Aquestive Therapeutics, Inc.AQST
Aquestive Therapeutics, Inc. Income Taxes Disclosure
Income Taxes
The Company adopted ASU 2023-09 for the year ending December 31, 2025 and added the required disclosures on a prospective basis.
The components of the provision for income taxes are as follows:
| Expense classification: | Year Ended December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
Current | |||||||||||
Federal | $ | — | $ | (14) | |||||||
State | — | — | |||||||||
Total | — | (14) | |||||||||
Deferred | |||||||||||
| Federal | — | — | |||||||||
| State | — | — | |||||||||
| Total | — | — | |||||||||
Provision for Income Tax | $ | — | $ | (14) | |||||||
The tax effect of temporary differences between the tax bases of assets and liabilities and their financial reporting amounts that give rise to the deferred tax assets and deferred tax liabilities as of December 31, 2025 and 2024 are as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Inventory | $ | 435 | $ | 337 | |||||||
| Accrued expenses | 178 | 186 | |||||||||
| NOL carryforwards | 48,764 | 34,689 | |||||||||
| Interest limitation imposed by the TCJA | 11,392 | 11,594 | |||||||||
| Stock Compensation | 2,966 | 6,862 | |||||||||
| Deferred Revenue | 5,144 | 5,157 | |||||||||
| Royalty Monetization | 16,289 | 16,117 | |||||||||
Property and Equipment | 2,324 | 2,690 | |||||||||
| Orphan Drug and R&D Tax Credits | 7,528 | 5,099 | |||||||||
| Intangible Assets | 1,212 | 137 | |||||||||
| Section 174 R&D Capitalization | 6,906 | 7,263 | |||||||||
Sales of Royalty Rights | 5,055 | 3,438 | |||||||||
OID and Deferred Financing Cost | 2,004 | 1,636 | |||||||||
| Other | 4,724 | 143 | |||||||||
| 114,921 | 95,348 | ||||||||||
| Deferred tax liabilities: | |||||||||||
| Right of use assets | (1,161) | — | |||||||||
| Prepaid expenses | (586) | (795) | |||||||||
| (1,747) | (795) | ||||||||||
| Valuation Allowance | (113,174) | (94,553) | |||||||||
| Net deferred tax asset/(liability) | $ | — | $ | — | |||||||
At December 31, 2025 and 2024, the Company had federal net operating loss carryforwards of $184,246 and $128,658, respectively, which can be carried forward for an indefinite period. At December 31, 2025 and 2024, the Company also had state net operating loss carryforwards of $212,690 and $139,189, respectively, which begin expiring in 2035. At
December 31, 2025 the Company had $7,214 of federal R&D credits and $398 of state R&D credits, which begin expiring in 2037 and 2031, respectively.
The Company has determined, based upon available evidence, that it is more likely than not that the net deferred tax asset will not be realized and accordingly, has provided a full valuation allowance against its net deferred tax assets. Valuation allowances of $113,174, and $94,553 have been established at December 31, 2025 and 2024, respectively. The Company may also be subject to the net operating loss utilization provisions of Section 382 of the Internal Revenue Code due to ownership changes. As a result, the use of NOL carry forwards from the current and prior periods are subject to annual limitations.
On July 4, 2025, the President signed H.R. 1, the Budget Reconciliation Bill, into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. These changes were reflected in the income tax provision for the year ended December 31, 2025. As the result of the Company maintaining a full valuation allowance against its U.S. federal and state deferred tax assets, the changes introduced by this legislation did not result in a material impact to the Company’s income tax provision or deferred tax balances for the current reporting period. The Company will continue to monitor the potential future impacts of the legislation, including any changes to its valuation allowance assessment, as further guidance becomes available and as facts and circumstances evolve.
The Company has analyzed its tax positions and has concluded that there were no uncertain positions as of December 31, 2025 and 2024.
A reconciliation of income tax expense computed at the statutory federal tax rate to income taxes as reflected in the financial statements is as follows:
| December 31, 2025 | |||||||||||
| Rate | Tax | ||||||||||
| At U.S. federal statutory rate | 21.0 | % | $ | (17,595) | |||||||
| Research and development credit | 2.5 | (2,115) | |||||||||
| Changes in valuation allowances | (18.1) | 15,174 | |||||||||
| Stock compensation | (4.7) | 3,923 | |||||||||
| Other items | (0.7) | 613 | |||||||||
| Total | 0.0 | % | $ | — | |||||||
| December 31, 2024 | |||||
| Presented under prior guidance | |||||
| At U.S. federal statutory rate | 21.0 | % | |||
| State taxes, net of federal effect | 3.3 | ||||
| Permanent differences | (1.1) | ||||
| Tax rate changes | (0.7) | ||||
| Change in valuation allowance | (23.5) | ||||
| FDII deduction | — | ||||
| Provison to return adjustments | 1.0 | ||||
| Effective tax rate | 0.0 | % | |||
During the year ended December 31, 2025, the Company received an ERTC refund of $1,402, which is included in Interest income and other income, net on the Company's Statements of Operations and Comprehensive Loss. The Company also received a refund of $65, including interest, related to the 2023 tax year.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 4, 2026 | Showing above |
| 2024 | Mar 5, 2025 | |
| 2023 | Mar 5, 2024 | |
| 2022 | Mar 31, 2023 | |
| 2021 | Mar 8, 2022 | |
| 2020 | Mar 9, 2021 | |
| 2019 | Mar 11, 2020 | |
| 2018 | Mar 14, 2019 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.