Note 8.    Income Taxes

The Company’s (loss) income before income taxes for the periods presented in the statement of operations was entirely generated from its U.S. operations. As a result of its continuing taxable losses, the Company had no provision for income taxes for the years ended December 31, 2025 and 2024.

As of December 31, 2025 and 2024, the Company had federal net operating loss (“NOL”) carryforwards of $140.5 million and $112.1 million, respectively, of which $48.4 million and $48.4 million, respectively, which will begin to expire in 2036, and $92.1 million and $63.7 million, respectively, have indefinite lives. The Company had state NOLs of $141.1 million and $140.5 million as of December 31, 2025 and 2024, respectively, which will begin to expire in 2034. As of December 31, 2025 and 2024, the Company

has federal research and development (“R&D”) credit carryforwards of $7.1 million and $6.9 million, respectively, which will begin to expire in 2039. As of December 31, 2025 and 2024, the Company also has California R&D credit carryforwards of $5.2 million and $5.0 million, respectively, which have an indefinite carryforward period.

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In general, if the Company experiences a greater than 50 percentage point aggregate change in ownership of certain significant stockholders over a three-year period (a “Section 382 ownership change”), utilization of its pre-change NOL carryforwards and the R&D credit carryforwards is subject to an annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and similar state laws. The annual limitation generally is determined by multiplying the value of the Company’s stock at the time of such ownership change, subject to certain adjustments, by the applicable long-term tax-exempt rate. Such limitations may result in expiration of a portion of the NOL carryforwards and R&D credit carryforwards before utilization and may be material. As of December 31, 2025, the Company has not determined to what extent a potential ownership change will impact the annual limitation that may be placed on the Company’s utilization of its NOL carryovers and R&D credit carryforwards. Due to the existence of the valuation allowance, limitations created by ownership changes, if any, will not impact the Company’s effective tax rate.

The components of deferred tax assets and liabilities were as follows (in thousands):

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The table below provides the updated requirements of ASU 2023-09 for 2025. The effective income tax rate for the year ended December 31, 2025 differs from the statutory federal income tax rate as follows:

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As previously disclosed for the year ended December 31, 2024, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:

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A reconciliation of unrecognized tax benefits at the beginning and end of 2025 and 2024 is as follows (in thousands):

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The Company has considered the amounts and probabilities of the outcomes that can be realized upon ultimate settlement with the tax authorities and determined unrecognized tax benefits should be established of $16.4 million and $16.1 million as of December 31, 2025 and 2024, respectively. The Company’s effective income tax rate would not be impacted if the unrecognized tax benefits are recognized.

The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. There were no accrued interest and penalties associated with uncertain tax positions as of December 31, 2025. The Company’s tax returns for all years since inception are open for audit.

For the year ended December 31, 2025, the amount of income taxes paid, net of refunds received, to the State of California was $3 thousand. The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in the United States, introducing a wide array of tax reform measures. These include extensions and modifications to certain provisions originally enacted under the Tax Cuts and Jobs Act. Key changes include the immediate expensing of domestic research and development costs and the reinstatement of 100 percent bonus depreciation. For the year ending December 31, 2025, the impact from the OBBBA provisions did not impact the effective tax rate. The Company will continue to evaluate the OBBBA provisions for their potential impact on future periods.