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INCOME TAXES - SECURITIZE, INC. AND SUBSIDIARIES
 3 Months Ended
Mar. 31, 2026
Securitize, Inc. and Subsidiaries  
Income Taxes [Line Items]  
INCOME TAXES INCOME TAXES
The Company accounts for income taxes in interim periods in accordance with ASC 740-270, Income Taxes, Interim Reporting. Under ASC 740-270, interim tax provisions are generally determined using an estimated annual effective tax rate applied to year-to-date ordinary income or loss, adjusted for discrete items. Due to the Company’s full valuation allowance against its deferred tax assets, the estimated annual effective tax rate method is not meaningful. As a result, the Company determined its income tax provision for the three months ended March 31, 2026 using a year-to-date actual method. The provision primarily reflects current income taxes payable or refundable for the period, while deferred tax benefits generated during the period are offset by corresponding changes in the valuation allowance.
The provision for income taxes and the effective income tax rates were as follows:
Three Months ended
March 31,
20262025
Provision for income taxes$43,008 $82,059 
Effective income tax rate0.55 %0.68 %
The effective tax rates differ from the statutory tax rates for the three months ended March 31, 2026 and 2025 primarily due to the Company’s full valuation allowance position against net deferred tax assets. The provision for income taxes for the three months ended March 31, 2026 and 2025 included estimated federal, state, and foreign income taxes in jurisdictions in which the Company does not have sufficient tax attributes.
The valuation allowance was $28,929,000 as of March 31, 2026 compared to $28,627,000 as of December 31, 2025. The increase during the three months ended March 31, 2026 relates to a full valuation allowance primarily recorded against capitalized research expenditures and additional net operating losses generated in the year.
The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will not be realized. In assessing the realizability of deferred tax assets, the Company considers taxable income in prior carryback years, as permitted under the tax law, forecasted taxable earnings, tax planning strategies, and the expected timing of the reversal of temporary differences. This determination requires significant judgment, including assumptions about future taxable income that are based on historical and projected information and is performed on a jurisdiction-by-jurisdiction basis. Despite positive operating results in 2026, the Company faces uncertainties in forecasting its operating results going forward. This operating uncertainty also makes it difficult to predict the availability and utilization of tax benefits over the next several years. As a result, management has concluded, as of March 31, 2026, it is more likely than not the Company’s net deferred tax assets will not be realized, and a full valuation allowance against net deferred tax assets in all jurisdictions is still warranted as of March 31, 2026. The valuation allowance against these deferred tax assets may require adjustment in the future based on changes in the mix of temporary differences, changes in tax laws, and operating performance. If the positive operating results continue, and the Company believes future taxable income can be more reliably forecasted, the Company may release all or a portion of the valuation allowance. If and when the Company determines the valuation allowance should be released (i.e., reduced), the adjustment would result in a tax benefit reported in that period’s Consolidated Statements of Operations, the effect of which would be an increase in reported net income.
INCOME TAXES
The components of income/(loss) before provision for/(benefit from) income taxes are:
For the Year Ended
December 31,
20252024
Domestic
$(46,135,563)$(28,802,994)
Foreign
(2,116,657)4,606,222 
Total income/(loss) before provision for/(benefit from) income taxes
$(48,252,220)$(24,196,772)
The income tax provision recorded for the period ended December 31, 2025 primarily relates to current U.S. federal and state income taxes, partially offset by the utilization of available net operating loss carryforwards. The provision also includes current foreign income taxes and deferred tax expense related primarily to the increase in the indefinite-lived deferred tax liability on goodwill. The income tax provision recorded for the period ended December 31, 2024 primarily relates to current foreign taxes due and the increase in the indefinite lived deferred tax liability on goodwill.
