8. INCOME TAXES

As a result of the Company's history of net operating losses and the full valuation allowance against its deferred tax assets, there was no current or deferred income tax provision other than current state minimum taxes and current foreign taxes for the years ended December 31, 2025 and 2024.

Domestic and international pre-tax income/(loss) consists of the following:

The provision for income taxes is attributable to operations and is comprised of the following:

The Company has elected to prospectively adopt the guidance in ASU No, 2023-09, 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The reconciliation of the federal statutory income tax rate to the Company's provision for income taxes for the year ended December 31, 2025 in accordance with the guidance in ASU No. 2023-09 is as follows:

Reconciliation to the statutory federal income tax rate and the Company's effective tax rate for the year ended December 31, 2024, consist of the following:

The components of deferred tax assets included on the balance sheet are:

Management has determined based on all the available information that a 100% valuation reserve is required against its deferred tax assets due to the uncertainty surrounding realization of such assets. Total increase in the valuation allowance is $3.8 million and $4.0 million for the years ending December 31, 2025 and 2024,  respectively.

As of December 31, 2025, the Company currently has net operating loss carryforwards of approximately $87.4 million and $8.7 million for U.S. Federal and state purposes, respectively. Approximately $35.9 million of the U.S. Federal losses begin to expire in 2029. The balance, all post-2017 federal net operating losses may be carried forward indefinitely.

As of December 31, 2025, the Company had $1.9 million research and development credit carryforwards to offset federal income taxes and $0.3 million of California research credit carryforwards to offset state income taxes. Both the federal and California credits will begin to expire in 2042 if unutilized.

Under the provisions of the Internal Revenue Code, the NOL's and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, respectively, as well as similar state tax provisions. This could limit the amount of tax attributes that the Company can utilize annually to offset future taxable income or tax liabilities. The amount of the annual limitation, if any, will be determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed several financings since its inception, which may have resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code, or could result in a change in control in the future. Utilization of the net operating loss and tax credits carryforwards may be limited by “ownership change” rules, as defined in Section 382 of the Internal Revenue Code of 1986, as amended, and similar state provisions. This annual limitation may result in the expiration of the net operating losses and credits before utilization.

The Company has elected to recognize interest and penalties related to uncertain tax positions as components of income tax expense. As of December 31, 2025, the Company has no accrual for payment of interest related to unrecognized tax benefits.

The Company’s income tax returns for all years remain open to examination by federal and state taxing authorities. The Company does not expect that is unrecognized tax benefit will change significantly in the next 12 months.

As of December 31, 2025 the Company has $2.1 million unrecognized tax benefits that, if recognized, would change its effective rate. The Company’s unrecognized tax benefit relates entirely to the federal and California research credits. The total increase in the unrecognized tax benefits is $0.4 million and $0.9 million for the years ending December 31, 2025 and 2024, respectively.