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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The following table presents the components of net loss before income taxes (in thousands):
| For the Years Ended December 31,
| 2024 |  | 2023
United States | $ | (48,656) |  |  | $ | (59,713) |
Non-U.S. | 131 |  |  | — |
Loss before provision for income taxes | $ | (48,525) |  |  | $ | (59,713) |
The provision for income taxes included in the consolidated statements of operations and comprehensive loss is comprised of the following (in thousands):
| For the Years Ended December 31,
| 2024 |  | 2023
Current |  |  |
Federal | $ | — |  |  | $ | — |
State | 6 |  |  | — |
Non-U.S. | — |  |  | — |
Total current | 6 |  |  | — |
Deferred: |  |  |
Federal | — |  |  | — |
State | — |  |  | — |
Non-U.S. | — |  |  | — |
Total deferred | $ | — |  |  | $ | — |
Total provision | $ | 6 |  |  | $ | — |
The following table presents a reconciliation of the statutory federal rate and the Company’s effective tax rate, using a federal statutory rate of 21%:
| For the Years Ended December 31,
| 2024 |  | 2023
Statutory federal income (benefit) rate | (21) | % |  | (21) | %
Increase (decrease) resulting from: |  |  |
State income tax rate | (4) | % |  | (4) | %
Change in valuation allowance | 37 | % |  | 29 | %
Stock-based compensation | (4) | % |  | 2 | %
Tax credits | (7) | % |  | (6) | %
Other | — | % |  | — | %
Effective tax rate | — | % |  | — | %
Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the Company’s deferred tax assets and liabilities consisted of (in thousands):
| December 31,
| 2024 |  | 2023
Deferred tax assets: |  |  |
Net operating loss (“NOL”) carryforwards | $ | 31,417 |  |  | $ | 23,111 |
R&D credit carryforwards | 13,829 |  |  | 10,502 |
Stock-based compensation | 2,646 |  |  | 2,083 |
Research and experimental expenditures under IRC Section 174 | 19,382 |  |  | 14,063 |
Lease liabilities | 4,189 |  |  | 2,507 |
Disallowed interest expense | 3,438 |  |  | 2,767 |
Accruals and other | 1,335 |  |  | 1,064 |
| 76,236 |  |  | 56,097 |
Valuation allowance | (62,492) |  |  | (44,606) |
Total deferred tax assets | 13,744 |  |  | 11,491 |
Deferred tax liabilities: |  |  |
Property and equipment, net | (1,024) |  |  | (1,967) |
Right of use assets, net | (3,936) |  |  | (2,496) |
Capitalized internal-use software | (8,784) |  |  | (7,028) |
Total deferred tax liabilities | $ | (13,744) |  |  | $ | (11,491) |
Net deferred tax liabilities | $ | — |  |  | $ | — |
Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Based on evidence of Company's earnings history, the net U.S. deferred tax assets have been fully offset by a valuation allowance. The val uation allowance increased by $17.9 million and $17.6 million during the years ended December 31, 2024 and 2023, respectively. Effective for tax years beginning after December 31, 2021, taxpayers are required to capitalize any expenses incurred that are considered incidental to research and experimentation (R&E) activities under IRC Section 174. While taxpayers historically had the option of deducting these expenses under IRC Section 174, the December 2017 Tax Cuts and Jobs Act mandates capitalization and amortization of R&E expenses for tax years beginning after December 31, 2021. Expenses incurred in connection with R&E activities in the US must be amortized over a 5-year period if incurred, and R&E expenses incurred outside the US must be amortized over a 15-year period. R&E activities are broader in scope than qualified research activities that are considered under IRC Section 41 (relating to the research tax credit). For the year ended December 31, 2024, the Company performed an analysis based on available guidance and determined that it will not impact (increase) taxable income. The Company will continue to monitor this issue for future developments and its impact on taxable income. As of December 31, 2024, the Company had federal and state NOL carryforwards of $123.3 million and $95.6 million, respectively. The federal NOL carryforwards consisted of $16.0 million generated before January 1, 2018, which will begin to expire in 2027 but are able to offset 100% of taxable income and $107.3 million generated after December 31, 2017 that will carryforward indefinitely but will be subject to 80% taxable income limitation beginning in tax years after December 31, 2022 as provided by the CARES Act. State net operating loss carryforwards in the amount of $79.2 million begin expiring in 2029 and approximately $16.4 million have an indefinite life. The Company has federal research and development (“R&D”) credit carryforwards of $11.7 million which will begin to expire in 2032 and California R&D credit carryforwards of $5.5 million which do not expire. The Company also has $0.1 million of California enterprise zone credits which will begin to expire in 2028. Utilization of some of the federal and state net operating loss and credit carryforwards are subject to annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986 (specifically Section 382), as amended, and similar state provisions. The Company performed a Section 382 analysis through December 31, 2024 and determined that ownership changes occurred in the year 2007, 2009, 2012, and 2024. The ownership changes identified had no significant impact on federal and state net operating losses. The annual limitations may result in the expiration of net operating losses and credits before utilization in the future. On August 16, 2022, the Inflation Reduction Act was enacted in the U.S. and introduced a 15% alternative minimum tax based on the financial statement income of certain large corporations (“CAMT”) and an excise tax of 1% of stock repurchases, effective January 1, 2023. The various provisions of the Inflation Reduction Act do not have a material impact on the Company’s consolidated financial statements for the years ended December 31, 2024 and 2023. Uncertain Income Tax Positions The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands):
| For the Years Ended December 31,
| 2024 |  | 2023
Balance at beginning of year | $ | 1,889 |  |  | $ | 1,239 |
Tax positions related to the current year: |  |  |
Additions | 628 |  |  | 649 |
Reductions | — |  |  | — |
Tax positions related to the prior year: |  |  |
Additions | — |  |  | 1 |
Reductions | (50) |  |  | — |
Balance at end of year | $ | 2,467 |  |  | $ | 1,889 |
The total amount of unrecognized tax benefits as of December 31, 2024 was $2.5 million, all related to federal and state tax jurisdictions. If recognized, none of the unrecognized tax benefits would affect the effective tax rate. As of December 31, 2024, the Company had no interest related to unrecognized tax benefits. No amounts of penalties related to unrecognized tax benefits were recognized in the provision for income taxes. The Company does not anticipate any significant change within twelve months of this reporting date. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company is subject to U.S. federal and state income tax examination for calendar tax years beginning in 2007 due to NOLs that are being carried forward for tax purposes.

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