DYADIC INTERNATIONAL INC Income Taxes Disclosure

Note 8: Income Taxes

 

For the year ended December 31, 2025, there was no provision for income taxes or unrecognized tax benefits recorded.

 

The significant components of gain (loss) before income taxes are as follows:

 

Schedule of Gain Loss Before Income Tax

		2025				2024
		Years Ended December 31,
		2025				2024
U.S. operations		$	(7,333,535	)		$	(5,757,824	)
Foreign operations			(31,093	)			(51,335	)
Total loss before provision for income taxes		$	(7,364,628	)		$	(5,809,159	)

 

The Company has no current or deferred income tax for the years ended December 31, 2025 and 2024.

 

The reconciliation of income tax computed at U.S. federal statutory rate to income tax expense after the adoption of ASU 2023-09 is as follows:

 Schedule of Actual Effective Tax Rate

 

		Years Ended December 31,
		2025								2024
Tax at U.S. statutory rate		$	(1,546,572	)			21.00	%		$	(1,219,923	)			21.00	%
Nontaxable and nondeductible items
Other			39,897				(0.54	)			15,000				(0.26	)
Tax credits
Research and development tax credits			198,519				(2.70	)			225,193				(3.88	)
Change in valuation allowance			1,104,390				(15.00	)			953,532				(16.41	)
Other adjustments
Provision-to-return adjustments			203,766				(2.76	)			26,198				(0.45	)
Effective income tax rate		$	—				—	%		$	—				—	%

 

 

The significant components of the Company’s net deferred income tax assets are as follows:

 Schedule of Deferred Income Tax Assets

		2025				2024
		December 31,
		2025				2024
Section 174 - R&D expenses		$	3,015,100			$	2,123,800
Stock option expense			1,458,300				1,584,700
NOL carryforward			13,456,200				12,655,300
General Business credits			1,079,900				1,278,400
Operating lease liability			8,800				22,500
Right-of-use asset			(9,800	)			(23,400	)
Other			4,500				800
Deferred tax asset, net of deferred tax liabilities			19,013,000				17,642,100
Valuation allowance			(19,013,000	)			(17,642,100	)
Net deferred tax asset		$	—			$	—

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In assessing the realizability of deferred tax assets, Management evaluates 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 during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on Management’s evaluation, the net deferred tax asset, was offset by a full valuation allowance as of December 31, 2025 and 2024.

 

The Company had federal and state net operating loss (“NOL”) carryforwards available as of December 31, 2025 and 2024, in the amount of approximately $53,011,000 and $49,903,000, respectively. Approximately $50,073,000 of the federal net operating loss carryforwards will be carried forward indefinitely and will be available to offset 80% of taxable income. The remaining amount of the net operating loss carryforwards will expire at varying dates through 2037.

 

The Tax Cuts and Jobs Act eliminated the current year deduction election for research and experimental expenditures. Instead, a taxpayer must charge such expenditures to a capital account and is allowed to amortize such expenditures ratably over a five-year period (or fifteen-year period for expenditures attributable to foreign research), beginning with the midpoint of the tax year in which such expenditures are paid or incurred.

 

On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act (“OBBBA”) of 2025 which includes, among other provisions, changes to the U.S. corporate income tax system, including the allowance of 100% expensing of qualified asset expenditures, immediate expensing of qualifying domestic research and development expenses and permanent extensions of certain other provisions within the Tax Cuts and Jobs Act. Certain provisions are effective for 2025, beginning January 19, 2025. The adoption of this guidance did not have any material impact on the Company’s financial position and results of operations.