READING INTERNATIONAL INC Income Taxes Disclosure

Deferred income taxes reflect the “temporary differences” between the financial statement carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, adjusted by the relevant tax rate. The components of the deferred tax assets and liabilities are as follows:

We record net deferred tax assets to the extent we believe these assets will more-likely-than-not be realized. In making such determination, we considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial performance. As of December 31, 2025, based on all available evidence, we believe the U.S., state, and New Zealand deferred tax assets do not support a conclusion of being more-likely-than-not to be realized. Accordingly, we recorded an increase to valuation allowance of $70.1 million. We reassess the valuation allowance quarterly and a tax benefit is recorded if future evidence allows for a partial or full release of the valuation allowance.

As of December 31, 2025, we had the following carry-forwards:

approximately $105.4 million in Federal loss carry-forwards with no expiration date;

approximately $77.3 million in California loss carry-forwards expiring in 2045;

approximately $42.8 million in Hawaii loss carry-forwards expiring in 2045;

approximately $4.7 million in New Jersey state loss carry-forwards expiring in 2045;

approximately $57.1 million in New York state loss carry-forwards expiring in 2045;

approximately $48.8 million in New York city loss carry-forwards expiring in 2045; and,

We expect no substantial limitations on the future use of U.S. loss carry-forwards.

We adopted ASU 2023-09 Income Taxes (Topic 740): Improvements To Income Tax Disclosures on a prospective basis beginning with the year ended December 31, 2025. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025:

The following table presents the require disclosure prior to our adoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate to the actual global effective income tax rate for the years ended December 31, 2024 and December 31, 2023:

The undistributed earnings of the Company's Australian and New Zealand subsidiaries are not indefinitely reinvested. Due to the enactment of the Tax Cuts and Jobs Act of 2017, future repatriations of foreign earnings will generally not be subject to U.S. federal taxation but may incur minimal state taxes.

The following table is a summary of the activity related to unrecognized tax benefits, excluding interest and penalties, for the years ended December 31, 2025, 2024, and 2023:

As of December 31, 2025 and 2024, if recognized, $11.1 million and $11.1 million respectively, of the unrecognized tax benefits would impact the Company’s effective tax rate.

During the year ended December 31, 2025, we recorded an increase to tax interest of $245,000, resulting in a total $1.0 million in interest. During the year ended December 31, 2024, we recorded an increase to tax interest of $310,000, resulting in a total $801,000 in interest.

It is difficult to predict the timing and resolution of uncertain tax positions. Based upon the Company’s assessment of many factors, including past experience and judgments about future events, it is probable that within the next 12 months the reserve for uncertain tax positions will increase within a range of $500,000 to $1.5 million. The reasons for such change include but are not limited to tax positions expected to be taken during 2025, revaluation of current uncertain tax positions, and expiring statutes of limitations.