v3.26.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income Taxes
Loss before provision for income taxes for the year ended December 31, 2025 and 2024 consists of the following:

Year Ended December 31,

2025
2024
U.S. loss
$
(29,809)
$
(29,807)
Foreign income (loss)
—
—
Total current
$
(29,809)
$
(29,807)
The major components of income tax expense attributable to loss from operations consists of:

Year Ended December 31,

2025
2024
Current:
Federal
$
—
$
—
State
(30)
(49)
Foreign
—
—
Total current
$
(30)
$
(49)
Deferred:


Federal
95
9
State
3
1
Foreign
—
—
Total deferred
98
10
Total income tax (expense) benefit
$
68
$
(39)
The following table reconciles the income tax provision with the amount calculated using the 21.0% U.S. federal statutory rate applied to pretax income, reflecting the adoption of ASU 2023-09:
Year Ended December 31,
 
2025
2024
U.S. federal statutory tax expense
$
(6,260)
21.0 
%
$
(6,259)
21.0 
%
State taxes, net of federal benefit
(785)
2.6 
%
(1,288)
4.3 
%
Share based compensation
205
(0.7)
%
323
(1.1)
%
Change in fair value of financial instruments and other
1,106
(3.7)
%
(171)
0.6 
%
Disallowed convertible debt expense
1,516
(5.1)
%
214
(0.7)
%
Change in valuation allowance(1)
4,583
(15.4)
%
6,525
(21.9)
%
R&D credit
(242)
0.8 
%
(53)
0.2 
%
Rate change
93
(0.3)
%
47
(0.2)
%
Other, net
(284)
1.0 
%
701
(2.4)
%
Income tax (benefit) expense
$
(68)
0.2%
$
39
(0.1)%
(1)During the year ended December 31, 2025 and 2024, the Company maintained a full valuation allowance on its deferred tax assets.
The components of deferred tax assets and liabilities are as follows:

December 31,

2025
2024
Deferred tax assets:
Net operating loss and other carryforwards
$
82,392
$
77,922
Inventory provision and UNICAP 263A
450
553
Lease liability
3,529
4,021
Section 174 capitalized costs
3,191
3,020
Share-based compensation
558
685
Other
1,491
1,601
Total deferred tax assets
$
91,611 
$
87,802 
Valuation allowance
(86,752)
(82,169)
Total deferred tax assets, net
$
4,859
$
5,633

Deferred tax liabilities:
Right of use assets
(2,930)
(3,296)
Investment in unconsolidated entity
(2,282)
(2,765)
Other
(77)
(101)
Total deferred tax liabilities
$
(5,289)
$
(6,162)

Net deferred taxes
$
(430)
$
(529)
The realization of deferred income tax assets may be dependent on the Company’s ability to generate sufficient income in future years in the associated jurisdiction to which the deferred tax assets relate. The Company considers all available positive and negative evidence, including scheduled reversals of deferred income tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Based on the review of all positive and negative evidence, including a three-year cumulative pre-tax loss, the Company continues to believe its deferred tax assets are more likely to not be realized and, as such, a full valuation allowance is recorded against net deferred taxes. For the year ended December 31, 2025 and 2024, the Company’s valuation allowance increased by $4,583 and $6,525, respectively, primarily related to the incremental net operating losses and an increase to the inventory provision.
As of December 31, 2025, the Company has U.S. federal, US state, and Canadian net operating losses ("NOL") of approximately $299,974, $251,063, and $11,542 respectively. The entire U.S. federal NOLs are post-2017 NOL and therefore can be carried forward indefinitely and the US state NOLs will begin to expire in 2032. The Canada NOLs will begin to expire in 2041. For the year ended December 31, 2025 and 2024, the Company also has a research and development credit carryforward of $2,718 and $2,404, respectively, which begin to expire in 2042.
Tax laws impose restrictions on the utilization of net operating loss carryforwards and research and development credit carryforwards in the event of a change in ownership of the Company as defined by Internal Revenue Code Section 382 and 383. The Company may have experienced ownership changes in the past that impact the availability of its net operating losses and tax credits. Should there be additional ownership changes in the future, the Company's ability to utilize existing carryforwards could be substantially restricted.
Net income tax payments after the prospective adoption of ASU 2023-09, as described in Note 2, consisted of the following:

Year Ended December 31,

2025
2024
Federal
$
—
$
—
State
California
2
2
Massachusetts
8
4
Texas
13
8
North Carolina
—
7
South Carolina
5
2
Other
—
3
Subtotal
28
26
Foreign
$
—
$
—
Total
$
28
$
26
Uncertain tax positions
A reconciliation of the beginning and ending amount of uncertain tax positions as of December 31, 2025 and 2024 is as follows:
Balance at December 31, 2024
$
240 
Additions for current year tax positions
24 
Additions for prior year tax positions
7 
Reductions for prior year tax positions
— 
Reductions as a result of settlement with tax authority
— 
Balance at December 31, 2025
$
271 
Balance at December 31, 2023
$
279 
Additions for current year tax positions
5 
Additions for prior year tax positions
— 
Reductions for prior year tax positions
(44)
Reductions as a result of settlement with tax authority
— 
Balance at December 31, 2024
$
240 
The Company recognizes the tax benefit from an uncertain tax position only if it is probable that the tax position will be sustained based on its technical merits. The Company measures and records the tax benefits from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company’s estimated liabilities related to these matters are adjusted in the period in which the uncertain tax position is effectively settled, the statute of limitations for examination expires or when additional information becomes available. The Company’s liability for unrecognized tax benefits requires the use of assumptions and significant judgment to estimate the exposures associated with the Company's various filing positions. Although the Company believes that the judgments and estimates made are reasonable, actual results could differ and resulting adjustments could materially affect the Company's effective income tax rate and income tax provision. The Company’s policy is to recognize interest and penalties on taxes, if any, as income tax expense.
If recognized, none of the uncertain tax positions would affect the effective tax rate. The Company does not anticipate any significant changes to the uncertain tax positions in the next twelve months.
The Company files income tax returns in the U.S. federal, various state jurisdictions, Canada, and Israel. In the normal course of business, it is subject to examination by taxing authorities throughout the world. As of December 31, 2025, the Company’s tax years prior to 2022 are closed for federal income tax purposes. The Company’s 2019 tax year was opened for examination by the IRS during the second half of 2023. The statute of limitations on assessment with respect to the Company’s 2019 Form 1120 remains open until June 30, 2027, pursuant to an agreed-upon extension to the applicable statute of limitations. The Company’s 2022 through 2024 tax years remain open until the general statute of limitations lapses for each respective tax year.