CERUS CORP Income Taxes Disclosure
Note 15. Income Taxes
U.S and foreign components of consolidated loss before income taxes for the years ended December 31, 2025, 2024 and 2023, was as follows (in thousands):
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Loss before income taxes: |
|
|
|
|
|
|
|
|
|
|||
Domestic |
|
$ |
(17,709 |
) |
|
$ |
(21,318 |
) |
|
$ |
(38,281 |
) |
International |
|
|
2,426 |
|
|
|
562 |
|
|
|
959 |
|
Loss before income taxes |
|
$ |
(15,283 |
) |
|
$ |
(20,756 |
) |
|
$ |
(37,322 |
) |
The provision for income taxes for the years ended December 31, 2025, 2024 and 2023, was as follows (in thousands):
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Provision for income taxes: |
|
|
|
|
|
|
|
|
|
|||
Current: |
|
|
|
|
|
|
|
|
|
|||
Foreign |
|
$ |
338 |
|
|
$ |
130 |
|
|
$ |
285 |
|
Federal |
|
|
— |
|
|
|
— |
|
|
|
— |
|
State |
|
|
11 |
|
|
|
70 |
|
|
|
36 |
|
Total current |
|
|
349 |
|
|
|
200 |
|
|
|
321 |
|
Deferred: |
|
|
|
|
|
|
|
|
|
|||
Foreign |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Federal |
|
|
3 |
|
|
|
3 |
|
|
|
2 |
|
State |
|
|
2 |
|
|
|
2 |
|
|
|
2 |
|
Total deferred |
|
|
5 |
|
|
|
5 |
|
|
|
4 |
|
Provision for income taxes |
|
$ |
354 |
|
|
$ |
205 |
|
|
$ |
325 |
|
|
|
|
|
|
|
|
|
|
|
|||
A summary of cash paid for income taxes, net of refunds received, for the year ended December 31, 2025 was as follows (in thousands):
|
|
|
|
|
|
|
2025 |
|
|
Federal |
|
$ |
— |
|
State |
|
|
|
|
Pennsylvania |
|
|
34 |
|
Other states |
|
|
27 |
|
Foreign |
|
|
|
|
Netherlands |
|
|
198 |
|
France |
|
|
42 |
|
Total cash paid for income taxes, net of refunds |
|
$ |
301 |
|
Significant components of the Company’s deferred tax assets and liabilities consisted of the following (in thousands):
|
|
2025 |
|
|
2024 |
|
||
Deferred tax assets |
|
|
|
|
|
|
||
Net operating loss carryforwards |
|
$ |
132,585 |
|
|
$ |
127,184 |
|
Research and development credit carryforwards |
|
|
31,323 |
|
|
|
29,739 |
|
Capitalized research and development |
|
|
27,362 |
|
|
|
35,861 |
|
Compensation items |
|
|
10,425 |
|
|
|
9,437 |
|
Other |
|
|
14,637 |
|
|
|
13,933 |
|
Total deferred tax assets |
|
|
216,332 |
|
|
|
216,154 |
|
Less valuation allowance |
|
|
(214,026 |
) |
|
|
(214,321 |
) |
Net deferred tax assets |
|
|
2,306 |
|
|
|
1,833 |
|
|
|
|
|
|
|
|
||
Deferred tax liabilities |
|
|
|
|
|
|
||
Other |
|
|
(236 |
) |
|
|
(226 |
) |
Right of use asset |
|
|
(2,149 |
) |
|
|
(1,676 |
) |
Total deferred tax liabilities |
|
|
(2,385 |
) |
|
|
(1,902 |
) |
Less valuation allowance |
|
|
— |
|
|
|
— |
|
Net deferred tax liabilities |
|
$ |
(79 |
) |
|
$ |
(69 |
) |
A reconciliation of the U.S. Federal statutory tax rate to our 2025 annual tax rate is as follows (in thousands):
|
|
Amount |
|
|
Tax Rate |
|
||
U.S. federal statutory tax rate |
|
$ |
(3,209 |
) |
|
|
21 |
% |
|
|
|
|
|
|
|
||
State income tax, net of federal benefit (1) |
|
|
11 |
|
|
|
— |
|
Foreign tax effects |
|
|
|
|
|
|
||
Netherlands |
|
|
|
|
|
|
||
Foreign currency related items |
|
|
(222 |
) |
|
|
2 |
|
Other |
|
|
51 |
|
|
|
— |
|
Other foreign jurisdictions |
|
|
(1 |
) |
|
|
— |
|
Tax Credits |
|
|
|
|
|
|
||
Federal research credits(2) |
|
|
(605 |
) |
|
|
4 |
|
Change in valuation allowance |
|
|
(1,678 |
) |
|
|
11 |
|
Nontaxable or nondeductible items |
|
|
|
|
|
|
||
Stock compensation(3) |
|
|
3,501 |
|
|
|
(23 |
) |
Other |
|
|
(56 |
) |
|
|
— |
|
Changes in unrecognized tax benefits |
|
|
(30 |
) |
|
|
— |
|
Other adjustments |
|
|
|
|
|
|
||
Expired federal carryovers of losses, credits and deductions |
|
|
2,592 |
|
|
|
(17 |
) |
Total income tax expense |
|
$ |
354 |
|
|
|
(2 |
%) |
(1) State taxes in California, Florida, Massachusetts, and Pennsylvania make up the majority (greater than 50%) of the tax effect in this category.
