Apimeds Pharmaceuticals US, Inc. Income Taxes Disclosure

Note 13 INCOME TAXES

 

Income Tax Expense (Benefit)

 

The Company recorded income tax expense (benefit) of $0 for the year ended December 31, 2025.

 

Effective Tax Rate Reconciliation

 

The Company adopted Accounting Standards Update (ASU) 2023-09, “Improvements to Income Tax Disclosures,” on a retrospective basis within its annual reporting for the year ended December 31, 2025. The adoption of ASU 2023-09 resulted in enhanced disclosures related to the effective tax-rate reconciliation, including additional disaggregation requirements prescribed by the standards.

 

During 2025, the Company elected accelerated amortization under the transition provisions of the One Big Beautiful Bill Act for previously capitalized domestic research and experimental expenditures. As a result of accelerating the deduction of the remaining $252,981 of capitalized costs, the related deferred tax asset was fully reversed during the year.

 

		For the years ended December 31,
		2025								2024
U.S. Federal statutory tax rate			(1,260,238	)			21.0	%		$	(291,898	)			21.0	%
State and local income tax, net of federal income tax effect
New Jersey			(295,523	)			4.9	%			(62,529	)			4.5	%
Valuation allowance			295,523				-4.9	%			62,529				-4.5	%
Changes in valuation allowances			1,209,037				-20.0	%			278,165				-20.0	%
Nontaxable or nondeductible items
Accretion expense			52,322				-0.9	%			16,790				-1.2	%
Other			1,665				0.0	%			172				0.0	%
Other Adjustments
Intangible true-up			(2,786	)			0.1	%			(3,228	)			0.2	%
Income tax		$	-				0.0	%		$	-				0.0	%

Deferred Tax Assets and Liabilities

 

		For the years ended December 31,
		2025				2024
Net operating loss carry forwards		$	2,470,869			$	741,321
Stock based compensation			685,998				151,750
Accruals			(0	)			182,509
Capitalized research and development			-				66,117
Intangible assets			1,776				(824	)
Fixed Assets			(14,496	)			-
Right of use assets			(4,799	)			-
Change in fair value of digital assets			(473,657	)			-
Change in fair value of warrant liabilities			(5,848	)			-
Change in fair value of derivatives			(14,412	)			-
Total deferred tax assets			2,645,231				1,140,873
Valuation allowance			(2,645,231	)			(1,140,873	)
Net deferred tax assets		$	-			$	-

 

The Company has cumulative federal net operating losses of $9,473,032 and state net operating losses of $9,377,473 which do not expire but are subject to an 80% utilization against future taxable income.

 

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.

 

The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations. As of December 31, 2025, the Company had no unrecognized tax benefits. There were no changes in the Company’s unrecognized tax benefits during the years ended December 31, 2025 and 2024. The Company did not recognize any interest or penalties during the 2025 fiscal year related to unrecognized tax benefits.