NOTE 16 – INCOME TAXES

At each reporting period, the Company considered all the positive and negative evidence related to the likelihood of realization of the deferred tax assets and determined, based on the weight of available evidence, it is more likely than not that some of the deferred tax assets will be realized. As of December 31, 2025 and 2024 the Company recorded $54.4 million and $47.0 million of deferred tax assets before valuation allowance, respectively, which was offset by $53.7 million and $47.0 million of valuation allowance, respectively. The Company has recorded net deferred tax liabilities of $11.4 million and $0 as of December 31, 2025 and 2024, respectively, which have all been determined to be sources of future taxable income. The increase of $6.7 million of the valuation allowance is based on cumulative negative operating results over the prior three-year period and expectations about generating U.S. taxable income in the future. The remaining valuation allowance relates primarily to anticipated expirations of U.S. net operating losses prior to utilization based on our forecasts of future taxable income.

(a) Composition of income before income taxes is as follows (in thousands):

SCHEDULE OF COMPOSITION OF INCOME BEFORE INCOME TAXES

Income tax (benefit) expense consists of the following (in thousands):

SCHEDULE OF INCOME TAX (BENEFIT) EXPENSE

For the years ended December 31, 2025 and 2024, the Company did not make any material cash payments for income taxes in the United States or foreign jurisdictions. Cash taxes paid during the periods presented were not material and primarily related to state minimum taxes and other non-income-based taxes.

(b) Effective Income Tax Rates

Set forth below is a reconciliation between the federal tax rate and the Company’s effective income tax rates with respect to continuing operations:

 SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

Florida

The rate reconciliation above has been adjusted to be presented in compliance with the guidance under ASU 2023-09. The Company has adopted this guidance on a prospective basis.

As previously disclosed for the year ended December 31, 2024, prior to the adoption of ASU No. 2023-09, the following reconciles the federal tax rate and the Company’s effective income tax rates with respect to continuing operations:

(c) Analysis of Deferred Tax Assets and (Liabilities) (in thousands):

 SCHEDULE OF ANALYSIS OF DEFERRED TAX ASSETS AND LIABILITIES

Valuation allowances relate primarily to NOL carryforwards related to the Company’s tax losses. During the years ended December 31, 2025 and 2024, the valuation allowance increased by $6.7 million and decreased by $8.4 million, respectively.

(d) Summary of Tax Loss Carryforwards

As of December 31, 2025, the Company had various NOL carryforwards expiring as follows (in thousands):

 SCHEDULE OF NET OPERATING LOSS CARRYFORWARDS

Due to the Streamex Acquisition, the utilization of the Company’s pre-2025 federal and state net operating losses may be subject to limitation under the Internal Revenue Code, as well as similar state provisions. Such limitations may result in the expiration of those net operating loss (NOL) carry forwards before their utilization. Future changes in the Company’s stock ownership, which may be outside of the Company’s control may trigger an “ownership change” which could result in limitations under the Internal Revenue Code.

The utilization of the Company’s net operating loss carryforwards and research tax credit carryovers could be subject to annual limitations under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), due to ownership change limitations that may have occurred previously or that could occur in the future. These ownership changes limit the amount of net operating loss carryforwards and other deferred tax assets that can be utilized to offset future taxable income and tax, respectively.

In general, an ownership change, as defined by Sections 382 and 383 of the Code, results from transactions increasing ownership of certain stockholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. The Company has not completed a formal study to determine whether an ownership change under Sections 382 or 383 of the Code has occurred. To the extent that such a study is completed and an ownership change is deemed to have occurred, the Company’s ability to utilize its net operating loss carryforwards and tax credit carryovers could be significantly limited. The Company files income tax returns in the United States federal jurisdiction, various state jurisdictions, and Canada. The Company’s significant state tax jurisdictions include Florida.

The Company is no longer subject to U.S. federal income tax examinations for tax years ended on or before December 31, 2018. State income tax returns are generally subject to examination for periods ranging from three to five years, depending on the jurisdiction. Canadian income tax returns are generally subject to examination for three years following the date of assessment.

As of December 31, 2025, the Company is not currently under examination by any U.S. federal, state, or foreign tax authorities.

On July 4, 2025, the One Big Beautiful Bill was enacted (“OBBBA”), introducing significant and wide-ranging changes to the U.S. federal tax system. Significant components include restoration of 100% accelerated tax depreciation on qualifying property including expansion to cover qualified production property. Another major aspect includes the return to immediate expensing of domestic research and experimental expenditures (“R&E”) which in some cases may include retroactive application back to 2021 for businesses with gross receipts of less than $31 million or accelerated tax deductions of R&E that was previously capitalized for larger businesses. The legislation also reinstates EBITDA-based interest deductions for tax purposes and makes several business tax incentives permanent. Less favorable business provisions include limitations on tax deductions for charitable contributions.