CorMedix Inc. Income Taxes Disclosure

Note 8 - Income Taxes:

 

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

 

		December 31,
		2025				2024
United States		$	150,016			$	(19,066	)
Foreign			-				(259	)
Total		$	150,016			$	(19,325	)

The income tax (benefit)/expense consisted of the following

 

		December 31,
		2025				2024
Current tax expense:
Federal		$	2,721			$	-
State			10,037				(1,395	)
Foreign			-				-
Total current		$	12,758			$	(1,395	)
Deferred tax expense							-
Federal			(28,883	)			-
State			3,086				-
Foreign			-				-
Total deferred		$	(25,797	)		$	-
Total income tax (benefit)		$	(13,039	)		$	(1,395	)

 

The Company’s deferred tax assets consist of the following (are tax effected): 

 

		December 31,
		2025				2024
Deferred tax assets
Net operating loss carryforwards – Federal		$	117,135			$	55,778
Net operating loss carryforwards – State			37,811				2,820
Net operating loss carryforwards – Foreign			-				10
Capitalized licensing fees			31				86
Interest expense			6,656				-
Stock-based compensation			3,952				2,976
Accrued compensation			3,495				1,601
Section 174 capitalization			-				5,159
Sales Return			7,756				210
Tax Credit			3,385				-
Inventory reserve			256				-
Other			616				528
Total gross deferred tax assets			181,093				69,168
Less valuation allowance			(113,330	)			(69,168	)
Total Deferred tax assets net of valuation allowance		$	67,763			$	-
Deferred tax liabilities
In Process R&D			(36,281	)			-
Intangible asset			(15,206	)			-
Total gross deferred tax liabilities			(51,487	)			-
Net deferred tax assets			16,276				-

 

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, 2025 was ($44.2) million as a result of the acquisition of Melinta and its NOLs.

 

The tax benefit for year ended December 31, 2025 was $13.0 million, an increase of 11.6 million, or 835% from 1.4 million for the same period in 2024. As of December 31, 2025, the Company partially released a valuation allowance of $61.5 million primarily related to US Federal net operating losses. The release of valuation allowance was mainly attributed to the expected utilization of historical CorMedix federal NOLs. The Company will continue to evaluate the realizability of its remaining deferred tax assets each reporting period and adjust the valuation allowance as appropriate based on changes in cumulative results, forecasts of future taxable income, or other objective evidence as required by ASC 740-10-35. 

 

The Company has not completed a formal study to determine whether ownership changes, as defined under Section 382 of the Internal Revenue Code, have occurred that could limit the utilization of its net operating loss carryforwards and other tax attributes. Until such a study is completed, the Company cannot determine the extent to which its tax attributes may be subject to annual limitations. The Company does not expect the results of study to have material effects of the financial statements for the year ended December 31, 2025.

As a result of the Merger, Melinta experienced a Section 382 ownership change on August 29, 2025. This ownership change limits our ability to utilize federal net operating loss carryforwards and certain other tax attributes that accrued prior to the ownership change and may continue to limit our ability to utilize such attributes in the future. 

 

The Company recognizes income tax benefits associated with uncertain tax positions, when, in our judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more likely than not recognition threshold, the Company initially and subsequently measures the tax benefit as the largest amount that judged to have a greater than 50% likelihood of being realized upon ultimate settlement with the taxing authority. The Company accrues interest and penalties related to uncertain tax positions in income tax expense. The Company has concluded that there are no uncertain tax positions requiring recognition in its financial statements as of December 31, 2025.

 

The Company files its federal and state income tax returns with the Internal Revenue Service and the relevant state taxing authorities. The Company is no longer subject to U.S. federal income tax examinations for tax years prior to 2022 and is no longer subject to state income tax examinations for tax years prior to 2021. As of December 31, 2025, there are no ongoing federal or state income tax audits

 

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

 

		December 31,
		2025				2024
Federal		$	557,786			$	265,610
State		$	636,556			$	41,090
Foreign		$	-			$	38

 

Approximately $91.5 million of net operating losses generated will expire in 2026 through 2037 for Federal purposes whereas the operating losses for state purposes will start to expire in 2025. 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. Our federal and state operating loss carry forwards include windfall tax deductions from stock option exercises.

 

The Company’s foreign earnings, if any, are derived from its foreign subsidiaries which were dissolved in the year ended December 31, 2025 and there was no income during the year.

 

The following table summarizes the Company’s effective tax rate for the periods indicated:

 

		December 31,
		2025				2024
Profit (Loss) before income taxes		$	150,016			$	(19,325	)
Provision (Benefit) for income taxes		$	(13,039	)		$	(1,395	)
Effective tax rate			(8.7	)%		$	7.2	%

 

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

 

		2025								2024
		Amount				Percent				Amount				Percent
U.S. federal statutory tax rate		$	31,503				21.0	%		$	(4,058	)			21.0	%
State and local income tax (net of federal) (a)			10,367				6.9	%			(1,395	)			7.2	%
Foreign tax effects			-				0.0	%			57				(0.3	)%
Effects of changes in tax laws or rates enacted in the current period			-				0.0	%			-				0.0	%
Changes in valuation allowances:			(60,713	)			(40.5	)%			675				(3.5	)%
Non-taxable or non-deductible items
Stock compensation			(851	)			(0.6	)%			1,473				(7.6	)%
Transaction Cost			2,122				1.4	%			-				0.0	%
Officer’s Compensation			1,646				1.1	%			332				(1.7	)%
Change in Fair Value of Contingent Liability			1,365				0.9	%			-				-
Other non-taxable or non-deductible items			507				0.4	%			186				(1.0	)%
Other adjustments:
Stock compensation prior year true-up			79				0.1	%			1,318				(6.8	)%
Other			936				0.6	%			17				(0.1	)%
Effective tax rate		$	(13,039	)			(8.7	)%		$	(1,395	)			7.2	%

 

(a)

State taxes in Tennessee, Kentucky and California made up the majority (greater than 50 percent) of the tax effect in this category in 2025. State taxes in New Jersey made up the majority (greater than 50 percent) of the tax effect in this category in 2024.

Individual jurisdictions equaling 5% or more of the total income taxes paid (net of refunds) for the year ended December 31, 2025 include Tennessee at $28 thousand, Texas at $18 thousand, South Carolina at $5 thousand and Massachusetts at $4 thousand.

 

Income taxes paid:

 

		December 31,
		2025				2024
U.S. Federal			-				-
U.S. State and Local			62				6
Total Taxes paid		$	62			$	6