Income Taxes |
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| Income Taxes | |||||||||||||||||||||||||||||
| Income Taxes |
12. Income Taxes
The Company maintains a full valuation allowance against its U.S. federal and state deferred tax assets. Management concluded that it is more likely than not that these deferred tax assets will not be realized based on the Company's cumulative pre-tax losses and other sources of negative evidence. Accordingly, no income tax benefit is recognized for losses in those jurisdictions. Tax positions are recognized when it is more likely than not that the position will be sustained on examination, and are measured at the largest amount of benefit that is greater than 50 percent likely of being realized. Uncertain tax positions are reviewed at each balance sheet date. Liabilities recorded as a result of this analysis are recorded separately from current and deferred income tax accounts. The Company accounts for interest and penalties related to unrecognized tax benefits as a component of its income tax provision. The total amount of unrecognized tax benefits as of June 30, 2026, that would favorably impact the effective tax rate if recognized was $417. As of June 30, 2026, the Company had accrued $80 in interest and penalties related to unrecognized tax benefits. A reconciliation of the beginning and ending amount of liabilities associated with uncertain tax positions is as follows:
Although the Company believes its estimates are reasonable, no assurance can be given that the final tax outcome of these matters will not differ from the amounts reflected in its historical income tax provisions and accruals. Such differences could have a material impact on the Company's income tax provision and operating results in the period in which such determination is made.
The Company's U.S. federal income tax returns for 2022 through 2025 are subject to examination. The Company also files in various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to federal, state, or non-U.S. income tax examinations by tax authorities for years prior to 2022.
The Merger described in Note 14 — Subsequent
Events, together with prior issuances of common stock, is expected to result in
an ownership change under Section 382 of the Internal Revenue Code, which would
substantially limit the Company's ability to utilize its net operating loss
carryforwards and other tax attributes. Because the Company maintains a full
valuation allowance against its deferred tax assets, any such limitation is not
expected to have a material effect on the Company's financial position or results
of operations.
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