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Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes

Income Taxes

13. Income Taxes

Losses before income taxes for the years ended December 31, 2024 and 2023 was as follows:

​

​	​	​	​	​	​	​
​		Year Ended December 31,
​		2024			2023
​	​	​	​	​	​	​
Domestic	​	$	(7,641)	​	$	(8,568)
Foreign	​		(18,012)	​		(11,421)
​	​	​	​	​	​	​
Income/(Loss) before Income Taxes	​	$	(25,653)	​	$	(19,989)

​

The components of income tax benefit consisted of the following for the years ended December 31, 2024 and 2023:

​

​	​	​	​	​	​	​
​		Year Ended December 31,
​		2024			2023
Current:	​	​	​	​	​	​
Federal	​	$	—	​	$	—
State	​		—	​		—
Foreign	​		—	​		—
Total Current	​		—	​		—
​	​	​	​	​	​	​
Deferred:	​			​
Federal	​	$	—	​	$	—
State	​		—	​		—
Foreign	​		—	​		(1,640)
Total Deferred	​		—	​		(1,640)
Provision (Benefit) for income taxes	​		—		​	(1,640)

​

​

13. Income Taxes – (continued)

​

Income tax (benefit) provision related to continuing operations differ from the amounts computed by applying the statutory income tax rate of 21% to pretax loss as follows (in thousands):

​

​	​	​	​	​	​	​	​	​	​	​
​		Year Ended December 31, 2024					Year Ended December 31, 2023			​
​		Amount			Rate		Amount		Rate
US Federal Statutory Tax Rate		$	(5,387)		21.00	%	(4,198)		21.00	%
State and Local Income Taxes, Net of Federal Income Tax Effect		​	4,445		(17.33)	%	(532)		2.66	%
Foreign Tax Effects-Spain		​	​		​	​	​	​	​	​
Statutory tax rate difference between Spain and United States		​	(721)		2.81	%	(457)		2.29	%
Changes in Valuation Allowances		​	3,741		(14.58)	%	1,332		(6.66)	%
VCN Impairment	​	​	1,400	​	(5.46)	%	0	​	0	%
Changes in Valuation Allowances	​	​	(19,347)	​	75.42	%	2,291	​	(11.46)	%
Nontaxable or Nondeductible Items		​	222		(0.87)	%	(187)		0.93	%
Other Adjustments		​	181		(0.71)	%	111		(0.56)	%
NOL adjustment- 382 study	​	​	15,466	​	(60.28)	%	0	​	0	%
Effective Tax Rate		$	0		0	%	(1,640)		8.20	%

​

Deferred Tax Assets and Liabilities

​

Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets for federal and state income taxes are as follows (in thousands):

​

​	​	​	​	​	​	​
​	​	Year Ended December 31,
​		2024			2023
Deferred Tax Assets:		​			​
Federal, State and Foreign NOL Carryforward	​	$	9,714	​	$	27,356
Accrued Compensation	​		26	​		24
Stock Issued For Services	​		785	​		957
Stock Issued for Acquisition of Program	​		1,398	​		1,457
Stock Issued for License Agreement	​	​	888	​	​	1,124
Amortizable License Fee	​	​	3	​	​	3
Other Deferred Tax Asset	​	​	11	​	​	—
Capitalized Research & Development costs	​	​	2,885	​	​	2,422
​	​	​	​	​	​	​
Total Gross DTA	​		15,710	​		33,343
Less: Valuation Allowance	​		(11,326)	​		(28,351)
Total Deferred Tax Assets	​		4,384	​		4,992
Deferred Tax Liabilities:	​	​	​	​	​	​
IPR&D	​	​	(4,340)	​	​	(4,939)
ASC 842 Net ROU Assets	​		(44)	​		(53)
Total Gross DTL	​		(4,384)	​		(4,992)
​	​	​	​	​	​	​
Net Deferred Tax Asset (Liability)	​	$	—	​	$	—

