v3.25.4
Note 15 - Income Taxes
 12 Months Ended
Dec. 31, 2025
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

(15) Income Taxes

 

The provision for income taxes reflects current taxes and deferred taxes. The effective tax rate for each of the years ended  December 31, 2025 and 2024 was 0%. The Company continues to provide for a valuation allowance to offset its net deferred tax assets, primarily net operating losses ("NOLs") and tax credits, until such time it is more likely than not the tax assets or portions thereof will be realized.

 

Components of loss before income taxes are as follows:

 

  

Year Ended December 31,

 
  

2025

  

2024

 

Domestic

 $(22,248) $(27,044)

International

  (10,030)  (11,922)

Loss before income taxes

 $(32,278) $(38,966)

 

Components of the (provision) benefit for income taxes allocated to continuing operations include the following:

 

  Year Ended December 31, 
  

2025

  

2024

 

Current:

        

Federal

 $—  $5 

State

  (8)  (13)

Foreign

  (23)  (36)

Sub-total

 $(31) $(44)

Deferred:

        

Federal

 $—  $— 

State

  —   — 

Foreign

  —   — 

Sub-total

 $—  $— 

Total

 $(31) $(44)

 

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to (income) loss before income taxes after the adoption of ASU 2023-09 is as follows:

 

  Year Ended      Year Ended     
  

December 31,

      

December 31,

     
  

2025

  

%

  

2024

  

%

 

Income taxes computed at U.S. statutory rates

 $6,778   21% $8,183   21%

State income taxes, net of federal tax benefit

  (7)  —%  (10)  —%

(Increases) decreases resulting from:

                

Foreign tax effects:

                

United Kingdom:

                

Change in valuation allowance

  (2,513)  (8)%  (2,443)  (6)%

Statutory rate differential

  407   1%  615   2%

Research and development tax deductions and credits

  25   —%  650   2%

NOLs surrendered for refundable tax credit

  —   —%  (1,355)  (3)%

Other

  (54)  —%  3   —%

Other foreign jurisdictions

  6   —%  (9)  —%

Tax credits:

                

Research and development tax credits

  832   3%  1,373   4%

Nontaxable or nondeductible items:

                

Stock compensation expense windfall (shortfall)

  (542)  (2)%  171   1%

Other

  (270)  (1)%  (56)  —%

Change in valuation allowance

  (4,860)  (15)%  (7,001)  (18)%

Change in unrecognized tax benefits

  (96)  —%  (74)  —%

Other

  263   1%  (91)  —%

Total

 $(31)  —% $(44)  —%

(1)

During the Year Ended December 31, 2025, state taxes in California, Massachusetts, and New Jersey comprised the majority of the tax effect in this category. During Year Ended December 31, 2024, South Carolina and New York comprised the majority.

 

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 tax purposes. The tax effects of significant items comprising the Company’s deferred tax assets and deferred tax liabilities are as follows:

 

  

December 31,

  

December 31,

 
  

2025

  

2024

 

Deferred tax assets:

        

Federal and state net operating losses

 $88,985  $79,856 

Federal and state research and experimentation credits

  14,626   13,610 

Research and experimental costs

  9,464   12,806 

Stock based compensation

  2,289   1,822 

ASC 842 - lease liabilities

  1,125   1,303 

Accrued compensation

  270   324 

Fixed asset differences

  220   191 

Intangible asset differences

  3   4 

Other

  182   264 

Total gross deferred tax assets

  117,164   110,180 

Less valuation allowance

  (112,746)  (104,361)

Net deferred tax assets

 $4,418  $5,819 
         

Deferred tax liabilities:

        

Patent expenditures

 $(808) $(888)

ASC 842 - right of use assets

  (699)  (795)

Fixed asset differences

  (1)  (4)

Intangible asset differences

  (2,910)  (4,132)

Total gross deferred tax liabilities

 $(4,418) $(5,819)

Total net deferred tax assets and liabilities

 $—  $— 

 

The Company had a valuation allowance of $112,746 and $104,361 on deferred tax assets as of  December 31, 2025 and 2024, respectively, an increase of $8,385 during the year ended December 31, 2025.

 

As of December 31, 2025, the Company has federal, state, and foreign NOL carryforwards of $289,499, $177,072, and $80,051 respectively, which have a carryforward of 5 years to indefinite depending on the jurisdiction.

 

As of  December 31, 2025, the Company has federal research and experimental tax credits of $15,832, which have a carryforward of 20 years.

 

A summary reconciliation of the Company’s uncertain tax positions is as follows:

 

  Year Ended December 31, 
  

2025

  

2024

 

Beginning balance

 $1,137  $1,063 

Addition for current year tax positions

  66   85 

Addition (reduction) for prior year positions

  30   (11)

Ending balance

 $1,233  $1,137 

 

As of December 31, 2025, the total unrecognized tax benefits, if recognized, would not materially affect the Company’s effective tax rate.

 

The Company records accrued interest and penalties associated with uncertain tax positions in the “provision for income taxes” in the Consolidated Statements of Operations. For the years ended  December 31, 2025 and 2024, the Company recognized accrued interest and penalties associated with uncertain tax positions of $0 and $0, respectively.

 

The Company’s open tax years subject to examination in the U.S. federal jurisdiction are 2022 through 2024, in applicable state jurisdictions for the tax years 2022 through 2024, and in applicable foreign jurisdictions for tax year 2024. To the extent allowed by law, the taxing authorities may have the right to examine prior periods where NOLs or tax credits were generated and carried forward, and make adjustments up to the amount of the NOL or tax credit carryforward. 

 

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”), which includes a broad range of tax reform provisions, was signed into law in the United States, which includes a new IRC Section 174A. Under Section 174A, commencing with tax years beginning after December 31, 2024, domestic research or experimental expenditures may be deducted in the current period rather than capitalized and amortized over multiple years, as previously required under IRC Section 174. As a result of this legislation, the Company is deducting its domestic Section 174A expenditures beginning in the 2025 taxable year. OBBBA did not have a material impact on our effective tax rate, financial condition, or results of operations for the year ended December 31, 2025.