CorMedix Inc. Income Taxes Disclosure

Note 6 — Income Taxes:

 

The Company’s U.S. and foreign loss before income taxes are set forth below:

 

		December 31,
		2024				2023
United States		$	(19,065,449	)		$	(45,946,020	)
Foreign			(259,341	)			(393,207	)
Total		$	(19,324,790	)		$	(46,339,227	)

 

There were no current or deferred income tax provision for the years ended December 31, 2024 and 2023 because the Company has incurred operating losses since inception.

 

The Company’s deferred tax assets consist of the following:

 

		December 31,
		2024				2023
Net operating loss carryforwards – Federal		$	55,778,000			$	53,614,000
Net operating loss carryforwards – State			2,820,000				4,603,000
Net operating loss carryforwards – Foreign			10,000				6,000
Capitalized licensing fees			86,000				165,000
Stock-based compensation			2,976,000				6,151,000
Accrued compensation			1,601,000				720,000
Section 174 capitalization			5,159,000				5,522,000
Other			738,000				(4,000	)
Totals			69,168,000				70,777,000
Less valuation allowance			(69,168,000	)			(70,777,000	)
Deferred tax assets		$	-			$	-

 

A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The net change in the total valuation allowance for the year ended December 31, 2024 was $1,609,000.  

The Company had the following potentially utilizable net operating loss tax carryforwards:

 

		December 31,
		2024				2023
Federal		$	265,610,000			$	255,306,000
State		$	41,090,000			$	64,738,000
Foreign		$	38,000			$	25,000

 

Approximately $113,600,000 of net operating losses generated will expire in 2026 through 2037 for Federal purposes whereas the operating losses for state purposes will expire between 2043 and 2044. The Tax Cuts and Jobs Act of 2017 (the “Act”) limits the net operating loss deduction to 80% of taxable income for losses arising in tax years beginning after December 31, 2017.  However, the net operating losses now have an indefinite carryforward as opposed to the former 20-year carryforward. The foreign net operating loss tax carryforwards do not expire.  Our federal and state operating loss carryforwards include windfall tax deductions from stock option exercises.

  

The Company’s foreign earnings, if any, are derived from its German and Spanish subsidiaries. The Company does not expect any foreign earnings to be repatriated in the U.S. in the near future. The winding down of its operations in the EU is ongoing and there was no income during the year ended December 31, 2024.

 

The Company’s effective tax rate varied from the statutory rate as follows:

 

		December 31,
		2024				2023
Statutory federal tax rate			21.0	%			21.0	%
State income tax rate (net of federal)			(11.3	)%			8.7	%
Change in foreign NOL			(0.3	)%			(0.2	)%
Stock compensation prior year true-up			(6.8	)%			-
Stock compensation			(7.6	)%			-
Sale of NJ NOL			7.2	%			0.0	%
Deferred only adjustment			(0.1	)%			0.0	%
Other permanent differences			(2.7	)%			(1.4	)%
Effect of valuation allowance			7.8	%			(28.1	)%
Effective tax rate			7.2	%			0.0	%

 

In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income of the appropriate character during the periods in which those temporary differences become deductible and the loss carryforwards are available to reduce taxable income. In making its assessment, the Company considered all sources of taxable income including carryback potential, future reversals of existing deferred tax liabilities, prudent and feasible tax planning strategies, and lastly, objectively verifiable projections of future taxable income exclusive of reversing temporary differences and carryforwards. At December 31, 2024 and 2023, the Company maintained a full valuation allowance against its net deferred tax assets. The Company will continue to assess all available evidence during future periods to evaluate the realization of its deferred tax assets.

 

The following table presents the changes in the deferred tax asset valuation allowance for the periods indicated: 

 

Year Ended		Balance at Beginning of Year				Increase (Decrease) Charged (Credited) to Income Taxes (Benefit)				Increase (Decrease) Charged (Credited) to OCI				Balance at End of Year
December 31, 2024		$	70,777,000			$	(1,574,000	)		$	(35,000	)		$	69,168,000
December 31, 2023		$	57,761,000			$	13,050,000			$	(34,000	)		$	70,777,000

  

Accounting for uncertainty in income taxes requires uncertain tax positions to be classified as non-current income tax liabilities unless they are expected to be paid within one year. The Company has concluded that there are no uncertain tax positions requiring recognition in its consolidated financial statements as of December 31, 2024 and 2023. The Company recognizes interest and penalties related to uncertain tax positions if any as a component of income tax expense.

The Company files U.S. federal and state returns. The Company’s foreign subsidiary also files a local tax return in their local jurisdiction. From a U.S. federal, state and local perspective the years that remain open to examination are consistent with each jurisdiction’s statute of limitations.

 

During the year ended December 31, 2024, the Company received approximately $1,395,000, net of expenses, from the sale of its unused New Jersey net operating losses (NOL), that was eligible for sale under the State of New Jersey’s Economic Development Authority’s New Jersey Technology Business Tax Certificate Transfer program (NJEDA Program). The NJEDA Program allowed the Company to sell its available NOL tax benefits for the state fiscal year 2023 in the amount of approximately $1,500,000. During the year ended December 31, 2023 the Company did not sell any of its unused NOL.