​

13. Income Taxes – (continued)

​

On March 10, 2022, the Company acquired VCN, a Spanish Company in a tax-free stock acquisition. Due to this acquisition, VCN is a wholly owned subsidiary of the company. As a result of the acquisition, a deferred tax liability was established with purchase accounting related to acquired In Process Research and Development. A deferred tax asset was also established with purchase accounting related to VCN’s unlimited life net operating loss carryover. During 2024, for book purposes, IPR&D and Goodwill assets were both impaired, with Goodwill written down to zero and IPR&D written down to $17.4 million. The impairment to Goodwill represents a permanent difference and the impairment to IPR&D represents a reduction in the deferred tax liability established with the Company’s VCN acquisition.

​

At December 31, 2024, the Company has a gross Federal net operating loss carry-forward of approximately $1.8 million available to offset future United States taxable income. In 2024, it was determined that availability of gross Federal net operating losses of $72.7 million were fully limited as well as $3.9 million of current 2024 net operating losses as a result of change of ownership that occurred in 2024 under Section 382 of the Internal Revenue Code. State Net Operating Losses are also limited by Section 382 of the Internal Revenue Code and were limited accordingly. At December 31, 2024, the Company has a gross Foreign net operating loss carry forward of approximately $35.4 million USD. The foreign net operating loss carries forward indefinitely.

In 2020, the Company completed an Internal Revenue Code Section 382 analysis of its historical net operating loss carry-forward amount. As a result, the prior year net operating loss carry-forward was limited by $155.6 million. The decrease in the prior year net operating loss is attributable to control ownership changes which were determined for the years 2013 and 2018 which caused the reduction in the value of the historical net operating loss carry-forward amounts. Updated section 382 analysis were performed in 2021, 2022, 2023  to identify if any additional ownership shifts occurred in these years. It was determined that an ownership shift occurred on January 20, 2021. The result of the updated Section 382 analysis produced an IRC 382 limit due to the 2021  ownership changes. There was no ownership change determined for 2022 or 2023.In 2024 it was determined that all of the Company’s Federal and state Net Operating Loss carryforwards through 12/31/2023 as well as a portion of the current year 2024 loss were limited due to an updated 382 study performed in 2024.

As a result of 2024 section 382 study, the Company’s does not have any pre-2018 net operating losses available for use in future tax years.  In addition, all post 2017 net operating losses through 12/31/2023 are also not available due the section 382 study. A portion or $1.8 million of the net operating loss carry-forward originating in 2024 is subject to additional limitations based on taxable income.

At December 31, 2024, the Company has a gross foreign net operating loss carryforward of approximately $35.4 million Euros related to its Spanish subsidiary, VCN.  The net operating loss does not expire and is available to offset future Spanish taxable income.

The Company’s valuation allowance at December 31, 2024 was approximately $11.3 million. The net change in valuation allowance during the year ended December 31, 2024,was a decrease of $17 million due to the following; $22 million federal and state net operating loss write off related to the 382 limitation offset by  increase in gross domestic and foreign deferred tax assets of $1.6 and $3.5 million. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of December 31, 2024 and 2023, management has established a full valuation allowance against its net deferred tax assets in all US tax jurisdictions. The Company has also established a valuation allowance in its Spanish tax jurisdictions as it is no longer in a net deferred tax liability position in Spain.

Undistributed earnings of the Company’s foreign subsidiary, VCN, are considered to be permanently reinvested and, accordingly, no deferred U.S. income taxes have been provided thereon. Upon distribution of any earnings in the form of dividends or otherwise, those earnings would be subject to U.S. income tax. At the present time, VCN does not have any earnings and thus it is not necessary to estimate the amount of U.S. income taxes that might be payable if these earnings were repatriated.

We have incurred net operating losses since inception, and we do not have any significant unrecognized tax benefits.

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The entire disclosure for income tax.

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