Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

v3.25.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
13. Income Taxes
The Company's consolidated effective income tax rate from continuing operations for the years ended December 31, 2024 and 2023 was -0.70% and -1.26%, respectively. The Company's provision for income taxes from continuing operations for the years ended December 31, 2024 and 2023 was as follows:
Years Ended December 31,
2024 2023
(in thousands)
Current:
Federal $ —  $ — 
State 205  569 
Foreign 165  104 
Total current 370  673 
Deferred:
Federal —  — 
State —  — 
Total deferred —  — 
Total provision for income taxes $ 370  $ 673 
The Company’s primary operations are domestically located and the Company is subject to tax in one foreign jurisdiction. The provision for income taxes differed from the amount computed by applying the federal statutory income tax rate of 21% to loss before income taxes due to the following items for the years ended December 31, 2024 and 2023:
Years Ended December 31,
2024 2023
(in thousands)
Tax benefit at federal statutory rate $ (11,938) $ (11,169)
Non-deductible compensation 171  2,342 
State tax, net of federal benefit (95) (9,393)
Valuation allowance 10,773  17,251 
Shortfall of stock compensation deduction 1,288  2,666 
Non-taxable warrants 591  (1,613)
Other (420) 589 
Income tax expense $ 370  $ 673 
The deferred income tax expense as of December 31, 2024 and 2023 was $0. The tax benefits associated with losses generated by the consolidated group have been reduced by a full valuation allowance as the Company does not believe it is more-likely-than-not that the losses will be utilized.
Deferred tax assets and liabilities as of December 31, 2024 and 2023, consisted of the following:
December 31,
2024 2023
(in thousands)
Deferred tax assets:
Net operating loss carryforwards $ 73,482  $ 68,374 
Sec. 163(j) carryforward 11,603  9,214 
Accruals and reserves 1,664  1,841 
Deferred revenue 115  194 
Capital loss carryforward 3,993  4,004 
Section 174 - research expenditures 11,869  7,914 
Other deferred tax assets 7,223  6,604 
Total deferred tax assets 109,949  98,145 
Valuation allowance (108,162) (97,388)
Total net deferred tax assets 1,787  757 
Deferred tax liabilities
Basis difference in intangibles (1,233) (332)
Other deferred tax liabilities (554) (425)
Total deferred tax liabilities (1,787) (757)
Net deferred tax liabilities $ —  $ — 
The Company continues to provide for a full valuation allowance on its net deferred tax assets as the Company does not believe it is more-likely-than-not that the losses will be utilized after evaluation of all significant positive and negative evidence including, but not limited to, historical cumulative losses over the prior three-year period, as adjusted for permanent items, insufficient sources of taxable income in prior carryback periods and unavailability of prudent and feasible tax-planning strategies.
Below is a summary of the Company's estimated loss and tax credit carryforwards. In the year ended December 31, 2022, the Company performed a historic ownership change analysis and concluded that $1.5 million of federal net operating loss carryforward pre-tax attributes were subject to limitations, as defined by the Internal Revenue Code Sections 382 and 383, will go unutilized.
Tax Effected Expiration
(in thousands)
Federal net operating loss (“NOL”) carryforward $ 8,313  2033-2037
Federal NOL carryforward 54,595  Indefinite
Federal capital loss carryforward 3,993  2025
State NOL carryforwards 10,574  2034-2043
At December 31, 2024 and 2023 the Company had $299.6 million and $275.4 million of NOL carryforwards for U.S. federal tax purposes, respectively. U.S. federal tax NOL carryforwards generated prior to 2018 of $39.6 million will expire, if unused, between 2033-2037. Under the Tax Cuts and Jobs Act of 2017, as modified by the Coronavirus Aid, Relief, and Economic Security Act, federal NOL carryforwards generated in tax years beginning after December 31, 2017 may be carried forward indefinitely. As of December 31, 2024, the Company had $260.0 million of NOL carryforwards generated after 2017 for U.S. federal tax purposes, which may be used to offset 80% of its taxable income annually.
The Company files income tax returns in the United States federal jurisdiction and various state jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities. Tax years 2015-2023 remain open for examination.
Below is a tabular reconciliation of the total amounts of unrecognized tax benefits:
2024 2023
(in thousands)
Unrecognized tax benefits - January 1 $ 9,006  $ 9,006 
Gross decrease - tax positions in current period —  — 
Gross increase - tax positions in current period —  — 
Unrecognized tax benefits - December 31 $ 9,006  $ 9,006 
The majority of the unrecognized tax benefits in the year ended December 31, 2024 is from the valuation of guaranteed incentives shares issued for SVB guarantors. The balance of unrecognized tax benefits as of December 31, 2024 and 2023, if recognized, would not affect the Company's effective tax rate and would result in adjustments to other tax accounts, primarily deferred tax assets and the net operating loss carry forward.