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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Taxes

17. INCOME TAXES

The current and deferred components of the provision for income taxes for federal, state and foreign jurisdictions are as follows (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

—

 

 

$

—

 

 

$

—

 

State

 

 

—

 

 

 

—

 

 

 

—

 

Foreign

 

 

59

 

 

 

48

 

 

 

—

 

Total current tax expense (benefit)

 

$

59

 

 

$

48

 

 

$

—

 

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

—

 

 

 

—

 

 

 

—

 

State

 

 

—

 

 

 

—

 

 

 

—

 

Foreign

 

 

—

 

 

 

—

 

 

 

—

 

Total deferred tax expense (benefit)

 

$

—

 

 

$

—

 

 

$

—

 

Total tax expense (benefit)

 

$

59

 

 

$

48

 

 

$

—

 

 

The Company’s provision for income taxes differs from the amount determined by applying the applicable federal statutory tax rate to the loss before income taxes due to the valuation allowance for the net deferred income tax assets. A reconciliation of the U.S. statutory tax rate to our effective tax rate is presented below:

 

 

Year Ended December 31,

 

 

2024

 

 

2023

 

 

2022

 

U.S. federal statutory income tax rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

State and local income taxes

 

 

3.2

%

 

 

4.5

%

 

 

7.4

%

R&D tax credits

 

 

5.3

%

 

 

3.1

%

 

 

5.9

%

Compensation

 

 

0.7

%

 

 

2.6

%

 

 

(5.1

)%

Warrant (gain) loss

 

 

(7.4

)%

 

 

(2.5

)%

 

 

13.0

%

Change in tax rates

 

 

0.0

%

 

 

(0.4

)%

 

 

0.4

%

Provision to return and deferred tax adjustments

 

 

0.1

%

 

 

(0.2

)%

 

 

10.9

%

Valuation allowance

 

 

(22.9

)%

 

 

(28.0

)%

 

 

(53.4

)%

Other

 

 

0.0

%

 

 

(0.1

)%

 

 

(0.1

)%

Effective tax rate

 

 

0.0

%

 

 

0.0

%

 

 

0.0

%

 

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. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

 

 

 

December 31,

 

 

December 31,

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Accrued bonus

 

$

2,036

 

 

$

3,652

 

Unearned revenue

 

 

158

 

 

 

1,233

 

Stock-based compensation

 

 

9,793

 

 

 

7,308

 

Depreciation and amortization

 

 

3,109

 

 

 

2,843

 

Capitalized R&D costs

 

 

62,939

 

 

 

27,432

 

Lease liabilities

 

 

4,483

 

 

 

2,031

 

R&D credit carryforwards

 

 

29,800

 

 

 

11,428

 

Net operating loss carryforwards

 

 

56,204

 

 

 

36,197

 

Other

 

 

677

 

 

 

686

 

Total deferred tax assets

 

$

169,199

 

 

$

92,810

 

Valuation allowance

 

 

(166,287

)

 

 

(90,963

)

Total deferred tax assets, net of valuation allowance

 

$

2,912

 

 

$

1,847

 

Deferred tax liabilities:

 

 

 

 

 

 

Right of use assets

 

 

(2,386

)

 

 

(1,142

)

Other

 

 

(526

)

 

 

(705

)

Total deferred tax liabilities

 

$

(2,912

)

 

$

(1,847

)

Net deferred tax assets (liabilities)

 

$

—

 

 

$

—

 

 

The following table summarizes the activity in the Company’s valuation allowance against its gross deferred tax assets (in thousands):

 

 

2024

 

 

2023

 

 

2022

 

Beginning balance

 

$

90,963

 

 

$

48,212

 

 

$

20,388

 

Charged to costs and expenses

 

 

75,780

 

 

 

44,123

 

 

 

25,925

 

Charged (credited) to other accounts

 

 

(456

)

 

 

(1,372

)

 

 

1,899

 

Ending balance

 

$

166,287

 

 

$

90,963

 

 

$

48,212

 

 

The Company had U.S. federal and state net operating loss carryforwards of approximately $224.2 million and $148.1 million, respectively, as of December 31, 2024. The Company’s net operating loss carryforwards generated prior to January 1, 2018 of $1.1 million will begin to expire, if not utilized, in 2036. The Company’s net operating loss carry forwards generated after December 31, 2017, will carryforward indefinitely. As of December 31, 2024, the Company had U.S. federal and state tax credit carryforwards of $30.0 million. The tax credit carryforwards will expire between 2025 and 2044.

The deductibility of such credits and net operating losses (“NOL”) may be limited. Under Sections 383 and 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which generally occurs if the percentage of the corporation’s stock owned by 5% stockholders increases by more than 50% over a three-year period, the corporation’s ability to use its pre-change credits and NOL carryforwards and other pre-change tax attributes to offset its post-change income, may be limited. The Company has not determined if it has experienced Section 383/382 ownership changes in the past and if a portion of its NOL and tax credit carryforwards are subject to an annual limitation. In addition, the Company may experience ownership changes in the future as a result of subsequent shifts in its stock ownership, some of which may be outside of its control. If the Company determines that an ownership change has occurred and its ability to use its historical NOL and tax credit carryforwards is significantly limited, it would harm the Company’s future operating results by effectively increasing its future tax obligations.

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based on the Company’s history of operating losses, including a three-year cumulative loss position as of December 31, 2024 and 2023, the Company has concluded that it is not more likely than not that its net deferred income tax assets will be realized. Accordingly, the Company has provided a full valuation allowance as of December 31, 2024 and 2023. The net increase in the valuation allowance of $75.3 million is due to the impact of capitalized research and development and current year operating losses.

The Company is generally subject to a three-year statute of limitations by major tax jurisdictions. The current tax years that are subject for examination are tax years 2021 through 2023, although tax years dating back to 2016 remain open up to the tax attribute amounts carried forward for future use.