11. Income Taxes

The Company reported pre-tax book losses in the United States of $83.9 million and $65.4 million, for the years ended December 31, 2025 and 2024, respectively.

Due to losses, the Company did not pay any federal and state income taxes in 2025 or 2024.

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The principal components of the Company’s deferred tax assets and liabilities consisted of the following (in thousands):

The Company increased its valuation allowance by $24.5 million for the year ended December 31, 2025 in order to maintain a full valuation allowance against its deferred tax assets. The Company recorded a full valuation allowance against its net deferred tax assets as of December 31, 2025 due to the uncertainty surrounding the realization of such assets. The Company has determined it more likely than not that the deferred tax assets are not realizable due to the Company's historical loss position. The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support a reversal of the allowance.

The Company has net operating loss (NOL) carryforwards for federal and state income tax purposes of $195.0 million and $217.7 million, respectively, as of December 31, 2025. All of the federal net operating loss

carryforwards are not subject to expiration but are limited to 80% of the taxable income in the year the carryforward is used. The state net operating loss carryforwards, if not utilized, will start to expire in 2039.

As of December 31, 2025, the Company has federal and state research and development credit carryforwards of $10.6 million and $6.8 million, respectively. The federal credits will start to expire in 2041 and the state credits are available indefinitely.

Pursuant to Sections 382 and 383 of the Code, and corresponding provisions of state law, annual use of the Company’s federal and state NOLs and research and development credit carryforwards may be limited in the event of a cumulative ownership change of more than 50 percentage points (by value) within a rolling three-year period. The Company has not completed an ownership change analysis pursuant to Section 382. If ownership changes have occurred or occurs in the future, the amount of remaining tax attribute carryforwards available to offset taxable income and income tax expense in future years may be restricted or eliminated. If eliminated, the related asset would be removed from deferred tax assets with a corresponding reduction in the valuation allowance.

The Company files income tax returns in the United States federal jurisdiction and California. The Company is not currently under examination by any federal, state or local tax authority and all tax years from inception remain open to United States federal and state examination to the extent of the utilization of net operating loss and credit carryovers.

As of December 31, 2025, the Company had unrecognized tax benefits of $6.2 million related primarily to the federal and state research and development credits as a result of no formal research credit study performed.

Due to the full valuation allowance, future recognition of previously unrecognized tax benefits will not impact the Company’s effective tax rate. The Company recognizes interest expense and penalties related to the above unrecognized tax benefits within income tax expense (benefit). Management determined that no accrual for interest and penalties was required as of December 31, 2025.

On July 4, 2025, the One Big Beautiful Bill Act (the OBBBA) was enacted in the United States. The OBBBA includes corporate provisions that make 100% bonus depreciation permanent, allow for the expensing of domestic research costs, and modifies the business interest expense limitation calculation. These changes were incorporated into our income tax provision for the tax year ended December 31, 2025, resulting in no impact to our fiscal year 2025 effective tax rate and net deferred tax assets as we maintain a full valuation allowance.