The components of loss before benefit from (provision for) income taxes consisted of the following for the years ended December 31:

The Company’s (benefit from) provision for income taxes consisted of the following for the years ended December 31:

The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consist of the following as of December 31:

A reconciliation of the federal statutory income tax rate and the effective income tax rate for the year ended December 31, 2025 is as follows:

The rate reconciliation for the year ended December 31, 2025 has been adjusted to be presented in compliance with the guidance under ASU 2023-09. The Company adopted this guidance on a prospective basis.

As previously reported, prior to the adoption of ASU No. 2023-09, a reconciliation of the federal statutory income tax rate and the effective income tax rate for the year ended December 31, 2024 is as follows:

For the years ended December 31, 2025 and 2024, the Company recorded full valuation allowances against its domestic net deferred tax assets due to uncertainty regarding future realizability pursuant to guidance set forth in the FASB ASC Topic No. 740, “Income Taxes.” In future periods, if the Company determines it will more likely than not be able to realize these amounts, the applicable portion of the benefit from the release of the valuation allowance will generally be recognized in the statements of operations in the period the determination is made.

The Company assesses whether a valuation allowance should be recorded against its deferred tax assets based on the consideration of all available evidence, using a “more likely than not” realization standard. The four sources of taxable income that must be considered in determining whether deferred tax assets will be realized are as follows: (1) future reversals of existing taxable temporary differences (i.e., offset of gross deferred tax assets against gross deferred tax liabilities); (2) taxable income in prior carryback years, if carryback is permitted under the applicable tax law; (3) tax planning strategies and (4) future taxable income exclusive of reversing temporary differences and carryforwards. In assessing whether a valuation allowance is required, significant weight is to be given to evidence that can be objectively verified. A significant factor in the Company’s assessment is that the Company has been in a three-year historical cumulative loss position as of the end of December 31, 2025. After a review of the four sources of taxable income (as described above) and after consideration of the Company’s continuing cumulative loss position as of December 31, 2025, the Company has recorded a full valuation allowance on its deferred tax assets as presented in the table above. The change in the valuation allowance for the years ended December 31, 2025 and 2024 totaled $614,000 and $5,496,000, respectively.

At December 31, 2025, the Company had U.S. federal, state income tax, and foreign net operating loss carryforwards of approximately $163.8 million, $150.9 million, and $0, respectively. Of the federal net operating losses, $24.5 million will expire from 2034 to 2037, and $139.3 million will carry over indefinitely. Federal net operating loss carryforwards generated in 2018 or after do not expire, however, they can only be used to offset 80% of taxable income in a given year. Of the state net operating losses, $149.3 million will expire from 2034 to 2043, and $1.6 million will carry over indefinitely.

The state and local income taxes which comprise the majority of the state and local income taxes, net of federal effect category are: (1) California, (2) New York, (3) New York City, (4) Texas, and (5) Florida.

Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state provisions. The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company’s formation due to the complexity and cost associated with such a study, and the fact that there may be additional such ownership changes in the future.

ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. The Topic also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Topic requires an entity to recognize the financial statement impact of a tax position when it is more likely than not that the position will be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. In addition, the Topic permits an entity to recognize interest and penalties related to tax uncertainties either as income tax expense or operating expenses. The Company will recognize interest and penalties related to tax uncertainties as income tax expense. There were no uncertain tax positions as of December 31, 2025.

The Company is subject to taxation in the United States, and various state and local jurisdictions where the Company conducts business. As of December 31, 2025, the Company had no outstanding tax audits. Currently there are no audits in process or pending from Federal, state or foreign tax authorities. Federal and state income tax returns are subject to examination for a period of three to four years after filing.

For the years ended December 31, 2025 and 2024, respectively, there were no cash amounts paid for income taxes.

On July 4, 2025, H.R.1 – 119th Congress (2025-2026) (“H.R.1”) was signed into law. H.R.1 introduces changes to United States tax policy, trade regulations, and federal spending priorities. The main impacts of H.R.1 for the Company are the ability to deduct domestic Sec. 174 R&D costs for tax years 2025 forward, 100% bonus depreciation, and changes to 163(j) interest limitations to remove depreciation and amortization expense from adjusted taxable income.  These changes do not have a material impact on the Company’s taxable position.  The Company is electing under H.R.1 to continue to amortize Sec. 174 costs capitalized in 2022-2024 through the remaining lives of the assets instead of taking a one-time deduction in 2025 for all unamortized amounts.