15. Income Taxes

A sweeping legislative package formally titled “An act to provide for reconciliation pursuant to title II of H. Con. Res. 14” (the “Act”), and commonly referred to as the One Big Beautiful Bill Act, was signed into law on July 4, 2025. The legislation includes numerous changes to existing tax law that are retroactive to the beginning of 2025, including provisions for the current deductibility of certain property additions and deductibility of current and previously capitalized domestic research and development costs. In our U.S. tax provision, we’ve elected to accelerate all previously capitalized domestic research costs ratably over 2025 and 2026. These impacts have been incorporated into our provision for income taxes and cash tax forecasts. Additionally, multiple changes are effective beginning in 2026 and we are continuing to evaluate the impacts they will have on our subsequent consolidated financial statements and related disclosures.

No provision was made for U.S. taxes on undistributed foreign earning as such earnings are considered to be permanently reinvested. It is not practicable to determine the amount of additional tax, if any that might be payable on those earnings if repatriated.

Income before income taxes included the following (in thousands):

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The tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred tax assets and liabilities at December 31, 2025 and 2024 are comprised of the following (in thousands):

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The Company has identified the United States, Maryland, Germany and United Kingdom as significant tax jurisdictions.

The Company’s U.S. net operating loss (“NOL”) carryforwards for tax purposes as of December 31, 2025, are approximately $828.0 million. Unused NOL carryforwards from years prior to 2018 of $506.7 million will expire through 2038. NOL incurred in 2018 and later amount to $321.3 million and shall carryforward indefinitely. NOL carryforwards are generally available to offset future taxable income. However, an Internal Revenue Code Section 382 analysis has not been performed to determine availability of NOL to offset future taxable income, and the utilization of NOL may be limited under the Internal Revenue Code Section 382 as a result of changes in ownership of the Company’s stock over the loss periods and prior to utilization of the carryforwards. The Company also has approximately $19.0 million in research and development tax credits available to offset federal income tax in future periods. If unused, these credits expire through 2045. The Company’s NOL carryforwards for foreign tax purposes as of December 31, 2025 are $27.7 million. NOL in the United Kingdom and Germany of $9.0 million and $18.7 million respectively do not expire over time. The Company’s tax years are still open under statute from 2019 to present, although NOL carryovers from prior tax years are subject to examination and adjustments to the extent utilized in future years.

In connection with the Advent acquisition, the Company reported approximately $52.0 million of identifiable intangible assets for financial reporting purposes. If the Company were to re-sell those assets, it could recognize a gain of approximately $52.0 million and owe U.K. taxes on that gain. However, the Company does not currently have any plans to re-sell the assets and as such does not anticipate incurring any tax effect. Because the transaction did not give rise to a corresponding step-up in the U.K. tax basis of the underlying assets, the Company recorded an ending deferred tax liability of approximately $13.0 million related to the excess of the financial reporting basis over the tax basis of such intangible assets. If the Company were to re-sell those assets, it could recognize a gain of approximately $52.0 million and owe U.K. taxes on that gain at an applicable tax rate of 25%. However, the Company does not currently intend to re-sell the assets and as such does not anticipate incurring any cash tax obligation. This deferred tax liability is soley an estimate of the hypothetical tax that could be due upon a sale of the intangible assets at the $52.0 million stepped up value included on the balance sheet. The Company does not currently expect to have to pay any such deferred tax liability, as it does not anticipate a taxable transaction or other event that would cause the temporary difference to reverse in a manner giving rise to cash taxes.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment. In case the deferred tax assets will not be realized in future periods, the Company has provided a valuation allowance for the full amount of the deferred tax assets at December 31, 2025 and 2024.

The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follow (dollars in thousands):

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(a)State taxes in Maryland made up the majority (greater than 50 percent) of the tax effect in this category.

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ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. As of December 31, 2025 and 2024, there were no uncertain tax positions. The Company’s policy for recording interest and penalties associated with uncertain tax positions is to record such expense as a component of income tax expense. There were no amounts accrued for penalties or interest during the year ended December 31, 2025 and 2024. Management is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from its position.