalized Research and Development expenditure	6,185		4,228
Other	10		1
Gross deferred tax asset	40,643		36,233
Valuation allowance	(30,830)		(25,057)
Net deferred tax assets	9,813		11,176
Deferred tax liabilities:
Depreciation	(1,815)		(1,652)
Right-of-use lease asset	(1,149)		(1,922)
Undistributed earnings of subsidiaries	(1,248)		(1,267)
Intangible assets	(6,039)		(6,909)
Net deferred tax liabilities	(10,251)		(11,750)
Total deferred tax, net	$	(438)	$	(574)

Specified research and experimentation costs under Section 174 of the Internal Revenue Code are required to be capitalized and amortized ratably over five years for domestic expenditures and over 15 years for foreign expenditures. This provision of Section 174 became effective for tax years beginning after December 31, 2021. As a result of the capitalization of these costs in the current year, the Company has recorded a $6.2 million deferred tax asset (2023: $4.2 million).

As of December 31, 2024, the Company had a valuation allowance of $30.8 million (2023: $25.1 million) against its deferred tax assets, which consisted principally of net operating loss and research and development credit carryforwards. The Company considered the positive and negative evidence bearing upon its ability to realize the deferred tax assets. In addition to the Company’s history of cumulative losses, the Company cannot be certain that future taxable income will be sufficient to realize its deferred tax assets. Accordingly, a valuation allowance has been provided against its deferred tax assets. When the Company changes its determination as to the amount of its deferred tax assets that can be realized, the valuation allowance is adjusted with a corresponding impact to the provision for income taxes in the period in which such determination is made.

Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2024 and 2023 related primarily to the increase in net operating loss and credit carryforwards, and were as follows:

	Year ended December 31, 2024		Year ended December 31, 2023
Valuations allowance at beginning of year	$	25,057	$	13,707
Changes in valuation allowance arising from in-year additions	—		1,052
Increases recorded to income tax provision	6,123		9,605
Foreign exchange translation	(350)		693
Valuation allowance at end of year	$	30,830	$	25,057

As of December 31, 2024, the Company had net operating loss ("NOL") carryforwards totaling approximately $101.7 million which have an unlimited carryforward period, of which $75.6 million originate in the United Kingdom. As of December 31, 2024, the Company had $0.1 million of research and development tax credit carryforwards which also have an unlimited carryforward period.

As of December 31, 2023, the Company had NOL carryforwards totaling approximately $92.7 million which have an unlimited carryforward period, of which $74.2 million originate in the United Kingdom. As of December 31, 2023, the Company had $0.4 million of research and development tax credit carryforwards which also have an unlimited carryforward period.

As of December 31, 2024 and 2023, the Company does not have any material unrecognized tax benefit liabilities. The Company files corporation/income tax returns in the United Kingdom, the United States, Switzerland, Australia and Italy. The associated tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. In the United Kingdom, tax years from 2021 remain subject to examination by HMRC. In all other jurisdictions, the tax years since inception remain subject to examination by the applicable taxing authorities as of December 31, 2024 and 2023.