10. Income Taxes

For the years ended December 31, 2025 and 2024, the Company has a full valuation allowance against the deferred tax assets.

(1) For the year ended December 31, 2025, the net state income tax benefit includes deferred tax effects from temporary differences primarily in California, Illinois, and New Jersey, offset by current state income tax expense in California and New Jersey. These jurisdictions collectively represent more than 50% of the net state and local income tax effect.

Our effective income tax rates for the years ended December 31, 2025, and December 31,2024, are same at 0%. The Company’s annual effective tax rate for the year ended December 31, 2025, and December 31, 2024 differs from the statutory rate of 21% primarily because the Company is only liable for minimum taxes in a handful of states, deferred tax adjustments, impacts from fair value adjustments of warrant liability, and the change in valuation allowance.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. Certain provisions of OBBBA became effective during 2025, while other provisions will become effective in periods subsequent to 2025. The Company has evaluated the provisions of OBBBA applicable to its operations and, based on its assessment as of December 31, 2025, has determined the impact on its financial statements to be immaterial. The Company will continue to monitor developments and evaluate the effects of any additional guidance or interpretive regulations issued in connection with OBBBA.

For the years ended December 31, 2025 and 2024, the Company has a full valuation allowance against the deferred tax assets.

At December 31, 2025, valuation allowances against deferred tax assets in the U.S. totaled $19.8 million, an increase of $3.0 million from valuation allowance at December 31, 2024 of $16.8 million. The Company will maintain the valuation allowances until it determines it is more likely than not the deferred tax assets will be realized. The net increase in the deferred tax valuation allowance in 2025 is primarily attributable to federal and state net operating loss and foreign tax credits that the Company does not expect to realize.

At December 31, 2025, the Company had federal and state net operating loss (“NOL”) carryforward amounts of $49.5 million and $49.1 million, respectively. The federal NOL carryforwards consists of $4.7 million generated before January 1, 2018, which will begin to expire in 2030 but are able to offset 100% of taxable income and $44.9 million generated after December 31, 2017 which can be carried forward indefinitely and may be able to be used against 100%. The state NOL carryforward will begin to expire in 2033.

The utilization of the Company’s NOLs may be subject to a U.S. federal limitation due to the “change in ownership provisions” under Section 382 and 383 of the IRC and similar limitations for states. In general, under Section 382, a corporation that undergoes an “ownership change” (as defined under Section 382 of the Code and applicable Treasury

Regulations) is subject to limitations on its ability to utilize its pre-change NOLs to offset its future taxable income. As of December 31, 2025, the Company had not conducted an analysis of an ownership change under Section 382. To the extent that a study is completed, and an ownership change is deemed to occur, in the past or future, such limitations may result in a reduction of the amount of net operating loss carryforwards in future years and possibly the expiration of certain net operating loss carryforwards before their utilization.

As of December 31, 2025, the Company had federal and state tax credit carryforwards of $3.4 million which will begin to expire in 2033, and California tax credit carryforwards of $0.5 million which do not expire.

Uncertain Income Tax Positions

The total amount of unrecognized tax benefits as of December 31, 2025, is $1.0 million which relates to federal and state tax credits. The Company did not have tax-related interest and penalties at December 31, 2025. If recognized, none of the unrecognized tax benefits would affect the effective tax rate.

The Company’s policy is to account for interest and penalties as income tax expense. As of December 31, 2025, the Company had no interest related to unrecognized tax benefits. No amounts of penalties related to unrecognized tax benefits were recognized in the provision for income taxes. The Company does not anticipate any significant change within twelve months of this reporting date.

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company is subject to U.S. federal and state income tax examination for calendar tax years beginning in 2011 due to net operating losses that are being carried forward for tax purposes.