We had no current or deferred federal and state income tax expense or benefit for the years ended December 31, 2025 and 2024, because we generated net operating losses, and currently we do not believe it is more likely than not that the net operating losses will be realized.

The provision for income tax expense (benefit) for the years ended December 31, 2025 and 2024 was comprised of the following:

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our net deferred tax asset are as follows:

Income tax expense differed from the amounts computed by applying the statutory federal income tax rate of 21% to pretax income (loss) as a result of the following:

(A.) State taxes in Georgia made up the majority (greater than 50 percent) of the tax effect in these categories.

Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by approximately $1.3 million and $0.3 million during the fiscal years ended December 31, 2025 and 2024, respectively.

As of December 31, 2025, we had U.S. federal net operating loss carryforwards of approximately $14.5 million and state net operating loss carryforwards of approximately $7.3 million. Federal net operating loss carryforwards of approximately $14.5 million generated since fiscal years beginning after December 31, 2017 will carry forward indefinitely, but are subject to an 80% taxable income limitation. We also have federal and state research and development tax credit carryforwards of approximately $0.03 million. The federal and state tax credits will expire at various dates beginning with our fiscal year ending December 31, 2042, unless utilized.

We recognize the financial statement effects of tax positions when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. Tax positions that do not meet the recognition threshold are recorded as unrecognized tax benefits. As of December 31, 2025 and 2024, we have not recorded any unrecognized tax benefits.

We file income tax returns in the U.S. federal, and various U.S. state jurisdictions. We are subject to U.S. federal and state income tax examinations by tax authorities for tax years 2018 through 2025 due to net operating losses that are being carried forward for tax purposes, but we are not currently under examination by tax authorities in any jurisdiction.

Our policy is to recognize interest and penalties related to income taxes as components of interest expense and other expense, respectively. We incurred no material interest or penalties related to unrecognized tax benefits in the years ended December 31, 2025 or 2024. We do not anticipate any significant changes in our uncertain tax positions within 12 months of this reporting date.

As a result of the One Big Beautiful Bill Act, we are permitted to immediately deduct domestic R&D expenditures incurred in 2025 and future years, rather than capitalizing and amortizing such costs. This change reduces the amount of deductible temporary differences related to unamortized research and development expenditures and, accordingly, reduces the related deferred tax assets. In accordance with ASC 740, we remeasured our deferred tax assets and liabilities as of December 31, 2025, to reflect the impact of the new law. The effect of the remeasurement was immaterial.