The components of loss before income taxes are as follows:

Upon adoption of ASU No. 2023-09, for the year ended December 31, 2025 and 2024, the provision for income taxes differs from the expense that would be obtained by applying the U.S. federal statutory income tax rate as a result of the following:

The difference between the statutory federal income tax rate and the Company’s effective tax rate in 2025, and 2024 is primarily attributable to the parent (filer) now domiciled in United States as of December 31, 2024.

The net deferred tax assets (liabilities) are comprised of the following:

A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized based on an assessment of positive and negative evidence, including estimates of future taxable income necessary to realize future deductible amounts. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2025. Such objective evidence limits the ability to consider other subjective evidence such as its projections for future growth. On the basis of this evaluation, at December 31, 2025 and 2024, a valuation allowance of $12.6 million and $22.4 million, respectively, has been recorded. As of December 31, 2025, the Company has no more Canadian net operating loss ("NOL") carryforward and capital loss carryforwards as the Company has transferred its continuance of business from the Province of British Columbia into the State of Delaware, and it became the U.S. income tax filer.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, introducing significant and wide-ranging changes to the U.S. federal tax system. The OBBBA did not have a material impact on income tax benefit or expense or related tax assets or liabilities given that the Company remains in a net operating loss (“NOL”) position and has previously recorded a fully-offsetting valuation allowance against all deferred tax assets.

As of December 31, 2025, the Company has accumulated federal net operating loss (“NOL”) carryforwards of $60.0 million. As of December 31, 2024, the Company has accumulated federal and Canadian NOL carryforwards of $80.3 million.

Pursuant to the Internal Revenue Code of 1986, as amended (“IRC”), specifically Sections 382 and 383, the Company’s ability to use tax attribute carryforwards to offset future taxable income is limited if the Company experiences a cumulative change in ownership of more than 50% within a three-year testing period. The Company has not completed an ownership change analysis pursuant to IRC Section 382 therefore the ability to offset taxable income in the future may be impacted by ownership changes occurring prior to December 31, 2025. If ownership changes within the meaning of IRC Section 382 occur in the future, the amount of remaining tax attribute carryforwards available to offset future taxable income and income tax expense in future years may be significantly restricted or eliminated. Further, the Company’s deferred tax assets associated with such tax attributes could be significantly reduced or eliminated upon realization of an ownership change within the meaning of IRC Section 382. If eliminated, the related asset would be removed from the deferred tax asset schedule, with a corresponding reduction in the valuation allowance. Additionally, limitations on the utilization of the Company’s tax attribute carryforwards can increase the amount of taxable income and current income tax expense recognized. Due to the existence of the valuation allowance, ownership change limitations that are not significant may not impact the Company’s effective tax rate.

The Company is subject to taxation in the United States and various states. The Company has not been notified that it is under audit by the IRS or any state, however, due to the presence of NOL carryforwards, all the income tax years remain open for examination in each of these jurisdictions. There are no audits in any United States or foreign jurisdictions. The Company does not believe that it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease in the next 12 months.

Tax attributes are subject to review, and potential adjustment, by tax authorities. We redomiciled our jurisdiction from British Columbia to Delaware on December 18, 2024. Accordingly, the Company files income tax returns with the U.S. and state governments. With few exceptions, the Company is no longer subject to tax examinations by tax authorities for years before 2022.