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Income Taxes

12 Months Ended

Dec. 31, 2025

Income Taxes

Income Taxes

Note 10 – Income Taxes

The provision for income taxes consists of the following (expenses) benefits:

​

​	​	​	​	​	​	​
​	​	For The Years Ended
​	​	December 31,
​	​ ​ ​	2025		​ ​ ​	2024
Current tax (provision) benefit:	​	​	​	​	​	​
Federal	​	​	—	​	​	—
State and local	​	​	(30,940)	​	​	—
Deferred tax (provision) benefit:	​	​	​	​	​	​
Federal	​	​	9,092,800		​	12,749,587
State and local	​	​	(12,148,400)		​	9,773,203
​	​	​	(3,086,540)		​	22,522,790
Change in valuation allowance	​	​	3,055,600		​	(22,522,790)
Provision for income taxes	​	$	(30,940)		$	—

​

The effective income tax rate for the year ended December 31, 2025, differs from the statutory federal income tax rate as follows:

​

​	​	​	​	​	​
​	​ ​ ​ ​	2025
US Federal statutory tax rate at 21%	​	21.00	%	$	(9,516,031)
State and local taxes, net of federal income tax effect		0.07	%		(31,318)
Tax credits		(1.37)	%		621,947
Changes in valuation allowance		(14.44)	%		6,541,633
Nontaxable or nondeductible items		(0.47)	%		215,053
Other reconciling items related to net operating losses	​	(5.14)	%	​	2,331,301
Other reconciling items related to prior period deferreds		0.42	%		(193,525)
Effective income tax rate		0.07	%	$	(30,940)

​

As previously disclosed for the tax year ended December 31, 2024, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:

​

​	​	​	​
​	​ ​ ​	2024
Federal statutory rate		(21.00)	%
State tax rate, net of federal benefit		(13.20)	%
Permanent differences		1.00	%
Research & development tax credits		(0.80)	%
Prior period adjustments and other		(3.60)	%
Rate and apportionment changes		(7.60)	%
Change in valuation allowance		45.20	%
Effective income tax rate		0.00	%

​

The amounts of cash taxes paid are as follows:

​

​	​	​	​	​	​	​
​	​	For The Years Ended
​	​	December 31,
​	​ ​ ​	2025		​ ​ ​	2024
Federal	​	$	—		$	—
State and Local	​	​	​	​	​	​
New York	​		—		​	24,625
New York City	​		(9,665)		​	9,690
All other states	​		1,525		​	1,807
​	​	$	(8,140)		$	36,122

​

Deferred tax assets consist of the following:

​

​	​	​	​	​	​	​
​	​	For The Years Ended
​	​	December 31,
​	​ ​ ​	2025		​ ​ ​	2024
Deferred tax assets:	​	​	​		​	​
Net operating loss carryforwards	​	$	35,004,024	​	$	35,921,285
Research and development tax credits	​	​	1,373,706	​	​	1,995,653
Capitalized research and development costs	​	​	3,616,980	​	​	8,177,548
Stock-based compensation	​	​	1,762,617	​	​	3,026,311
Intangible assets	​	​	1,271,620	​	​	3,322,919
Lease liability	​		154,455	​		441,895
Other impaired assets	​	​	489,027	​	​	—
Property and equipment	​	​	102,854	​	​	246,074
Unrealized gain/loss on digital assets	​	​	6,057,526	​	​	—
Current expected credit loss	​	​	87,121	​	​	—
Total gross deferred tax assets	​		49,919,930	​		53,131,685
Valuation allowance	​		(49,830,516)	​		(52,886,116)
Deferred tax assets, net of valuation allowance	​		89,414	​		245,569
Deferred tax liabilities	​		​	​		​
Property and equipment	​	​	—	​	​	—
Right of use asset	​		(89,414)	​		(245,569)
Deferred tax liabilities, net	​	$	—	​	$	—
​	​	​	​	​	​	​
Changes in valuation allowance	​	$	(3,055,600)	​	$	(22,522,790)

​

As of December 31, 2025, the Company had approximately $149.0 million of domestic federal net operating loss carryforwards (“NOLs”), that may be available to offset future federal taxable income. Approximately $3.2 million of those NOLs will expire during the years ranging from 2034 to 2037. The remaining NOLs of approximately $145.8 million have no expiration dates. As a result of the ownership change on June 20, 2025, the Company’s NOLs are subject to an annual limitation of approximately $0.4 million per year. Additionally, as a result of the ownership change, approximately $7.5 million of NOLs are not expected to be realizable. As of December 31, 2025, the Company had approximately $62.3 million of state NOLs, which do not expire.

The Company recorded a valuation allowance of approximately $49.8 million and $52.9 million as of December 31, 2025 and 2024, respectively.

Valuation allowances are established when the Company has concluded that it is more likely than not that such deferred tax assets are not realizable. The Company’s ability to realize its remaining deferred tax assets as of December 31, 2025 is primarily dependent upon generating sufficient taxable income of the proper character in future years. Management has concluded that there is not sufficient positive evidence to support the expected realization of these deferred tax assets primarily due to the fact that unrealized investment on

digital assets and large net operating loss carryforwards as of December 31, 2025 is a source of future taxable benefits that will not be offset by future taxable income on minimal deferred tax liabilities. As part of the assessment of the amount of the valuation allowance, the Company considered that it has the ability and intent to execute tax planning strategies if necessary, including selling digital assets with a built-in-gain.

After consideration of all available evidence, the Company has concluded that, as of December 31, 2025, it is more likely than not that its deferred tax assets will not be realized. If the market value of digital assets changes in future periods, the Company will assess other sources of forecasted taxable income of proper character, which could result in the release of the valuation allowance.

Management has evaluated and concluded that there were no material uncertain tax positions requiring recognition in the Company’s financial statements as of December 31, 2025 and 2024. The Company does not expect any significant changes in its unrecognized tax benefits within twelve months of the reporting date.

No tax audits were commenced or were in process during the years ended December 31, 2025 and 2024. No tax related interest or penalties were incurred during the years ended December 31, 2025 and 2024. The Company’s federal, state and local income tax returns beginning with the year ended December 31, 2022 remain subject to examination.

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