XML 37 R22.htm IDEA: XBRL DOCUMENT v3.25.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income taxes
Loss before income taxes for the years ended December 31, 2024, and 2023 are as follows (in thousands):
Year Ended December 31,
20242023
Domestic$(98,413)$(375,023)
Foreign1,905 1,436 
Total$(96,508)$(373,587)
The components of income tax expense are as follows (in thousands):
Year Ended December 31,
20242023
Current:
Federal$— $84 
State34 38 
Foreign314 372 
Total current expense348 494 
Deferred:
Federal135 — 
State— — 
Foreign54 29 
Total deferred expense
189 29 
Total income tax expense
$537 $523 
A reconciliation between the statutory U.S. federal rate and the Company’s effective tax rate is as follows:
Year Ended December 31,
20242023
Tax at federal statutory rate$(20,267)$(78,453)
State income taxes, net of federal benefit23 30 
Stock compensation7,213 8,185 
Foreign rate differential10 99 
Fair value changes - warrants(22)10 
Goodwill impairment— 35,002 
Valuation allowance13,174 35,856 
Non-deductible expenses39 (412)
Other367 206 
Total tax provision
$537 $523 
Significant components of the Company’s deferred tax assets and liabilities for federal, state and foreign income taxes are as follows (in thousands):

Year Ended December 31,

20242023
Deferred tax assets:
Net operating loss carryforwards$200,050 $222,481 
Credits9,863 9,863 
Stock based compensation2,118 6,359 
Accruals and reserves4,296 10,805 
Deferred revenue5,163 5,017 
Fixed assets1,689 2,260 
Operating lease liability5,086 9,725 
Capitalized research and development expenditures37,291 53,647 
Gross deferred tax assets265,556 320,157 
Valuation allowance(259,698)(305,007)
Net deferred tax assets5,858 15,150 
Deferred tax liabilities:
Intangible property(3,022)(6,343)
Operating lease, right of use assets(2,571)(8,388)
Gross deferred tax liabilities(5,593)(14,731)
Net deferred tax assets$265 $419 
The Company has established a full valuation allowance of $259.7 million and $305.0 million for the years ended December 31, 2024 and 2023, respectively, against its U.S. Federal and state deferred tax assets. The Company determines its valuation allowance on deferred tax assets by considering both positive and negative evidence in order to ascertain whether it is more likely than not that deferred tax assets will be realized. Due to the history of losses the Company has generated in the past, the Company believes that it is not more likely than not that all of its U.S. Federal and state deferred tax assets can be realized as of December 31, 2024.
The valuation allowance on the Company’s net deferred taxes decreased by $45.3 million during the year ended December 31, 2024 as compared to an increase of $235.4 million during the year ended December 31, 2023. The decrease in valuation allowance is primarily attributable to the generation of net operating losses and capitalization of research and development expenditures.
As of December 31, 2024, the Company had federal net operating loss carryforwards and state net operating loss carryforwards of approximately $913.2 million and $415.8 million, respectively. As of December 31, 2024, federal net operating loss carryforwards generated after December 31, 2017 will be carried forward indefinitely and the state net operating loss carryforward begins expiring in 2028 through 2043. As of December 31, 2024, the amount of federal net operating loss that does not expire is $833.3 million.
As of December 31, 2024, the Company had federal and state research and development credit carryforwards of approximately $5.0 million and $12.8 million, respectively. As of December 31, 2024 the federal credits will expire starting in 2035, if not utilized and state credits carryforward indefinitely.
The Tax Reform Act of 1986 and similar state legislation impose substantial restrictions on the utilization of the net operating losses and tax credit carryforwards in the event there is a change in ownership as provided by Section 382 and Section 383 of the Internal Revenue Code and similar state provisions. We have completed an analysis of Section 382 ownership changes in our stock through February 10, 2023 and have concluded that we have experienced ownership changes that will result in limitations in our ability to use certain of our tax credit carryforwards. The Company may experience ownership changes in the future as a result of future transactions in our stock. If it is determined that we undergo one or more ownership changes in the future, then our ability to utilize our U.S. Federal and state net operating loss carryforwards or other tax attributes may be limited or eliminated.
The balance of gross unrecognized tax benefits as of December 31, 2024, and 2023 was $24.8 million and $24.8 million, respectively. Out of the total unrecognized tax benefits, $0.5 million at December 31, 2024, if recognized, would impact our effective tax rate in the period of recognition. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of December 31, 2024 and 2023, the Company has accrued immaterial interest and penalties related to uncertain tax positions. The following table sets forth the change in the uncertain tax positions for the years ended December 31, 2024 and 2023 (in thousands):
Year Ended December 31,
20242023
Balance at the beginning of the year$24,755 $18,812 
Decreases:
For prior years’ tax positions— (1,958)
Increases:
For prior years’ tax positions— 7,901 
Balance at the end of the year$24,755 $24,755 
The Company files income tax returns in the U.S. for Federal, California, and other US states, as well as miscellaneous foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities. The earliest year open for examination is the 2016 tax year. The Company’s 2017 and 2018 tax years are currently under IRS examination. The Company believes that an adequate provision has been made for any adjustments that may result from the tax examination. Although the timing of the resolution, settlement, and closure of the examination is not certain, the Company does not believe it is reasonably possible that the Company’s unrecognized tax benefits will materially change in the next 12 months. All of the net operating losses and research and development credit carry-forwards that may be used in future years are still subject to inquiry given that the statute of limitation for these items would begin in the year of the utilization.