(2) Current year amount generated net of prior year adjustments and expirations.
(3) Net effects of programs including shortfalls and executive items.
A reconciliation of the U.S. Federal statutory tax rate to our 2024 and 2023 annual tax rate is as follows (in thousands):
|
|
|
|
|
|
|
||
|
|
2024 |
|
|
2023 |
|
||
Federal statutory tax |
|
$ |
(4,359 |
) |
|
$ |
(7,838 |
) |
Federal research credits |
|
|
(853 |
) |
|
|
(1,065 |
) |
State research credits |
|
|
(767 |
) |
|
|
(642 |
) |
Expiration of federal carryovers |
|
|
5,206 |
|
|
|
7,284 |
|
Change in valuation allowance |
|
|
(2,357 |
) |
|
|
1,361 |
|
Compensation related items |
|
|
4,015 |
|
|
|
3,257 |
|
State taxes |
|
|
(259 |
) |
|
|
(1,710 |
) |
Revision to prior year items |
|
|
(676 |
) |
|
|
(664 |
) |
Other |
|
|
255 |
|
|
|
342 |
|
Provision for income taxes |
|
$ |
205 |
|
|
$ |
325 |
|
|
|
|
|
|
|
|
||
The valuation allowance decreased by $0.3 million for the year ended December 31, 2025, compared to the decrease of $2.6 million and increase $1.0 million for the years ended December 31, 2024 and 2023, respectively. The Company believes that, based on a number of factors, the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred tax assets such that a valuation allowance has been recorded. These factors include the Company’s history of net losses since its inception, the need for regulatory approval of the Company’s products prior to commercialization and expected near-term future losses. The Company expects to maintain a valuation allowance until circumstances change.
For the year ended December 31, 2025, the Company reported pretax net losses on its consolidated statement of operations and calculated taxable losses for federal purposes and varying taxable income and losses for state purposes based on individual jurisdictions. The differences between reported net loss and taxable income or loss are due to differences between book accounting and the respective tax laws. The most notable differences are the treatment of research and development expenses and compensation related items.
The Company’s tax losses and credits are subject to varying carryforward periods. The gross amounts and dates of expiration of the significant carryforwards are as follows:
|
|
|
|
|
Expires |
|
|
Expires |
|
|
Expires |
|
|
No |
|
|||||
|
|
Total |
|
|
2026-2028 |
|
|
2029-2035 |
|
|
2036-2045 |
|
|
Expiration |
|
|||||
Federal losses carryovers |
|
$ |
584,015 |
|
|
$ |
82,920 |
|
|
$ |
199,210 |
|
|
$ |
74,375 |
|
|
$ |
227,510 |
|
California loss carryovers |
|
|
108,035 |
|
|
|
19,243 |
|
|
|
48,774 |
|
|
|
40,018 |
|
|
|
— |
|
Other state loss carryovers |
|
|
52,119 |
|
|
|
16 |
|
|
|
5,175 |
|
|
|
33,217 |
|
|
|
13,711 |
|
Federal research credits |
|
|
17,852 |
|
|
|
1,117 |
|
|
|
2,533 |
|
|
|
14,202 |
|
|
|
— |
|
California research credits |
|
|
16,887 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
16,887 |
|
Federal foreign tax credits |
|
|
610 |
|
|
|
610 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
The Company’s ability to utilize net operating loss and research and development credit carryforwards is limited by (a) its ability to generate future taxable income, (b) varying apportionment and allocation rules, and (c) limitations pursuant to the ownership change rules in accordance with Sections 382 and 383 of the Internal Revenue Code, as well as similar state provisions.
The Company’s unrecognized tax benefits primarily relate to federal and California research tax credits. These tax credits have not been utilized on any tax return and currently have no impact on the Company’s tax expense due to the Company’s operating losses and the related valuation allowances. There are additional unrecognized tax benefits related to foreign activities.
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):
|
|
December 31, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Unrecognized tax benefits at beginning of period |
|
$ |
7,837 |
|
|
$ |
7,924 |
|
Decreases related to expired carryforwards |
|
|
(82 |
) |
|
|
(344 |
) |
Decreases related to administrative proceedings |
|
|
— |
|
|
|
(127 |
) |
Increases related to prior year tax positions |
|
|
52 |
|
|
|
94 |
|
Increases related to current year tax positions |
|
|
298 |
|
|
|
290 |
|
Unrecognized tax benefits at end of period |
|
$ |
8,105 |
|
|
$ |
7,837 |
|
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in its income tax expense.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Mar 5, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Mar 8, 2018 | |
| 2016 | Mar 8, 2017 | |
| 2015 | Mar 9, 2016 | |
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.