The components of the provision/(benefit) for income taxes are:
For the Year Ended
December 31,
20252024
Current
Federal
$115,909 $— 
State
27,538 — 
Foreign
59,058 33,173 
Total current provision for income taxes
$202,505 $33,173 
Deferred
Federal
$52,170 $26,971 
State
69,875 30,752 
Foreign
— — 
Total deferred provision for income taxes
122,045 57,723 
Total provision for income taxes
$324,550 $90,896 
A reconciliation of the statutory tax rates and the effective tax rates for the years ended December 31, 2025 and 2024 is as follows:
For the Year Ended December 31,
20252024
Amount%Amount%
U.S. federal statutory income tax rate$(10,133,228)(21.00)%$(5,027,185)(21.00)%
Domestic Federal
Nontaxable and nondeductible items
Interest disallowed on convertible debt1,342,776 2.78 %938,724 3.88 %
Impairment of Goodwill865,814 1.79 %630,000 2.60 %
Change in fair value of option liability1,350,510 2.80 %(54,810)(0.23)%
SAFE Agreement FV Adjustment994,350 2.06 %19,950 0.08 %
Derivatives liability fair value adjustment2,460,990 5.10 %287,700 1.19 %
Stock Compensation Expense2,365,198 4.90 %63,844 0.26 %
Other permanent differences27,311 0.06 %24,372 0.10 %
Cross-border tax laws
Global intangible low-taxed income268,251 0.56 %969,392 4.01 %
Foreign-derived intangible income deduction(72,750)(0.15)%— — %
Change in valuation allowance286,132 0.59 %3,147,233 13.01 %
State income taxes, net of federal benefit and tax credits67,727 0.14 %10,005 0.04 %
Foreign tax effects
British Virgin Islands
Statutory income tax rate differential292,158 0.61 %(1,164,116)(4.81)%
Spain
Statutory income tax rate differential(25,648)(0.05)%(22,658)(0.09)%
Change in valuation allowance160,298 0.33 %141,615 0.59 %
Other foreign jurisdictions74,661 0.15 %126,830 0.52 %
Total$324,550 0.67 %$90,896 0.15 %
The income taxes paid, net of refunds received, for the year ended December 31, 2025 is as follows:
For the Year Ended
December 31,
20252024
Federal (U.S.)
$— $— 
State (U.S.)
— — 
Foreign (total)
59,058 33,173 
Total
$59,058 $33,173 
A reconciliation of the income taxes paid, net of refunds received, by jurisdiction for the year ended December 31, 2025 is as follows:
For the Year Ended
December 31,
20252024
Israel
$59,058 $33,173 
Other jurisdictions
$— $— 
Significant components of the Company’s net deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows:
For the Year Ended
December 31,
20252024
Deferred tax assets
Net operating losses
$20,730,569 $25,307,036 
Capitalized R&D expenses
3,420,867 2,882,250 
Capital loss carryforward
2,656,192 188,164 
Accruals and reserves
541,238 636,378 
Fixed assets
22,502 13,210 
Net unrealized losses
1,143,956 — 
Other
224,743 178,387 
Gross deferred tax asset
28,740,067 29,205,425 
Valuation allowance
(28,650,505)(28,927,292)
Net deferred tax asset
$89,562 $278,133 
Deferred tax liabilities
Other
$(99,179)$(142,650)
Net unrealized gains
— (76,144)
Intangible assets
(254,017)(200,928)
Deferred tax liabilities
(353,196)(419,722)
Net deferred tax liabilities
$(263,634)$(141,589)
The Company adopted ASU 2023-09 on January 1, 2025 on a retrospective basis and has revised prior-period disclosures presented herein.
The Company regularly assesses the need for a valuation allowance against its deferred tax assets. In making that assessment, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more-likely-than-not that some or all of the deferred tax assets will not be realized. In assessing the realizability of deferred tax assets, the Company considers taxable income in prior carryback years, as permitted under the tax law, forecasted taxable earnings, tax planning strategies, and the expected timing of the reversal of temporary differences. This determination requires significant judgment, including assumptions about future taxable income that are based on historical and projected information and is performed on a jurisdiction-by-jurisdiction basis. Despite positive taxable income in 2025, the Company faces uncertainties in forecasting its operating results going forward. This operating uncertainty also makes it difficult to predict the availability and utilization of tax benefits over the next several years. As a result, management has concluded, as of December 31, 2025, it is more likely than not the Company’s net deferred tax assets will not be realized, and a full valuation allowance against net deferred tax assets in all jurisdictions is still warranted. The valuation allowance against these deferred tax assets may require adjustment in the future based on changes in the mix of temporary differences, changes in tax laws, and operating performance. If the results leading to positive taxable income continue, and the Company believes future taxable income can be
more reliably forecasted, the Company may release all or a portion of the valuation allowance. If and when the Company determines the valuation allowance should be released (i.e., reduced), the adjustment would result in a tax benefit reported in that period’s Consolidated Statements of Operations, the effect of which would be an increase in reported net income.
