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INCOME TAXES | 9 Months Ended
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Sep. 30, 2025
Income Tax Disclosure [Abstract] |
INCOME TAXES | 11. INCOME TAXES Current income tax expense represents the amount expected to be reported on the Company’s income tax returns, and deferred tax expense or benefit represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. Valuation allowances are recorded as appropriate to reduce deferred tax assets to the amount considered likely to be realized. On July 4, 2025, H.R. 1, the “One Big Beautiful Bill Act” was signed into law. In accordance with U.S. GAAP, the Company will account for the tax effects of changes in tax law in the period of enactment, which is the third quarter of calendar year 2025. There was no material impact to our financial statements as a result of this new law. The income tax expense and effective income tax rate for the three and nine months ended September 30, 2025 and 2024 were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2025 |  | 2024 |  | 2025 |  | 2024
| (in thousands, except percentages)
Income tax expense | $ | 125 |  |  | $ | 134 |  |  | $ | 488 |  |  | $ | 484 |
Effective income tax rate | (0.1) | % |  | — | % |  | (0.1) | % |  | — | %
For the three and nine months ended September 30, 2025, the Company recorded $0.1 million and $0.5 million, respectively, of income tax expense which consisted of discrete state taxes. The Company's estimated annual effective income tax rate without consideration of discrete items is 0.0%, compared to the U.S. federal statutory rate of 21.0% due to projected changes in the valuation allowance (9.9)%, cancellation of debt income 5.0%, state taxes 0.1%, non-deductible loss on warrant and contingent liabilities (14.7)% and other items (1.6)%. The Company has a full valuation allowance on its net deferred tax asset as the evidence indicates that it is not more likely than not expected to realize such asset. For the three and nine months ended September 30, 2024, the Company recorded $0.1 million and $0.5 million, respectively, of income tax expense which consisted of discrete state taxes. The Company's estimated annual effective income tax rate without consideration of discrete items was 0.0%, compared to the U.S. federal statutory rate of 21.0% due to projected changes in the valuation allowance 1.0%, state taxes 0.1%, non-deductible loss on warrant and contingent liabilities (21.9)% and other items (0.2)%. The Company has a full valuation allowance on its net deferred tax asset as the evidence indicates that it is not more likely than not expected to realize such asset.

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