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Note 19 - Income Taxes
 12 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

NOTE 19. INCOME TAXES

 

For the years ended December 31, 2024 and 2023, loss before provision for income taxes consisted of the following (in thousands):

 

   

For the Years Ended

December 31,

  
   

2024

    

2023

  

United States

   $ (7,223

)

   $ (9,640

)

International

     —       —  
    $ (7,223

)

   $ (9,640

)

 

For the years ended December 31, 2024 and 2023, the federal and state income tax provision is summarized as follows (in thousands):

 

   

For the Years Ended

December 31,

  
   

2024

    

2023

  

Current

                

Federal

   $ —     $ —  

State

     —       —  

Other

     —       —  

Total current tax expense

   $ —     $ —  
                 
                 

Deferred

                

Federal

     —       —  

State

     —       —  

Other

     —       —  

Total deferred tax expense

   $ —     $ —  
                 

Income tax provision

   $ —     $ —  

 

Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating losses and tax credit carryforwards.

 

The tax effects of significant items comprising the Company's deferred taxes as of December 31, 2024 and 2023 are as follows (in thousands):

 

   

For the Years Ended

December 31,

  
   

2024

    

2023

  

Deferred tax assets:

                

Net operating losses

   $ 40,689     $ 36,943  

Stock options

     573       665  

Research and development credits

     641       641  

Accruals

     311       477  

Operating lease liabilities

     245       368  

Property and equipment

     18       28  

Acquisition assets

     -       2,257  

Other deferred tax assets

     6       6  

Total deferred tax assets

     42,483       41,385  
                 

Deferred tax liabilities:

                

Operating lease right-of-use assets

     (245 )     (337 )

Total deferred tax liabilities

     (245 )     (337 )
                 

Valuation allowance

     (42,238 )     (41,048 )

Net deferred taxes

   $ —     $ —  

 

ASC 740, Income Taxes, requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. Because of the Company's history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance.

 

The valuation allowance increased by $1.2 million and $3.6 million during the years ended December 31, 2024 and 2023, respectively.

 

Net operating loss and tax credit carryforwards as of December 31, 2024, are as follows (in thousands):

 

         

Expiration
   

Amount

  

Years

Net operating losses, federal (Post December 31, 2017)

   $ 59,595  

Does Not Expire

Net operating losses, federal (Pre January 1, 2018)

   $ 94,140  

Beginning in 2025

Net operating losses, state

   $ 128,588  

Beginning in 2028

Tax credits, federal

   $ 542  

Beginning in 2031

Tax credits, state

   $ 125  

Indefinite

 

A reconciliation of the beginning and ending balances of the unrecognized tax benefits during the below years are as follows (in thousands):

 

   

For the Years Ended

December 31,

  
    2024     2023  

Unrecognized benefit - beginning of period

   $ 974     $ 974  

Change during the period

     —       —  

Unrecognized benefit - end of period

   $ 974     $ 974  

 

The entire amount of the unrecognized tax benefits would not impact our effective tax rate if recognized. Accrued interest and penalties related to unrecognized tax benefits are classified as income tax expense and were immaterial for the years ended December 31, 2024 and 2023. The Company files income tax returns in the United States and in California. Other jurisdictions are not significant. The tax years 2005 - 2024 (except 2007 and 2009) remain open in the federal and California jurisdictions. The Company is not currently under examination by income tax authorities in federal, state or other jurisdictions.

 

The effective tax rate of the Company's provision (benefit) for income taxes differs from the federal statutory rate as follows:

 

   

For the Years Ended

December 31,

  
   

2024

    

2023

  

Statutory rate

     21.0 %     21.0

%

State tax

     3.1 %     4.5

%

Stock-based compensation expense

     (1.4 %)     (1.4

%)

Change in valuation allowance

     (16.5

%)

     (19.5

%)

Warrant/equity expenses

     (4.0 %)     (3.7

%)

Expiration of tax attributes

     (2.2

%)

     — %

Impairment of assets

     - %     (0.9 %)

Other

     -

%

     (0.1

%)

Total

     0.0 %     0.0

%