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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES We file income tax returns in the U.S. federal jurisdiction, as well as in various state and local jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2021. Our practice is to recognize interest and penalties related to income tax matters in income tax expense when and if they become applicable. At December 31, 2024 and 2023, respectively, there were no accrued interest and penalties related to uncertain tax positions. The following table shows the components of the provision for income taxes (in thousands):
| For the year ended December 31,
| 2024 |  | 2023 |  |
Current: |  |  |  |  |
State | $ | 2 |  |  | $ | 3 |  |  |
Deferred: |  |  |  |  |
U.S. Federal | — |  |  | — |  |  |
Provision for income taxes | $ | 2 |  |  | $ | 3 |  |  |
The principal items accounting for the difference between income taxes computed at the U.S. statutory rate and the (benefit from) provision for income taxes reflected in our Consolidated Statements of Operations are as follows:
| For the year ended December 31,
| 2024 |  | 2023 |  |
U.S. statutory rate | 21.0 | % |  | 21.0 | % |  |
State taxes (net of federal tax benefit) | 4.5 |  |  | 4.5 |  |  |
Valuation allowance | 18.4 |  |  | (29.5) |  |  |
Federal NOLs write off | (11.9) |  |  | (0.1) |  |  |
Federal temporary | (12.1) |  |  | 0.2 |  |  |
State NOLs write off | (19.4) |  |  | 7.6 |  |  |
State temporary | (0.6) |  |  | (3.7) |  |  |
| 0.0 | % |  | 0.0 | % |  |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets are as follows (in thousands):
| At December 31,
| 2024 |  | 2023 |  |
Accrued expenses and other reserves | $ | 684 |  |  | $ | 1,195 |  |  |
Right-of-use-asset | (82) |  |  | (197) |  |  |
Lease liabilities | 86 |  |  | 224 |  |  |
Tax credits, deferred R&D, and other | 579 |  |  | 470 |  |  |
Net operating loss | 20,739 |  |  | 20,935 |  |  |
Valuation allowance | (22,006) |  |  | (22,627) |  |  |
Net deferred tax assets | $ | — |  |  | $ | — |  |  |
In 2024 and 2023, our effective tax rate was lower than the statutory rate due to an increase in the valuation allowance as a result of the $3.4 million and $6.3 million additional federal net operating loss we recognized for the year. At December 31, 2024, we had federal and state net operating loss carry-forwards (“NOLs”) of approximately $141.1 million for federal income tax purposes ($39.1 million for state and local income tax purposes). However, due to changes in our capital structure, approximately $86.8 million of the $141.1 million is available after the application of IRC Section 382 limitations. As a result of the Tax Cuts and Job Act of 2017 (the “Tax Act”), NOLs generated in tax years beginning after December 31, 2017 can only offset 80% of taxable income. These NOLs can no longer be carried back, but they can be carried forward indefinitely. The $3.4 million and $6.3 million in federal net operating losses generated in 2024 and 2023 will be subject to the new limitations under the Tax Act. If not utilized, the NOLs generated prior to December 31, 2017 of $1.0 million will begin to expire in 2025 for federal purposes and have begun to expire for state and local purposes. Since we believe it is more likely than not that the benefit from NOLs will not be realized, we have provided a full valuation allowance against our deferred tax assets at December 31, 2024 and 2023, respectively. We had no net deferred tax liabilities at December 31, 2024 and 2023.

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