9. Income Taxes

The Company’s income (loss) before provision (benefit) for income taxes for years ended December 31, 2025 and 2024, respectively were generated in the following jurisdictions (in thousands):

 Schedule of Income (Loss) Before Provision (Benefit) for Income Taxes

In accordance with the authoritative guidance for income taxes under ASC 740, a deferred tax asset or liability is determined based on the difference between the financial statement and the tax basis of assets and liabilities as measured by the enacted tax rates, which will be in effect when these differences reverse. The Company provides a valuation allowance against net deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax assets will be realized.

The Company recognizes the impact of a tax position in the consolidated financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. The Company’s practice is to recognize interest and/or penalties related to income tax matters as income tax expense.

The Company is subject to taxation and files income tax returns in the United States, Australia and various state jurisdictions. All tax years from inception to date are subject to examination by the U.S. and state tax authorities due to the carry-forward of unutilized net operating losses and research and development credits. Currently, no years are under examination.

As a result of operating loss and tax credit carryforward benefits being offset by valuation allowances, there is no current or deferred federal, state or foreign tax expense in 2025 or 2024. There were no federal, state or foreign tax payments in 2025.

Significant components of the Company’s deferred income taxes at December 31, 2025 and 2024 are shown below (table in thousands):

 Schedule of Deferred Tax Assets and Liabilities

The Company has established a valuation allowance against net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred tax assets. At such time as it is determined that it is more likely than not that deferred tax assets will be realizable, the valuation allowance will be reduced.

At December 31, 2025, the Company has federal and state net operating losses (“NOL”) carryforwards of approximately $122.5 million and $9.2 million, respectively. The federal and Florida NOL generated after 2017 of $60.9 million and $9.2 million, respectively, will carryforward indefinitely. The federal NOL carryforwards begin to expire in 2026.

At December 31, 2025, the Company had federal research credit carryforwards of approximately $3.7 million that expire in 2028.

The above NOL carryforward and the research tax credit carryforward are subject to an annual limitation under the Section 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions if the Company experienced one or more ownership changes, which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage points over a three-year period. The Company has not completed an IRC Section 382/382 analysis. If a change in ownership were to have occurred, NOL and tax credits carryforwards could be eliminated or restricted. If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance.

Upon adoption of ASU 2023-09, Improvements to Income Tax Disclosures, the reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended December 31,2025 was as follows (in thousands, except for percentages):

 Schedule of Reconciliation of Federal Statutory Income Tax Rate

The Company’s domestic operations are principally in the states of Washington and Florida.

The reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year December 31, 2024, in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows:

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which enacts significant changes to U.S. tax and related laws. Some of the provisions of the new tax law affecting corporations include but are not limited to current deduction of domestic research expenses, increasing the limit of the deduction of interest expense deduction to thirty percent of EBITDA, and one hundred percent bonus depreciation on eligible property acquired after January 19, 2025. The impact of the tax law changes from the OBBBA is included in the Company’s financial statements.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for public entities with annual periods beginning after December 15, 2024. The Company adopted ASU 2023-09 on a prospective basis effective January 1, 2025.