7. INCOME TAXES

The following table summarizes the Company’s loss before income taxes by tax jurisdiction for the years ended March 31, 2026 and 2025.

The Company conducts operations in the United States and Australia. Losses generated in the United States primarily relate to research and development and corporate activities. Losses generated in Australia primarily relate to research and development activities conducted through the Company’s Australian subsidiary. The Australian subsidiary participates in the Australian Research and Development Tax Incentive program, which provides refundable tax offsets for certain qualifying research and development expenditures. The Company accounts for these refundable tax offsets as reductions of research and development expense and, accordingly, they do not result in current income tax expense or benefit.

For the years ended March 31, 2026 and 2025, the Company recorded no income tax expense or benefit due to the full valuation allowance maintained against its net deferred tax assets.

At March 31, 2026 and 2025, the Company’s deferred tax assets consisted primarily of net operating loss carryforwards, research and development tax credit carryforwards, capitalized research and development costs under Internal Revenue Code Section 174, and stock-based compensation deductions. Net operating loss carryforwards represented approximately 80% of the Company’s gross deferred tax assets at March 31, 2026. Due to uncertainty regarding the realization of these deferred tax assets, the Company has recorded a full valuation allowance against its net deferred tax assets.

Significant components of the Company’s deferred tax assets at March 31, 2026 and 2025 are as follows:

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At March 31, 2026, the Company had federal, state and foreign net operating loss carryforwards of approximately $101 million, $98 million, and $1.2 million, respectively. Federal net operating losses generated after 2017 may be carried forward indefinitely, while certain federal and state net operating loss carryforwards are subject to expiration under applicable tax laws. The Company also had federal and state research and development tax credit carryforwards. Federal research and development tax credits began to expire in 2025.

The following table reconciles the U.S. federal statutory income tax rate to the Company’s effective income tax rate for the year ended March 31, 2026.

The state tax benefit represents the effect of state income taxes, net of the related federal tax benefit. Return-to-provision adjustments primarily relate to differences between estimates included in the prior year’s income tax provision and amounts reported on subsequently filed income tax returns. The expiration of net operating loss carryforwards relates to deferred tax assets associated with tax attributes that expired during the year. The change in valuation allowance reflects the increase in the valuation allowance required to fully offset deferred tax assets generated during the year.

ASC 740, “Income Taxes”, clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements, and prescribes recognition thresholds and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under ASC 740, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC 740 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. During the years ended March 31, 2026 and 2025, we did not recognize any interest or penalties relating to tax matters.

At and for the years ended March 31, 2026 and 2025, management does not believe the Company has any uncertain tax positions. Accordingly, there are no unrecognized tax benefits at March 31, 2026 or March 31, 2025.

Our tax returns remain open for examination by the applicable authorities, generally 3 years for federal and 4 years for state. We are currently not under examination by any taxing authorities.