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Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

10. Income Taxes

 

Income/(Loss) before provision for income taxes consisted of the following for the year ended December 31, 2025 and 2024 (in thousands):

 

   2025   2024 
United States  $(20,100)  $(22,215)
International   52    20 
Loss before provision for income taxes  $(20,048)  $(22,195)

 

 

The income tax expense (benefit) by jurisdiction for the year ended December 31, 2025 and 2024, were as follows (in thousands):

 

   2025   2024 
Current:                  
Federal  $

—

   $— 
State and local   1    — 
Foreign   14    14 
           
Total current  $

15

   $14 
           
Deferred:          
Federal  $

—

   $— 
State and local   —    — 
Foreign   —    — 
Total deferred   —    — 
Total tax expense  $

15

   $14 

 

Since inception, the Company has incurred net operating losses primarily for U.S. federal and state income tax purposes and has not reflected any benefit of such net operating loss carryforwards for any periods presented herein. For the year ended December 31, 2025 and 2024, no U.S. provision or benefit for income taxes was recorded and an insignificant amount of German provision for income taxes was recorded as presented on the consolidated statements of operations.

 

A reconciliation of the benefit for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to loss before income taxes for the year ended December 31, 2025, after the adoption of ASU 2023-09, is as follows (in thousands, except for percentages):

 

   Amount   Percent 
   2025 
   Amount   Percent 
U.S. Federal statutory tax rate  $(4,210)   21%
State tax, net of federal income tax effect(1)   1    —%
Enactment of new tax laws   —    —%
Effect of cross-border tax laws   —    —%
Tax credits   (299)   2%
Change in valuation allowance   3,519    (17)%
Nontaxable or non-deductible items          
Non-deductible expenses   30    —%
Stock based compensation   121    (1)%
Worldwide changes in unrecognized tax benefits   342    (2)%
Other          
Deferred tax adjustments   139    (1)%
Non-controlling interest   348    (2)%
Other   10    —%
Foreign tax effects          
Germany          
Foreign employee stock based compensation   11    

—

%
Rate differential   (4)   —%
Other   1    —%
Australia          
Rate differential   (1)   —%
Change in valuation allowance   7    —%
Effective income tax rate  $15    —%

  

(1) California contributes to the majority (greater than 50%) of the tax effect in this category for 2025.

 

The Company adopted ASC 2023-09 on a prospective basis. A reconciliation of the benefit for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to loss before income taxes for the year ended December 31, 2024, before the adoption of ASU 2023-09, is as follows:

 Schedule of U.S. Federal Income Tax Rates Indicated to Pretax Loss From Operations

   2024 
Computed tax benefit at U.S. federal statutory tax rate   21%
Permanent differences   —%
State tax benefit   7%
Stock based compensation   (3)%
Other permanent differences   (1)%
Change in valuation allowance   (25)%
Research and development credit   —%
Change in fair value of debt   1%
Stock issuance cost   —%
Acquired startup costs   —%
Pretax loss from operations rates total   —%

 

 

Upon adoption of ASU 2023-09, cash paid for income taxes, net of refunds received, were as follows (in thousands):

 

   Year Ended December 31, 2025 
Federal taxes  $— 
State and local taxes   1 
Foreign taxes:   — 
Australia   — 
Germany   16 
Total cash paid for income taxes, net of refunds  $17 

 

The amount of cash paid for income taxes during the year ended December 31, 2024 was $14 thousand.

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

 

The primary components of the deferred tax assets and liabilities at December 31, 2025 and 2024 were as follows (in thousands):

 

   2025   2024 
Deferred tax assets/(liabilities):                    
Net operating loss carryforwards  $

25,920

   $20,221 
Research and development credit carryforwards   928    931 
Stock-based and other compensation   2,355    2,135 
Lease liability   479    859 
Capitalized research and development expenditures   3,520    4,247 
Depreciation and amortization   1,315    1,393 
Accrued liabilities and other reserves   178    446 
Total deferred tax assets   34,695    30,232 
Right-of-use and other assets   (480)   (830)
Total deferred tax liabilities   (480)   (830)
Valuation allowance   (34,215)   (29,402)
Net deferred tax asset  $—   $— 

 

As of December 31, 2025, the Company had net operating loss carryforwards of approximately $89.2 million for U.S. federal income tax purposes and $106.2 million for state income tax purposes. Federal net operating losses of $8.0 million generated on or prior to December 31, 2017, expire in varying amounts between 2034 and 2037, while federal net operating losses of $81.2 million generated after December 31, 2017 carryforward indefinitely. The state net operating losses expire in varying amounts between 2034 and 2044.

 

As of December 31, 2025, the Company has research and development credit carryforwards for federal purposes of $1.4 million and for state purposes of $1.3 million. The federal credits will expire between 2040 and 2045, while the state credits have no expiration.

 

Utilization of the net operating loss carryforwards and credits may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses before utilization. The Company performed a Section 382 study for the period February 15, 2015 to December 31, 2021. There was an ownership change identified on March 26, 2018 after the Company’s Series A-2 preferred stock issuance. The Company has not undertaken a Section 382 study through December 31, 2025. Our ability to utilize our net operating loss carryforwards and other tax attributes to offset future taxable income or tax liabilities may be limited as a result of ownership changes.

 

A valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax assets will not be realized. The Company established a full valuation allowance for all periods presented due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets. The change in the valuation allowance was $4.8 million and $5.5 million for the year ended December 31, 2025 and 2024, respectively.

 

The Company has uncertain tax benefits (“UTBs”) totaling approximately $2.4 million and $1.8 million as of December 31, 2025 and 2024, respectively, which were netted against deferred tax assets subject to valuation allowance. The UTBs had no effect on the effective tax rate and there would be no cash tax impact for any period presented. The Company does not expect its UTBs to change significantly over the next twelve months.

 

A reconciliation of the beginning and ending unrecognized tax benefit amount is as follows (in thousands):

 

   2025   2024 
   December 31, 
   2025   2024 
Balance at the beginning of the year  $1,799   $1,517 
Additions based on tax positions related to current year   282    282 
Adjustments based on tax positions related to prior years   283    — 
Balance at end of year  $2,364   $1,799 

 

The Company files tax returns in the U.S. for federal purposes and California for state purposes, and in Germany and Australia for its foreign subsidiaries. For jurisdictions in which tax filings have been filed, all tax years remain open for examination by the federal and California state authorities for three and four years, respectively, from the date of utilization of any net operating losses or credits. The Company is not currently under audit by any taxing jurisdiction.

 

The Company tax filings are subject to audit by taxing authorities in jurisdictions where it conducts business. These audits may result in assessments of additional taxes that are subsequently resolved with the authorities or potentially through the courts. Management believes the Company has adequately provided for any ultimate amounts that are likely to result from these audits; however, final assessments, if any, could be significantly different than the amounts recorded in the consolidated financial statements.