BioCardia, Inc. Income Taxes Disclosure

(12)	Income Taxes

 

Our provision for income taxes for the years ended December 31, 2025 and 2024 was $0 for both years. We had no foreign income or losses in each of the years ended December 31, 2025 and 2024, and did not pay any cash income taxes in each of the years ended December 31, 2025 and 2024.

 

The provision for income taxes differs from the amount which would result by applying the federal statutory income tax rate to pre-tax loss for the years ended December 31, 2025 and 2024. The reconciliation of the provision computed at the federal statutory rate to the Company’s provision (benefit) for income taxes was as follows (in thousands):

 

		Years ended December 31,
		2025								2024
Tax at federal statutory rate		$	(1,728	)			21.0	%		$	(1,669	)			21.0	%
State, net of federal benefit			(866	)			10.5	%			(364	)			4.6	%
Foreign tax effects			—				—				—				—
Cross-border tax laws			—				—				—				—
Research and development credit			(229	)			2.8	%			(162	)			2.0	%
Changes in unrecognized tax benefits			57				(0.7%	)			—				—
Changes in tax laws or rates enacted in current year			—				—				—				—
Share-based compensation			71				(0.9%	)			176				(2.2%	)
Nontaxable or nondeductible items			2				—				—				—
Net operating loss expiration			257				(3.1%	)			233				(2.9%	)
Other			—				—				1				—
Change in valuation allowance			2,436				(29.6%	)			1,785				(22.5%	)
Total provision for income taxes		$	—				—			$	—				—

 

California makes up the majority of the state, net of federal benefit category. For the year ended December 31, 2025, our effective tax rate is below the federal statutory income tax rate of 21% due to state income taxes offset by our position to establish a full valuation allowance on our deferred tax assets. For the year ended December 31, 2024, our effective tax rate is below the federal statutory income tax rate of 21% primarily due to state income taxes, net of federal benefit and our position to establish a full valuation allowance on our deferred tax assets.

 

Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes as well as net operating loss and tax credit carryforwards, net of any adjustment for unrecognized tax benefits. The components of the net deferred income tax assets as of December 31, 2025 and 2024 were as follows (in thousands):

 

		Years ended December 31,
		2025				2024
Accrued compensation		$	146			$	160
Inventory adjustments			—				40
Depreciation and amortization			12				14
Share-based compensation			998				924
Net operating loss and tax credit carryforwards			37,772				34,539
Research and development capitalization			1,995				2,807
Other			10				13
Gross Deferred Tax Asset			40,933				38,497
Valuation Allowance			(40,933	)			(38,497	)
Net deferred tax asset		$	—			$	—

 

We had approximately $130.4 million and $74.4 million of federal and state net operating loss (NOL) carryforwards, respectively, as of December 31, 2025. For tax reporting purposes, operating loss carryforwards are available to offset future taxable income; such carryforwards expire in varying amounts beginning in 2024 and 2028 for federal and state purposes, respectively, with 2018-2024 federal NOLs having no expiration date. Under current federal and California law, the amounts of and benefits from net operating losses carried forward may be impaired or limited in certain circumstances. Events which may cause limitations in the amount of net operating losses that we may utilize in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period.

 

Generally, utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 of the Code, which discusses limitations on NOL carryforwards and certain built-in losses following ownership changes, and Section 383 of the Code, which discusses, special limitations on certain excess credits, etc., and similar state provisions. Accordingly, our ability to utilize net operating loss carryforwards and tax credit carryforwards may be limited, potentially significantly, as the result of such an “ownership change.” We have not yet performed a comprehensive study to determine if it has undergone any ownership changes. If we are able to potentially utilize our net operating loss carryforwards and tax credit carryforwards, we will perform a comprehensive Section 382 and 383 study to determine what, if any, limitation on its ability to utilize our NOLs exists. 

 

As of December 31, 2025, we had federal and state research and development credits of approximately $4.3 million and $3.2 million available to offset future federal and state income taxes, respectively. The federal tax credit carryforward expires beginning in 2028. The state credit carryforwards have no expiration.

 

We do not believe that these assets are realizable on a more likely than not basis; therefore, the net deferred tax assets have been fully offset by a valuation allowance. We did not have deferred tax liabilities as of December 31, 2025 or 2024. The net increases in the total valuation allowance of approximately $2.4 million and $1.8 million for the years ended December 31, 2025 and 2024, respectively, was primarily from the net operating losses generated. No liability related to uncertain tax positions is reported in the financial statements. 

 

The aggregate changes in the balance of gross unrecognized tax benefits were as follows (in thousands): 

 

		Years ended December 31,
		2025				2024
Balance, beginning of year		$	1,775			$	1,677
Additions based on tax positions related to the current year			98				98
Balance, end of year		$	1,873			$	1,775

 

Recognition of approximately $1.4 million and $1.3 million of unrecognized tax benefits would impact the effective rate at December 31, 2025 and 2024, respectively, if recognized. Increases in 2025 relate to increased research and development activity.   

 

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted into law. The OBBBA enacts significant changes to U.S. tax regulations, including the restoration of 100% bonus depreciation on qualifying asset purchases and a return to immediate deductibility of domestic research and development expenditures. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The legislation did not have a material impact on our fiscal 2025 effective tax rate or consolidated financial statements and is not expected to have a material impact in the year ended December 31, 2026. We continue to review the OBBBA tax provisions to assess impacts to our financial statements.