v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
We account for income taxes under the liability method; under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax reporting bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain.
We utilize a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.
The Company is subject to U.S. federal income taxes as well as state taxes. The Company has not recorded any state taxes in 2025, 2024 and 2023. However, the jurisdictions that comprise the majority (greater than 50%) of the composite state is Florida. The Company did not record an income tax provision for the years ended December 31, 2025 and December 31, 2023. The Company's income tax provision for the year ended December 31, 2024 was $0.1 million representing foreign withholding taxes incurred in connection with payments received under license agreements with foreign entities.
For financial reporting purposes, Loss before provision for income taxes and noncontrolling interest, includes solely domestic operations for all years presented.
A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate is as follows (in thousands):
Year Ended December 31,
2025
At statutory rate$(6,527)21.0 %
Change in valuation allowance6,925 (22.3)%
Tax credits(323)1.0 %
Other(75)0.3 %
Provision for income taxes$— 
Effective income tax rate— %
The provision (benefit) for income taxes for the year ended December 31, 2024 and 2023 consists of the following (in thousands):
December 31,
20242023
U.S. statutory tax benefit$(4,747)$(5,453)
Partnership income (federal) not subject to tax to the Company891 1,200 
Foreign withholding tax79 — 
State taxes (net of federal benefit)(928)(2)
Research and development tax credit(373)(273)
Other190 (64)
Change in valuation allowance4,988 4,592 
Provision for income taxes$100 $— 
Effective income tax rate(0.4)%0.0 %
Deferred Tax Assets
Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets for federal and state income taxes are as follows:
December 31,
20252024
Deferred tax assets:
Net operating loss carryforwards$37,094 $27,819 
R&D Tax Credit carryforwards2,815 2,491 
Investment in partnerships9,789 3,322 
Capital loss carryforward383 395 
Other47 2 
Total deferred tax assets50,128 34,030 
Valuation allowance(50,128)(34,030)
Net deferred tax assets$— $— 
The Company assesses the available positive evidence and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of existing deferred tax assets. A significant piece of objective negative evidence evaluated was the Company’s recent operating losses. Such objective evidence limits the ability to consider other subjective evidence, such as forecasts of profitability. Based on the weight of objective evidence, including cumulative pre-tax losses in recent years, the Company concluded that its deferred tax assets were not realizable on a more-likely-than-not basis and recorded a full valuation allowance. During the year ended December 31, 2025, the Company’s valuation allowance increased by $16.1 million.
The Company has federal net operating loss carryforwards of $171.1 million that will be available to offset future taxable income. Approximately, $38.8 million of these carryforwards expire in varying amounts starting in 2035 to 2037, if not utilized and are available to offset 100% of future taxable income. The remaining $132.3 million may be carried forward indefinitely but are only available to offset 80% of future taxable income. The Company has federal research and development tax credits of $2.8 million which expire in varying amounts starting in 2035 to 2045. In addition, the Company has North Carolina net operating loss carryforwards of approximately $51.7 million which are set to expire beginning in 2030 through 2045.
The Company applies applicable authoritative guidance which prescribes a comprehensive model for the manner in which a company should recognize, measure, present and disclose in its consolidated financial statements all material uncertain tax positions that the Company has taken or expects to take on a tax return. As of December 31, 2025, the Company had no uncertain tax positions. There are no uncertain tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within twelve months of December 31, 2025.
The Company files U.S. federal income tax returns and income tax returns in various state and local jurisdictions. The earliest open tax years that are still subject to examination by the IRS and the aforementioned state tax authorities are 2022 to 2025.