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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

11. Income Taxes

The tax effects of temporary differences and net operating loss (“NOL”) carryforwards that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were approximately as follows at December 31, 2024 and December 31, 2023 (in thousands):

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carry forwards

 

$

10,870

 

 

$

7,790

 

ASC 842 Lease liability

 

 

361

 

 

 

514

 

Equity based compensation

 

 

244

 

 

 

201

 

Fixed assets

 

 

-

 

 

 

-

 

Intangible assets

 

 

158

 

 

 

106

 

Capitalized research & development expenses

 

 

4,283

 

 

 

3,830

 

Tax credits

 

 

1,866

 

 

 

1,258

 

Accrual to cash adjustment

 

 

-

 

 

 

-

 

Other

 

 

466

 

 

 

468

 

Total deferred tax assets

 

 

18,248

 

 

 

14,167

 

Valuation allowance

 

 

(18,014

)

 

 

(13,776

)

Deferred tax assets, net of valuation allowance

 

 

234

 

 

 

391

 

Deferred tax liabilities:

 

 

 

 

 

 

ASC 842 Right-of-use asset

 

 

(220

)

 

 

(307

)

Depreciation and amortization

 

 

(14

)

 

 

(84

)

Total deferred tax liabilities

 

 

(234

)

 

 

(391

)

Deferred tax assets and liabilities, net of valuation allowance

 

$

-

 

 

$

-

 

 

As of December 31, 2024, the Company had NOL carryforwards for federal purposes of approximately $43.4 million, all of which have no expiration. The Company also had state NOL carryforwards of approximately $40.4 million, all of which have no expiration. However, these NOLs are subject to various limitations under Internal Revenue Code (“IRC”) Section 382. IRC Section 382 limits the use of NOLs to the extent there has been an ownership change of more than 50 percentage points in shares owned by any 50% owner. In addition, the NOL carry forwards are subject to examination by the taxing authority and could be

adjusted or disallowed due to such exams. Although the Company has not undergone an IRC Section 382 analysis, it is likely that the utilization of the NOLs may be substantially limited.

Reconciliations of the difference between income tax benefit computed at the federal and state statutory tax rates and the provision for income tax benefit for the years ended December 31, 2024 and 2023 were as follows:

 

 

2024

 

 

2023

 

Federal tax at statutory rate

 

 

21.0

%

 

 

21.0

%

State tax benefits, net of federal benefit

 

 

3.9

 

 

 

4.2

 

Other

 

 

1.6

 

 

 

1.6

 

Change in valuation allowance

 

 

(26.5

)

 

 

(26.7

)

Income tax benefit

 

 

-

%

 

 

-

%

 

Entities are also required to evaluate, measure, recognize and disclose any uncertain income tax provisions taken on their income tax returns. The Company has analyzed its tax positions and has concluded that as of December 31, 2024, there were no uncertain positions. The Company’s U.S. federal and state net operating losses have occurred since its inception and as such, tax years subject to potential tax examination could apply from 2021, the earliest year with a net operating loss carryover, because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities. Interest and penalties, if any, as they relate to income taxes assessed, are included in the income tax provision. The Company did not have any unrecognized tax benefits and has not accrued any interest or penalties for the years ended December 31, 2024 and 2023.