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v3.25.2

Income Taxes | 3 Months Ended | 12 Months Ended
--- | --- | ---
Mar. 31, 2025 | Dec. 31, 2024
INCOME TAX | Note 7. Income Taxes The Company is subject to United States federal and state taxes as well as other foreign income taxes. During the three months ended March 31, 2025 and 2024, the Company recorded a provision for income taxes of $0.2 million, which represented an effective tax rate of (0.1)% and (1.4)%, respectively. The effective income tax rates for both the three months ended March 31, 2025 and 2024 are different from the U.S. federal statutory rate of 21.0% due to the valuation allowance . | Note 6. Income Taxes The following represents the domestic and foreign components of loss from operations before income taxes for the years ended December 31, 2024 and 2023 (in thousands):
|  | 2024 |  |  | 2023 |
United States |  | $ | (64,690 | ) |  | $ | (89,525 | )
Foreign |  |  | 2,543 |  |  |  | 1,338 |
Total loss before income taxes |  | $ | (62,147 | ) |  | $ | (88,187 | )
The Company’s components of the benefit from income taxes consists of the following for the years ended December 31, 2024 and 2023 (in thousands):
|  | 2024 |  |  | 2023 |
Current: |  |  |  |  |  |  |  |
US Federal |  | $ | (256 | ) |  | $ | — |
US States |  |  | 1 |  |  |  | 1 |
Foreign |  |  | 427 |  |  |  | (492 | )
Total current |  |  | 172 |  |  |  | (491 | )
Deferred: |  |  |  |  |  |  |  |
US Federal |  | $ | — |  |  | $ | — |
US States |  |  | — |  |  |  | — |
Foreign |  |  | (1,124 | ) |  |  | (107 | )
Total deferred |  |  | (1,124 | ) |  |  | (107 | )
Benefit from income taxes |  | $ | (952 | ) |  | $ | (598 | )
Income tax expense differs from the amount of income tax determined by applying the U.S. federal statutory income tax rate of 21 % to pretax loss as a result of the following differences for the years ended December 31, 2024 and 2023 ($ in thousands):
|  | 2024 |  |  | 2023 |
|  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |
Pretax loss |  | $ | (62,147 | ) |  |  |  |  |  | $ | (88,187 | ) |  |  |  |
Federal tax at statutory rate |  |  | (13,049 | ) |  |  | 21.0 | % |  |  | (18,522 | ) |  |  | 21.0 | %
State taxes, net of federal benefit |  |  | 1 |  |  |  | 0.0 | % |  |  | 1 |  |  |  | 0.0 | %
Gain on remeasurement of warrant liability |  |  | 3,302 |  |  |  | -5.3 | % |  |  | — |  |  |  | 0.0 | %
Pay-to-Play equity financing charge (permanent difference) |  |  | — |  |  |  | 0.0 | % |  |  | 7,525 |  |  |  | -8.5 | %
Other permanent differences |  |  | 802 |  |  |  | -1.3 | % |  |  | 3,620 |  |  |  | -4.1 | %
Return to accrual adjustment |  |  | (896 | ) |  |  | 1.4 | % |  |  | (433 | ) |  |  | 0.5 | %
Foreign tax rate differential |  |  | 195 |  |  |  | -0.3 | % |  |  | 111 |  |  |  | -0.1 | %
Tax credits |  |  | (1,211 | ) |  |  | 1.9 | % |  |  | (539 | ) |  |  | 0.6 | %
Uncertain tax positions |  |  | 410 |  |  |  | -0.7 | % |  |  | 270 |  |  |  | -0.3 | %
Valuation allowance |  |  | 10,290 |  |  |  | -16.6 | % |  |  | 7,936 |  |  |  | -9.0 | %
Other, net |  |  | (796 | ) |  |  | 1.3 | % |  |  | (567 | ) |  |  | 0.6 | %
|  | $ | (952 | ) |  |  | 1.4 | % |  | $ | (598 | ) |  |  | 0.7 | %
The components of the Company’s deferred tax assets and liabilities are as follows as of December 31, 2024 and 2023 (in thousands):
|  | 2024 |  |  | 2023 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 55,739 |  |  | $ | 45,600 |
Tax credit |  |  | 5,678 |  |  |  | 4,989 |
Other reserves and accrued expenses |  |  | 1,178 |  |  |  | 1,105 |
Lease liability |  |  | 80 |  |  |  | 110 |
Depreciation |  |  | 440 |  |  |  | 66 |
Share-based compensation |  |  | 1,519 |  |  |  | 736 |
Capitalized R&D Sec 174 |  |  | 13,423 |  |  |  | 9,533 |
Other |  |  | 3 |  |  |  | (62 | )
Gross deferred tax assets |  |  | 78,060 |  |  |  | 62,077 |
Valuation allowance |  |  | (75,826 | ) |  |  | (60,937 | )
Net deferred tax assets |  |  | 2,234 |  |  |  | 1,140 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Right of use assets |  |  | (77 | ) |  |  | (107 | )
Total deferred tax liabilities |  |  | (77 | ) |  |  | (107 | )
Total net deferred tax assets |  | $ | 2,157 |  |  | $ | 1,033 |
