v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of the Company’s loss before income tax expense are as follows (in thousands):
Year Ended December 31,
20252024
United States$(33,192)$(54,046)
Foreign116 29 
Loss before income tax provision$(33,076)$(54,017)
Income tax expense is comprised of the following (in thousands):
Year Ended December 31,
20252024
Current:
Federal$—$—
State34—
Foreign28—
Total current income tax expense$62$—
Deferred:
Federal$—$—
State——
Foreign——
Total deferred income tax expense$—$—
Total income tax expense$62$—
The effective tax rate differs from the U.S. federal statutory rate primarily due to the full valuation allowance maintained on the Company’s net deferred tax assets and non-deductible fair value adjustments for the years ended December 31, 2025 and 2024. For the year ended December 31, 2025, the Company adopted ASU 2023-09 on a prospective basis. The following table is a reconciliation of the U.S. federal statutory rate of 21.0 % to the effective tax rate for the year ended December 31, 2025, in accordance with ASU 2023-09:
Year Ended December 31, 2025
Amount
(in thousands)		Percent
Federal statutory income tax rate$(6,946)21.0 %
State and local income tax, net of federal income tax effect—— 
Change in valuation allowance10,125(30.6)
Nontaxable or nondeductible items:
Change in fair value of contingent earn-out liability, public warrants, and contingently issuable common stock liability(3,252)9.8 
Stock-based compensation(6,934)20.9 
Non-deductible compensation6,976(21.0)
Permanent differences83(0.3)
Other100.2 
Effective income tax rate$62 0.0 %
The following table is a reconciliation of the US federal statutory rate of 21.0 % to the effective tax rate prior to the adoption of ASU 2023-09:
Year Ended December 31, 2024
Federal statutory income tax rate21.0 %
State income taxes, net of federal benefit7.7 
Federal and state research and development tax credits(0.1)
Change in fair value of contingent earn-out liability and contingently issuable common stock liability9.9 
Change in valuation allowance(42.9)
Change in uncertain tax positions(0.1)
Change in tax rate3.3 
Stock-based compensation1.1 
Non-deductible compensation0.5 
Permanent differences(0.2)
Other(0.2)
Effective income tax rate0.0 %
Net deferred tax assets consisted of the following (in thousands):
December 31,
20252024
Deferred tax assets:  
Net operating loss carryforwards$69,652$57,450
Research and development tax credit carryforwards3,5303,594
Capitalized research and development costs14,25215,868
Accrued expenses12,0219,991
Deferred revenue24,15422,531
Lease liability3,5963,848
Other4,7292,960
Total deferred tax assets131,934116,242
Valuation allowance(119,329)(106,268)
Total deferred tax assets, net of valuation allowance12,6059,974
Deferred tax liabilities:  
Depreciation and amortization(9,345)(6,250)
Right of use lease asset(3,243)(3,706)
Other(17)(18)
Total deferred tax liabilities(12,605)(9,974)
Net deferred tax assets$—$—
As of December 31, 2025, the Company had federal net operating loss carryforwards of $20.1 million, which begin to expire in 2033. These losses were generated before 2018 and are subject to a 20-year carryforward period under the tax rules in effect at that time. The Company also had federal net operating loss carryforwards of $248.0 million and $203.3 million as of December 31, 2025 and 2024, respectively, which do not expire but are generally limited to offsetting up to 80% of taxable income in any given year. These amounts were generated after 2017 and are subject to the provisions of the Tax Cuts and Jobs Act, which eliminated the expiration period but imposed a limitation on usage.
The Company had state net operating loss carryforwards of $248.0 million and $201.1 million as of December 31, 2025 and 2024, respectively, which may be available to offset future state taxable income and which begin to expire in 2033, depending on jurisdiction-specific rules. Additionally, as of December 31, 2025 and 2024, the Company had United Kingdom net operating loss carryforwards of approximately $1.4 million and $1.7 million, respectively, which do not expire under current UK tax law.
As of December 31, 2025, the Company had gross U.S. federal and state research and development and other tax credit carryforwards of $2.4 million and $1.4 million, respectively, which may be available to offset future tax liabilities and the majority of which begin to expire in 2035 and 2032, respectively. As of December 31, 2024, the Company had gross U.S. federal and state research and development and other tax credit carryforwards of $2.4 million and $1.5 million, respectively, which may be available to offset future tax liabilities and the majority of which begin to expire in 2033 and 2030, respectively.
Utilization of the U.S. federal and state net operating loss carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income or tax liabilities. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period. If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the net operating loss carryforwards or research and development tax credit carryforwards would be subject to an annual limitation under Section 382, which is determined by first multiplying the value of the
Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments. Any limitation may result in the expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization.
The Company believes that an ownership change within the meaning of Section 382 occurred on July 16, 2021, in connection with Merger. Based on the estimated annual limitation, the Company would have been able to fully utilize all of its Section 382-limited net operating losses and tax credit carryforwards in the 2022 tax year. The Company has not performed an analysis of ownership changes since the Merger, and does not anticipate utilization of net operating losses or credit carryforwards in the near term.
The Company considered the evidence of its history of cumulative net operating losses incurred since inception, as well as other positive and negative evidence bearing upon its ability to realize deferred tax assets in respect of our net operating loss carryforwards, and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the net deferred tax assets as of December 31, 2025 and 2024. If or when recognized, the tax benefits related to any reversal of the valuation allowance on deferred tax assets as of December 31, 2025, will be accounted for as follows: approximately $117.1 million will be recognized as a reduction of income tax expense and $2.2 million will be recorded as an increase in equity. The Company reevaluates the positive and negative evidence at each reporting period.
Changes in the valuation allowance for deferred tax assets related primarily to the increase in net operating loss carryforwards and capitalized R&D costs and were as follows (in thousands):
December 31,
20252024
Valuation allowance as of beginning of year$106,268$83,113
Additions charged to provision for income taxes13,06123,155
Valuation allowance as of end of year$119,329$106,268
The Company accounts for income tax uncertainties in accordance with ASC 740 Income Taxes, which prescribes a recognition threshold and measurement criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more likely than not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more likely than not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. ASC 740 also provides guidance on the accounting for and disclosure of liabilities for uncertain tax positions, interest and penalties. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision.
The following table summarizes the activity related to the Company’s uncertain tax positions (excluding interest and penalties and related tax attributes) (in thousands):
December 31,
20252024
Balance at beginning of fiscal year$447$428
Gross increases related to prior year tax positions1820
Foreign exchange and others(76)(1)
Balance at end of fiscal year$389$447
The Company’s liability for uncertain tax positions as of December 31, 2025 and 2024 includes $0.4 million related to amounts that, if recognized, would affect the effective tax rate (excluding related interest and penalties).
The Company files income tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state and non-US jurisdictions, where applicable. The Company is open to future tax examinations in the US under statute from 2022 to the present; however, carryforward attributes that were generated prior to 2022 may still be adjusted upon examination by federal, state, or local tax authorities if they either have been or will be used in a future period. The Company is also subject to future tax examinations under UK statute for the period from 2022 to the present, with a standard look-back period of 4 years, extendable to 6 years in cases of carelessness. The Company has not received notice of examination in any jurisdictions for any tax year open under statute.