Company: AWRE
Filing Date: 2025-03-13
Form Type: 10-K
Source: 0000950170-25-038714
Chunk: 66

Company: AWARE INC /MA/
Filing Date: 2025-03-13
Form: 10-K
Item: Item 5
Chunk 66
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 tax law changes which included the adoption of a single sales apportionment factor effective on January 1, 2025.  As required under ASC 740, Income Taxes, we have accounted for the deferred tax impacts of this tax law change in the period the tax law was enacted, which has the impact of reducing our state deferred tax assets.  The change in the deferred tax asset balance related to this was offset by a corresponding decrease in the valuation allowance. Deferred income taxes - We had net deferred tax assets of $0 as of December 31, 2024 and 2023.  The principal components of deferred tax assets, net, were as follows at December 31 (in thousands):

45

        2024

        2023

        Stock-based compensation
         
        $
        215

        $
        663

        Research and development credits

        6,662

        6,623

        Capitalized research expense

        3,846

        3,094

        Net operating loss

        2,655

        1,768

        Loss on note receivable

        —

        644

        Other

        318

        257

        Total deferred tax assts

        13,696

        13,049

        Valuation allowance

        (13,222
        )

        (12,504
        )

        Deferred tax liabilities

        Depreciation

        (113
        )

        (138
        )

        Intangibles

        (361
        )

        (407
        )

        Total deferred tax liabilities

        (474
        )

        (545
        )

        Net deferred tax assets (liabilities)
         
        $
        -

        $
        -

       As of December 31, 2024, $6.7 million of our deferred tax assets relate to research and development credit carryforwards.  Further, a significant portion of our deferred tax assets relates to federal and state research and development credits.  These credits may only offset 75% of the tax liability after net operating loss carryforwards are utilized and thus, we have the risk that the credits could expire before utilization if sufficient taxable income in the carryforward periods doesn’t exist.As of December 31, 2024, we had a federal net operating loss carryforward of $7.4 million, which may be available to offset future income tax liabilities.  $6.8 million of