In determining the need for a valuation allowance, the Company weighs both positive and negative evidence in the various jurisdictions in which it operates to determine whether it is more likely than not that deferred tax assets are recoverable. In assessing the ultimate realizability of its net deferred tax assets, the Company evaluates all available objective evidence, including the cumulative losses and expected future losses and as such, management does not believe it is more likely than not that the net deferred tax assets will be realized. Accordingly, a full valuation allowance has been established in the U.S. and the Philippines. As of December 31, 2024 and 2023, the valuation allowance was $ 75.8 million and $ 60.9 million, respectively. The increase of $ 14.9 million in the Company’s valuation allowance as of December 31, 2024 compared to the prior year was primarily due to an increase in deferred tax assets arising from capitalized research and experimental expenditures and net operating losses. At December 31, 2024, the Company had U.S. federal net operating loss (“NOL”) carryforwards of $ 215.5 million and U.S. state NOL carryforwards of $ 149.9 million. The U.S. federal NOL carryforwards will begin to expire in the year 2030 and the state NOL carryforwards will also begin to expire in the year 2030. As of December 31, 2024, the Company had federal tax credit carryforwards of $ 5.7 million available to offset future U.S. federal income taxes payable, which will begin to expire in the year 2035. As of December 31, 2024, the Company had state tax credit carryforwards of $ 4.3 million available to offset future state income taxes payable and foreign tax credits of $ 97.2 million available to offset future India income taxes payable. The Company’s ability to utilize the net operating loss and tax credit carryforwards in the future may be subject to substantial restriction in the event of past or future ownership changes as defined in Section 382 of the Internal Revenue Code and similar state tax laws. In the event the Company should experience an ownership change, as defined, utilization of its net operating loss carryforwards and tax credits could be limited. Due to the existence of the valuation allowance, future changes in the Company’s unrecognized tax benefits will not impact its effective tax rate. Any carryforwards that will expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding reduction of the valuation allowance. It is the Company’s policy to include penalties and interest expense related to income taxes as a component of income tax expense. Management determined that no accrual for interest and penalties was required as of December 31, 2024 and 2023. The Company’s primary tax jurisdictions are the United States, United Kingdom and India. All tax years since inception remain open to examination by the U.S. federal authorities as a result of the net operating losses and credit carryforwards since inception. The Company is not currently under income tax examinations in any foreign or state jurisdiction. It is the Company’s policy to indefinitely reinvest undistributed earnings of their foreign subsidiaries and hence, no deferred tax liability for withholding taxes on undistributed earnings is required. Uncertain Tax Positions The Company applied FASB ASC 740-10-50, Accounting for Uncertainty in Income Tax , which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company had unrecognized tax benefits of approximately $ 5.0 million and $ 4.3 million as of December 31, 2024 and 2023, respectively. ASC 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of any uncertain tax positions that have been taken or expected to be taken on a tax return. The amount of unrecognized tax benefits is not expected to significantly change over the next twelve months. No amounts, outside of valuation allowance, would impact the effective tax rate on continuing operations. The beginning and ending unrecognized tax benefits amounts is as follows as of December 31, 2024 and 2023 (in thousands):
|  | 2024 |  |  | 2023 |
Unrecognized tax benefits, beginning of period |  | $ | 4,283 |  |  | $ | 3,811 |
Additions based on tax positions taken related to prior years |  |  | 12 |  |  |  | — |
Additions based on tax positions taken related to current period |  |  | 705 |  |  |  | 472 |
Unrecognized tax benefits, end of period |  | $ | 5,000 |  |  | $ | 4,283 |

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