The valuation allowance was $28,651,000 as of December 31, 2025 compared to $28,927,000 as of December 31, 2024. The decrease of $276,000 during 2025 primarily reflects the utilization of a portion of the Company’s deferred tax attributes based on taxable income in 2025. The Company’s US federal and certain state net operating loss carryforwards are expected to offset no more than 80% of taxable income in any year, which may constrain the amount of net operating loss utilization in a given period and may result in the Company incurring current tax expense even when net operating losses are available. The increase of $6,070,000 during 2024 related to a full valuation allowance primarily recorded against capitalized research expenditures and additional net operating losses generated in the year.
As of December 31, 2025, the Company had federal net operating losses of $72,561,000. The Company’s federal net operating losses incurred in 2020 to 2024 totaling $72,561,000 can be carried forward indefinitely, but are limited to 80% utilization against future taxable income each year. During 2025, following the sale of Securitize For Advisors, federal net operating loss carryforwards attributable to the disposed subsidiary in the amount of $13,726,000 generally ceased to be available to the Company and were removed from the Company’s consolidated federal carryforward balances.
As of December 31, 2024, the Company had federal net operating losses of $91,480,000, which may be available to offset future federal income tax liabilities.
As of December 31, 2025, the Company had post-apportioned state net operating losses of $51,122,000 that can generally be carried forward 20 years and will expire at various dates through 2045. During 2025, following the sale of Securitize For Advisors, state net operating loss carryforwards attributable to the disposed subsidiary in the amount of $11,151,000 generally ceased to be available to the Company and were removed from the Company’s consolidated federal carryforward balances. As of December 31, 2024, the Company had post-apportioned state net operating losses of $62,548,000 that can generally be carried forward 20 years and will expire at various dates through 2044.
As of December 31, 2025, the Company had capital losses of $10,141,000 primarily relating to the sale of Securitize for Advisors that can generally be carried forward 5 years and will expire at various dates through 2030. As of December 31, 2024, the Company had capital loss carryforwards of $669,000.
As of December 31, 2025, the Company had foreign net operating losses of $7,967,000 that can generally be carried forward 10 years and will expire at various dates through 2035. As of December 31, 2024, the Company had foreign net operating losses of $7,246,000.
Pursuant to Internal Revenue Code Sections 382 and 383, annual use of the Company’s federal and state net operating losses and other carryforward tax attributes may be limited in the event a cumulative change in ownership of more than 50% that occurs within a three-year period. The Company has not completed an ownership change analysis pursuant to IRS Section 382. If ownership changes have occurred or occur in the future, the amount of remaining tax attribute carryforwards available to offset taxable income and income tax expense in future years may be restricted or eliminated. If eliminated, the related asset would be removed from deferred tax assets with a corresponding reduction in the valuation allowance.
The Tax Cuts and Jobs Act resulted in significant changes to the treatment of research or experimental (“R&E”) expenditures under Section 174. For tax years beginning after December 31, 2021, taxpayers are required to capitalize and amortize all R&E expenditures that are paid or incurred in connection with their trade or business which represent costs in the experimental or laboratory sense. Specifically, costs for U.S. based R&E activities must be amortized over five years and costs for foreign R&E activities must be amortized over 15 years; both using a midyear convention. The Company implemented this standard on January 1, 2022, noting that the impact on the Company’s consolidated financial statements was immaterial.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. Among other changes, the OBBBA restored immediate deductibility of domestic research and experimental expenditures for tax years beginning after December 31, 2024. In accordance with ASC 740, the Company recorded the effects of enacted tax law changes in the quarter ended September 30, 2025, primarily related to the change in the tax treatment of domestic research and experimental costs. The impact of this change on the Company’s consolidated financial statements was not material for the year ending December 31, 2025.
The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions. The Company recognizes liabilities for uncertain tax positions based on a two-step process. First, management determines whether it is more likely than not that the tax positions will be sustained on audit, including resolution of related appeals or litigation processes, based on their technical merits. Second, management measures the tax benefit of those positions as the largest amount that is more than 50% likely to be realized upon ultimate settlement with the related tax authority. While the Company believes that it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcome of examinations by tax authorities in determining the adequacy of its provision for income taxes. As of December 31, 2025 and 2024, the Company did not have any uncertain tax positions.
The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statements of operations and comprehensive loss. As of December 31, 2025 and 2024, no accrued interest or penalties are included on the related tax liability line in the consolidated balance sheets.
The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. There are currently no pending income tax examinations. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service and state and foreign tax authorities to the extent the tax attributes are utilized in a future period.