Aptevo Therapeutics Inc. Income Taxes Disclosure

Note 12. Income Taxes

We did not have an income tax benefit or income tax expense from continuing operations in the years ended December 31, 2025 and 2024.

The Company evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based on the Company’s history of operating losses, including a three-year cumulative loss position as of December 31, 2025, the Company has concluded that it is more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company provided a full valuation allowance for its net deferred tax assets as of December 31, 2025 and 2024. The valuation allowance increased by $5.1 million during the year ended December 31, 2025. The increase in the valuation allowance during the year ended December 31, 2025 was due primarily to an increase in deferred tax assets resulting from operating losses and tax credits generated in the current year. This is partially offset by a decrease in unamortized Section 174 capitalization from prior years without additional capitalization in the current year as the Company elects to fully expense current year R&D expenditures under Section 174A.

As of December 31, 2025 and 2024, we have recorded gross federal net operating losses (NOL) carryforwards of approximately $207.9 million and $173.9 million, respectively, gross state NOL carryforwards of approximately

$70.8 million and $70.8 million, respectively, and tax credit carryforwards of $0.8 million and $0 million, respectively. Approximately $2.0 million of federal losses and credits would begin to expire in 2037, while $205.9 million of federal losses may be carried forward indefinitely. The state net operating losses will begin to expire in varying periods.

The Company is in the process of completing an IRC Section 382/383 study through December 31, 2025 on its federal and state tax attributes. Based on the study, potential historical ownership changes have been identified, including a potential ownership change in June 2025. As a result of the potential June 2025 ownership change, there may be an additional permanent limitation on our ability to use approximately $0.8 million tax credits solely due to the IRC 382/383 limitations, assuming sufficient future taxable income. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. If an ownership change occurs in the future, our ability to use our net operating loss carryforwards and credits could be further limited.

The Company files income tax returns in the U.S. and several state jurisdictions and are open to review by taxing authorities for the 2020 tax filings and thereafter.

We are subject to the accounting guidance for uncertain income tax positions. We believe that our income tax positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material adverse effect on our financial condition, results of operations, or cash flow. Our policy for recording interest and penalties associated with audits and uncertain tax positions is to record such items as a component of income tax expense, and amounts recognized to date are insignificant. No uncertain income tax positions are recorded, and we do not expect our uncertain tax position to change during the next twelve months.

We adopted ASU 2023-09 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 effective amount and rate for the year ended December 31, 2025:

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

The amount of cash income taxes paid by the Company during the years ended December 31, 2025 and December 31, 2024 was $0.