Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES

v3.25.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 9—INCOME TAXES

The provision for income taxes consists of the following for the years ended December 31, 2024 and 2023 (in thousands):

 

 

 

2024

 

 

2023

 

Current

 

 

 

 

 

 

U.S.

 

$

7

 

 

$

(94

)

International

 

 

22

 

 

 

35

 

Deferred

 

 

 

 

 

 

U.S.

 

 

—

 

 

 

—

 

International

 

 

—

 

 

 

—

 

 

$

29

 

 

$

(59

)

 

Deferred tax assets consisted of the following as of December 31, 2024 and 2023 (in thousands):

 

 

2024

 

 

2023

 

Net operating loss carryforward

 

$

19,478

 

 

$

17,564

 

General business tax credit

 

 

12,154

 

 

 

12,085

 

Stock options

 

 

1,122

 

 

 

6,792

 

Charitable contribution

 

 

7

 

 

 

—

 

Accrued expenses

 

 

237

 

 

 

310

 

Unearned revenue

 

 

2,605

 

 

 

2,603

 

Allowance for bad debt

 

 

253

 

 

 

545

 

Unrealized gain on foreign exchange translation and others

 

 

1,314

 

 

 

1,295

 

Section 174 Expenditures

 

 

322

 

 

 

420

 

Unrealized gain on long term investment

 

 

—

 

 

 

30

 

Other

 

 

1,772

 

 

 

1,678

 

Total gross deferred tax assets

 

 

39,264

 

 

 

43,322

 

Less valuation allowance

 

 

(38,838

)

 

 

(42,895

)

Net deferred tax assets

 

$

426

 

 

$

427

 

 

Deferred tax liabilities consisted of the following as of December 31, 2024 and 2023 (in thousands):

 

 

 

2024

 

 

2023

 

Unrealized loss on available-for-sale securities

 

$

(427

)

 

$

(427

)

Other

 

 

1

 

 

 

—

 

Total deferred tax liabilities

 

$

(426

)

 

$

(427

)

 

A valuation allowance for the net deferred tax assets is recorded when it is more likely than not that the Company will not realize these assets through future operations. The valuation allowance decreased by approximately $4.1 million and $1.2 million for the year ended December 31, 2024 and December 31, 2023, respectively.

As of December 31, 2024 and December 31, 2023, the Company had net operating loss carryforwards for federal income tax purposes of approximately $72.4 million and $65.1 million, respectively, available to offset future federal taxable income, if any. Net operating loss generated in 2017 and prior years expire in various years through 2037. Net operating losses for federal income tax purpose generated in 2018 and after will be available indefinitely. In addition, the Company had net operating loss carryforwards for state income tax purposes of approximately $65.3 million and $58.5 million respectively, which generally expire in 10 to 20 years. For some states, the net operating loss generated in 2018 and after will be available indefinitely. As of December 31, 2024 and December 31, 2023, the Company has general business tax credits of $12.2 million and $12.1 million, respectively, for federal income tax purposes. The tax credits are available to offset future tax liabilities, if any, through 2044. The Company’s utilization of net operating loss carryforwards could be subject to an annual limitation as a result of certain past or future events, such as stock sales or other equity events constituting a “change in ownership” under the provisions of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitations could result in the expiration of net operating loss carryforwards and tax credits before they can be utilized.

The income tax provision differs from that computed using the statutory federal tax rate of 21% due to the following factors (in thousands):

 

 

 

2024

 

 

2023

 

Tax benefit at statutory federal rate

 

$

(1,351

)

 

$

(851

)

State taxes, net of federal tax benefit

 

 

(317

)

 

 

(173

)

Increase in valuation allowance

 

 

(4,058

)

 

 

(1,224

)

Permanent items

 

 

(10

)

 

 

73

 

General business tax credit

 

 

(68

)

 

 

(285

)

Other comprehensive income, tax benefit

 

 

—

 

 

 

(100

)

Stock options deferred true-up

 

 

5,674

 

 

 

—

 

Other

 

 

159

 

 

 

2,501

 

 

$

29

 

 

$

(59

)

 

As of December 31, 2024 and December 31, 2023, the Company had no unrecognized tax benefits or position which, in the opinion of management, would be reversed if challenged by a taxing authority. In the event the Company is

assessed interest or penalties, such amounts would be classified as income tax expense. As of December 31, 2024, all federal tax returns since 2021 are subject to audit. The expiration of the state returns varies by state, but the 2020 and subsequent years’ returns generally are subject to audit. No tax returns are currently being examined by taxing authorities.