11. Income Taxes

The provision for income taxes for the year ended December 31, 2025 is due to unrealized gains and losses on investments in the U.S. and based on the results of the Company’s foreign subsidiary in Australia. The provision for income taxes for the year ended December 31, 2024 was based on the results of the Company’s foreign subsidiary in Australia.

Income (loss) before income taxes consisted of the following:

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A summary of the Company’s current and deferred expense for income tax is as follows:

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A reconciliation of the Company’s statutory income tax rate to the Company’s effective income tax rate is as follows:

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The impact of state and local income taxes, net of federal income tax benefit, relates entirely to the Company’s naked credit, discussed below, and is attributable to Massachusetts.

The components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

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The Company’s net deferred tax liability of $5,118 is what is commonly referred to as a “naked credit” or “hanging credit”. A naked credit exists when a Company is subject to a valuation allowance and maintains a deferred tax liability that cannot be considered as a source of future taxable income for valuation allowance purposes, either because its reversal is indefinite in nature or otherwise. The result of a naked credit is a deferred tax liability that remains on the balance sheet. In future years, if the naked credit

can be offset by deferred tax assets, the reversal will be recorded as a benefit through the profit and loss statement. The Company will continue to assess and evaluate strategies that will enable the deferred tax asset, or portion thereof, to be utilized, and will reduce the valuation allowance appropriately at such time when the “more likely than not” criteria is satisfied. The Company notes that the balance currently recorded is in relation to unrealized gains on the Company’s cryptocurrency investments.

As of December 31, 2025, the Company had federal and state net operating loss (“NOL”) carryforwards of approximately $85,074 and $86,922 respectively. The Company’s federal NOL’s can be carried forward indefinitely and the state NOL’s begin to expire in 2032.

Under Internal Revenue Code Section 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. The Company has completed a study to assess whether an ownership change occurred or whether there had been multiple ownership changes since the Company became a “loss corporation” as defined in Section 382. The Company experienced multiple ownership changes occurring in 2019, 2020, 2023, and 2025. The ownership changes have and will continue to subject the Company’s pre-ownership change NOL carryforwards to an annual limitation, which will significantly restrict its ability to use them to offset taxable income in periods following the ownership changes. In general, the annual use limitation equals the aggregate value of the Company’s stock at the time of the ownership change multiplied by a specified tax-exempt interest rate. The latest ownership change in 2025, results in an annual limitation of $858,217. The Company determined it will not be able to utilize its pre 2025 change federal R&D credits before expiration and consequently, has written these off. As a result, during the year ended December 31, 2025, the Company has reduced its deferred tax assets related to the federal R&D credits which is offset by a corresponding decrease in the valuation allowance.

In addition, As of December 31, 2025, the Company has federal and state R&D tax credits of approximately $145 and $549, respectively, that begin to expire in 2043 and 2038, respectively, for federal and state tax purposes.

As of December 31, 2025 and 2024, the Company has provided a valuation allowance against its net deferred tax assets, as realization of any associated tax benefit in the future is not more likely than not. The valuation allowance increased by $4,010 and decreased by $19,307 during the years ended December 31, 2025 and 2024, respectively.

The One Big Beautiful Bill Act (“OBBBA”) was passed and became effective for the Company during 2025. The legislation includes, among other provisions, permanent full expensing for certain business assets, changes to the interest deduction limitation under Section 163(j), amendments to international tax provisions including the global intangible low-taxed income (“GILTI”) and foreign-derived intangible income (“FDII”) regimes, the permanent extension of the controlled foreign corporation (“CFC”) look-through rule, as well as modifications to the treatment of research and development expenditures mentioned above.

Congress modified the treatment for research and development expenditures by adding new Section 174A, which applies for tax years beginning after December 31, 2024. Section 174A permits the immediate deduction of domestic R&D expenditures or, at the taxpayer’s election, capitalization and amortization over a period of at least five years beginning when the related benefits are first realized. Foreign R&D expenditures continue to be capitalized and amortized over 15 years. Transition provisions allow taxpayers either to continue amortizing amounts capitalized under the TCJA rules or to deduct remaining unamortized domestic R&D expenditures in the first tax year beginning after December 31, 2024. The Company has elected to continue amortizing previously capitalized domestic R&D expenditures over the remaining amortization period permitted under OBBBA.

The Company follows the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Company to determine whether a tax position of the Company is more likely than not to be sustained upon examination, including resolution of any related appeals of litigation processes, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon the ultimate settlement with the relevant taxing authority. As of December 31, 2025, the Company has not recorded any uncertain tax positions.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. The earliest tax years that may be subject to examination by jurisdiction are 2020 for both federal and state purposes. The Company’s policy is to record interest and penalties related to income taxes as part of the tax provision. There were no interest and penalties pertaining to uncertain tax positions for the years ended December 31, 2025 or 2024.

The Company does not provide for U.S. Federal, state, and applicable foreign income and withholding taxes on the financial reporting basis over the tax basis of its foreign subsidiary investment because the Company does has the intentions and ability to indefinitely reinvest the undistributed earnings of its foreign subsidiaries. As a result, deferred taxes have not been recorded for the outside basis differences in its foreign subsidiary as of December 31, 2025 to the extent such differences are expected to result in future taxable income upon repatriation. The Company reviews its ability and intentions to indefinitely reinvest its foreign earnings at each balance sheet.

The Company paid $237 of income taxes related to profits in Australia during the year ended December 31, 2025.