Note 9 - Income Taxes

The Company has accumulated net losses since inception and has not recorded an income tax provision or benefit during the years ended December 31, 2025 and 2024.

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The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, on a prospective basis. As a result, the 2025 rate reconciliation is presented in accordance with the new disclosure requirements, while the 2024 reconciliation continues to be presented under the disclosure requirements in effect for that period.

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A reconciliation of income tax computed at the federal statutory rate to the provision for income taxes pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025, was as follows:

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(1) During the year ended December 31, 2025, state taxes in Massachusetts, New York and New York City comprised greater than 50% of the tax effect in this category.

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A reconciliation of the statutory U.S. federal rate to the Company’s effective tax rate for the year ended December 31, 2024, was as follows:

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The components of the net deferred tax asset as of December 31, 2025 and 2024 are the following:

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The Company has determined, based upon available evidence, that it is more likely than not that the net deferred tax asset will not be realized and, accordingly, has provided a full valuation allowance against its net deferred tax assets as of December 31, 2025 and 2024. A valuation allowance of approximately $149.8 million and $152.1 million, respectively, was recorded for the years ended December 31, 2025 and 2024.

As of December 31, 2025, the Company had federal and state net operating loss carryforwards of approximately $306.9 million and $654.8 million, respectively. Approximately $283.3 million and $0.6 million of the federal and state net operating loss carryforwards, respectively, can be carried forward indefinitely. As of December 31, 2025, the Company had federal and state income tax credits of approximately $15.0 million and $5.1 million, respectively, which will begin to expire in 2034. Under the provisions of Section 382 of the Internal Revenue Code, a corporation that undergoes an “ownership change”, as defined therein, is subject to limitations on its use of pre-change NOLs and income tax credits carryforwards to offset future tax liabilities. Certain tax attributes may be subject to an annual limitation as a result of the Company’s January 2017 capital raise, as it appears to constitute an ownership change under Section 382. Additionally, under Section 382, annual use of the Company’s net operating loss carryforwards to offset taxable income may be limited based on cumulative changes in ownership. The Company has not completed an analysis to determine whether any such limitations have been triggered as of December 31, 2025. The Company has no income tax effect due to the recognition of a full valuation allowance on all of its deferred tax assets as it believes that it is more likely than not that the deferred tax assets will not be realized regardless of whether an “ownership change” has occurred.

At December 31, 2025 and December 31, 2024, the Company did not have any significant uncertain tax positions. The Company will recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2025 and 2024, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statement of operations.

The Company is subject to U.S. federal and various state taxes. Because of net operating losses, all federal tax years since inception remain open for the assessment of income taxes. The expiration of the statute of limitations related to the various state income and franchise tax returns varies by state.

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On July 4, 2025, President Donald J. Trump signed the “One Big Beautiful Bill Act” (OBBBA) into law. Key corporate tax provisions include the restoration of 100% bonus depreciation, immediate expensing for domestic research and experimental expenditures, changes to interest limitation rules, and expanded aggregation requirements for compensation

deductibility limits. In accordance with ASC 740, the Company recognized the effects of the new tax law in the period enacted. As a result, the Company immediately expensed current-year domestic research and experimental expenditures and elected to continue amortizing its existing domestic capitalized research and experimental expenditures over their remaining useful lives. Due to the Company having a full valuation allowance, there were no impacts to the effective tax rate.

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Under ASC 2023-09, entities must disclose income taxes paid (net of refunds received), disaggregated between federal and state. This also requires disclosing income taxes paid (net of refunds) by individual jurisdictions that represent more than 5% of total income taxes paid (net of refunds).

Because the company does not have significant payments for the year ended December 31, 2025, no amounts are disclosed.