v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company’s loss before income taxes was generated from its U.S. operations and foreign operations as follows:
Year Ended December 31,
202520242023
United States$30,131 $33,349 $51,004 
Foreign20,833 16,407 10,505 
Loss before income taxes$50,964 $49,756 $61,509 
The following table shows the expense (benefit) for income taxes:
Year Ended December 31,
202520242023
Current provision:
Federal $— $— $— 
State90 279 138 
Foreign566 406 33 
Total current provision$656 $685 $171 
Deferred provision (benefit):
Federal $21 $(18)$1 
State— (3)4 
Foreign— — — 
Total deferred (benefit) provision$21 $(21)$5 
Total provision for income taxes$677 $664 $176 
A reconciliation of the difference between the provision (benefit) for income taxes and income taxes at the statutory U.S. federal income tax rate after the adoption of ASU 2023-09 is as follows:
Year Ended December 31,
2025
U.S. Federal Statutory Rate$(10,702)21.00 %
State and Local Taxes, Net of Federal Income Tax Benefit(1)
997 (1.96)%
Foreign Tax Effects
UK
Change in Valuation Allowance4,391 (8.62)%
Other(67)0.13 %
Other Foreign Entities617 (1.21)%
Tax Credits1,313 (2.58)%
Change in Valuation Allowance4,352 (8.54)%
Nontaxable or Nondeductible Items
Revaluation of Contingent Liabilities(1,340)2.63 %
Officers' Compensation1,387 (2.72)%
Share-based Compensation678 (1.33)%
Meals595 (1.17)%
Other31 (0.06)%
Changes in Unrecognized Tax Benefits(1,583)3.11 %
Other Adjustments8 (0.02)%
Income tax provision (benefit)$677 (1.34)%
(1) The state of California made up the majority (greater than 50%) of the tax effect in this category.
A reconciliation of the difference between the provision (benefit) for income taxes and income taxes at the statutory U.S. federal income tax rate before the adoption of ASU 2023-09 is as follows:
Year Ended December 31,
20242023
Income tax at statutory rate$(10,413)$(12,917)
State and local income taxes, net of federal income tax benefit(753)(1,981)
Revaluation of contingent royalty obligation1,823 1,078 
Meals and entertainment713 385 
Change in state tax rate50 218 
Officers' compensation1,231 793 
Foreign Rate Differential443 222 
Stock compensation(1,377)449 
Other, net125 (449)
Valuation allowance8,822 12,378 
Income tax provision (benefit)$664 $176 
The components of deferred tax assets and liabilities were as follows:
As of December 31,
202520242023
Deferred income tax assets:
Net operating losses$94,930 $86,277 $83,257 
Stock compensation7,890 7,808 5,442 
Research and development credits1,034 2,617 2,617 
Operating lease liabilities2,303 2,152 1,567 
Accrued legal settlement15,147 16,283 17,674 
R&E capitalization3,590 4,107 3,415 
Carryforward of interest expense under Section 163(j)11,471 8,325 5,072 
Other, net6,167 6,488 6,192 
Valuation allowance(133,986)(124,895)(116,073)
Total deferred income tax assets8,546 9,162 9,163 
Deferred income tax liabilities:
Intangible amortization(6,728)(7,343)(7,730)
Operating lease ROU assets(1,846)(1,825)(1,460)
Total deferred income tax liabilities(8,574)(9,168)(9,190)
Net deferred income taxes$(28)$(6)$(27)
As of December 31, 2025, the Company has federal net operating loss (“NOL”) carryforwards of $330,543, of which $66,345 will begin to expire in 2034. The federal NOLs generated in 2018 and in the subsequent years in the amount of $264,198 have an indefinite carryforward period. As of December 31, 2025, the Company has state NOL carryforwards of $257,754, which begin to expire in 2026. As of December 31, 2025, the Company has foreign NOL carryforwards of $59,259, which can be carried forward indefinitely. As of December 31, 2025, the Company has federal research and development (“R&D”) credit carryforwards of $1,615, which will begin to expire in 2039. The Company also has California R&D credit carryforwards of $573, which has an indefinite carryforward period.
In general, if a company experiences a greater than 50 percentage point aggregate change in ownership of certain significant stockholders over a three-year period, utilization of its pre-change NOL carryforwards and R&D credit carryforwards, and interest expense under Section 163(j), is subject to an annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and similar state laws. The annual limitation may result in the expiration of the Company’s tax attribute carryforwards before utilization and may be material. The Company has completed a study to evaluate whether an ownership change, as defined by Section 382 of the Internal Revenue Code, occurred from the Company's formation through December 31, 2024. Based on the findings of this study, the Company has determined that several ownership changes have occurred. Consequently, the Company’s tax attribute carryforwards allocable to the periods preceding the ownership change are subject to limitation under Section 382. However, it is important to note that the Company’s tax attribute carryforwards, which include NOLs, R&D credits, and interest expense under Section 163(j), are not anticipated to expire unused, solely due to the limitations under Section 382. The Company started but has not completed a study to determine whether its tax attribute carryforwards generated through December 31, 2025, are likely to be limited by Section 382 and 383. The Company’s net deferred income tax assets have been offset by a valuation allowance. Therefore, any resulting reduction to the Company’s tax attribute carryforwards once the analysis is completed will be offset by a corresponding reduction of the valuation allowance and there would be no impact on the Company’s consolidated balance sheet, statement of operations, or cash flows.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Year Ended December 31,
202520242023
Beginning balance$2,924 $2,924 $2,924 
Decreases to prior year tax positions
(2,070)— — 
Increases to current year tax positions241 — — 
Ending balance$1,095 $2,924 $2,924 
The Company has considered the amounts and probabilities of the outcomes that can be realized upon ultimate settlement with the tax authorities and determined unrecognized tax benefits primarily related to credits should be established as noted in the summary rollforward above. The Company’s effective income tax rate would not be impacted if the unrecognized tax benefits are recognized. Additional amounts in the summary rollforward could impact the Company’s effective tax rate if it did not maintain a full valuation allowance on its net deferred tax assets.
The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. There were no accrued interest and penalties associated with uncertain tax positions as of December 31, 2025, 2024, and 2023. The Internal Revenue Service (“IRS”) reviewed the Company’s 2022 tax return during the first quarter of 2025 and accepted it as filed but did not consider the year examined. The Company has incurred net operating losses since its inception; as such, the tax returns of all years remain open for audit.
The following table presents income taxes paid (net of refunds received) for the year ended December 31, 2025:
Year Ended December 31,
2025
Current:
Federal$— 
Foreign
Australia61
Netherlands747
Spain211
State and local196
Total$1,215 
The income taxes paid for the years ended December 31, 2024, and 2023 were $235 and $117, respectively.