v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of loss from continuing operations before income tax provision consist of the following:
(in thousands)20252024
Operations$(39,869)$(29,164)
Total loss before income taxes$(39,869)$(29,164)
Income tax provision consists of the following:
(in thousands)20252024
Current:
Federal$— $— 
State— — 
Foreign— — 
Total current taxes$— $— 
Deferred:
Federal$(8,704)$(5,666)
State(1,206)(864)
Foreign— — 
Total deferred taxes$(9,910)$(6,530)
Valuation allowance9,910 6,530 
Income tax provision$— $— 
A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows:
(in thousands)2025 ($)2025 (%)
Income tax at U.S. federal statutory rate$(8,372)21.0 %
State income tax, net of federal tax effect (1)
— 0.0 %
Tax credits
   R&D credits(1,605)4.0 %
Change in valuation allowance8,957 (22.5)%
Nontaxable and nondeductible items
   Stock-based compensation469 (1.2)%
   Other221 (0.5)%
Changes in unrecognized tax benefits321 (0.8)%
Other reconciling items9 0.0 %
Effective tax provision$— 0.0 %
(1) State and local taxes in California comprise the majority of this category.
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 before income taxes prior to the adoption of ASU 2023-09 is as follows:
(in thousands)2024
Income tax at U.S. federal statutory rate$(6,124)
Stock-based compensation251 
State income tax, net of federal tax effect(682)
Permanent adjustments22 
Loss on tranche liability fair value adjustment717 
R&D credits(667)
Other(47)
Change in valuation allowance6,530 
Effective tax provision$— 
There was no income tax provision for each of the years ended December 31, 2025, and 2024. The effective tax rate was 0.0% for each of the years ended December 31, 2025, and 2024 and differs from the statutory federal income tax rate due to the deferred tax assets being subject to a full valuation allowance.
The significant components that comprised the Company’s net deferred taxes at December 31, 2025 and 2024 are as follows:
(in thousands)20252024
Deferred tax assets:
Lease liabilities$395 $972 
Stock-based compensation173 60 
Book over tax depreciation— — 
Section 174 R&E expenditures3,823 5,151 
Sales and bad debt allowances— — 
Accrued compensation3 17 
Net operating loss16,055 7,032 
Credits4,967 2,719 
Other— — 
Total deferred tax assets25,416 15,951 
Valuation allowance(24,954)(15,044)
Net deferred tax assets$462 $907 
Deferred tax liabilities:
Right-of-use assets$387 $820 
Tax over book depreciation1 13 
Other74 74 
Total deferred tax liabilities462 907 
Net deferred tax assets (liabilities)$— $— 
Under the provisions of ASC 740, management is required to evaluate whether a valuation allowance should be established against its deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. Realization of deferred tax assets is dependent upon taxable income in prior carryback years, estimates of future taxable income, tax planning strategies, and reversal of existing taxable temporary differences. ASC 740 provides that forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years or losses expected in early future years. As of December 31, 2025, and 2024, due to cumulative losses in recent years, the Company maintained a valuation allowance in the amount of
$25.0 million and $15.0 million, respectively, against deferred tax assets that were not more likely than not of being realized.
As of December 31, 2025, and 2024, the Company had federal net operating loss (“NOL”) carryforwards of $76.5 million and $33.5 million, respectively and state NOL carryforwards of $5.0 million and $5.0 million, respectively. Due to the enactment of the Tax Cuts and Jobs Act, federal net operating losses generated beginning in 2018 are carried forward indefinitely. Therefore, the Company’s federal NOL carryforwards do not expire. The state NOL carryforwards begin to expire in 2029.
As of December 31, 2025, and 2024, the Company had federal general business credit carryforwards of $3.3 million and $1.7 million, respectively and state general business credit carryforwards of $4.2 million and $2.6 million, respectively. The federal general business credit carryforwards begin to expire in 2039. The Company's state general business credit carryforwards do not expire.
In general, if the 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 general business credit carryforwards 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 generally is determined by multiplying the value of the Company’s stock at the time of such ownership change, subject to certain adjustments, by the applicable long-term tax-exempt rate. The annual limitations may result in the expiration of NOL and general business credit carryforwards before utilization and may be material. The Company completed an analysis to determine whether its NOL and general business credits generated through June 30, 2025, are likely to be limited by Section 382 and 383. The Company determined that ownership changes as defined under Section 382 may have occurred and that the resulting limitation would reduce the Company’s ability to utilize its NOL and general business credit carryforwards in the near future. Additionally, future ownership changes under Section 382 and 383 may also reduce the Company's ability to utilize tax attributes. As of December 31, 2025, the Company’s net deferred income tax assets have been offset by a valuation allowance. Therefore, any resulting reduction to the Company’s NOL and general business credit carryforwards will be offset by a corresponding reduction of the valuation allowance and there would be no impact on the Company’s balance sheet, statement of operations, or cash flows.
Reconciliation of unrecognized tax benefits:
(in thousands)20252024
Balance as of beginning of year$1,660 $1,149 
Increases related to current year tax positions625 511 
Balance as of end of year$2,285 $1,660 
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 should be established as noted in the summary rollforward. The Company’s effective income tax rate would not be impacted if the unrecognized tax benefits are recognized, due to the full valuation allowance. The Company does not expect its unrecognized tax benefits to change significantly over the next 12 months.
The Company has no liabilities recorded for uncertain tax positions but does have unrecognized tax benefits of $2.3 and $1.7 million, which have been recorded as a direct reduction to the deferred tax asset as of the year ended December 31, 2025, and 2024.
The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. There were no accrued interest and penalties associated with uncertain tax positions as of December 31, 2025, and 2024. The Company’s tax returns for all years since inception are open for audit.
The amount of income taxes paid by the Company in cash in 2025 was as follows:
(in thousands)2025
Federal$— 
State
   California1 
   New Jersey— 
Total cash paid for income taxes, net of refunds$1