GENELUX Corp Income Taxes Disclosure

NOTE 9 - INCOME TAXES

 

Significant components of the provision for income taxes for the years ended December 31, 2025 and 2024 are as follows:

 SCHEDULE OF PROVISION FOR INCOME TAXES

		Year Ended December 31,
		2025				2024
		(in thousands)
Current
Federal		$	—			$	(4,442	)
State			1				(1,873	)
Total			1				(6,315	)
Deferred
Federal			54,508				46,515
State			24,012				20,036
Total			78,520				66,551
Total income tax expense before change in valuation allowance			78,521				60,236
Change in valuation allowance			(78,521	)			(60,236	)
Total income tax expense		$	—			$	—

 

 

The following table presents a reconciliation of the tax expense based on the statutory rate to the Company’s actual tax expense in the statements of operations and comprehensive loss. A notional 21% tax rate was applied as follows (in thousands):

 SCHEDULE OF INCOME TAX RECONCILIATION BASED ON FEDERAL STATUTORY RATE

		Year Ended December 31,
		2025								2024
U.S. Federal statutory income tax		$	(6,750	)			21.0	%		$	(6,272	)			21.0	%
State and local income taxes			(2,201	)			6.9	%			(2,120	)			7.1	%
Other temporary differences			(7,368	)			22.9	%			(5,171	)			17.3	%
Change in valuation allowance			16,319				(50.8	)%			13,563				(45.4	)%
Provision for income taxes		$	—				—			$	—				—

 

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2025 and 2024 were as follows:

 SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

		December 31,
		2025				2024
		(in thousands)
Deferred tax assets
Stock-based compensation		$	13,198			$	10,200
Accruals			371				1,482
Fixed assets			1,678				77
Net operating losses			56,891				48,821
Capitalized research and development expenses			4,530				4,282
Tax credits			6,925				1,116
Other			42				—
Total deferred tax assets			83,635				65,978
Deferred tax liabilities
State taxes			(5,114	)			(5,105	)
Prepaid expenses			—				(154	)
Total deferred tax liabilities			(5,114	)			(5,259	)
Net deferred tax assets before valuation allowance			78,521				60,719
Valuation allowance			(78,521	)			(60,719	)
Net deferred tax assets		$	—			$	—

 

Deferred income tax assets and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

 

 

The Company has evaluated the available evidence supporting the realization of its gross deferred tax assets, including the amount and timing of future taxable income, and has determined it is more likely than not that the assets will not be realized. Due to uncertainties surrounding the realizability of the deferred tax assets, the Company has recorded a full valuation allowance against its deferred tax assets at December 31, 2025 and 2024.

 

At December 31, 2025 and 2024, the Company had federal income tax net operating loss carryforwards of approximately $192.2 million and $160.0 million, respectively. At December 31, 2025 and 2024, the Company had California income tax net operating loss carryforwards of approximately $190.5 million and $165.9 million, respectively. Of the total federal net operating loss, approximately $93.7 million has an indefinite carryforward period as of December 31, 2025. The remaining federal and California net operating loss carryforwards will expire through December 31, 2045, unless previously utilized. At December 31, 2025, the Company also has federal and California research and development tax credits of approximately $3.9 million and $3.0 million, respectively. The federal credits will expire through 2042 unless previously utilized. The California credits carryforward indefinitely. The utilization of net operating loss and tax credit carryforwards may be subject to limitation under the provisions of the Internal Revenue Code Section 382 and similar state provisions.

 

The Company has adopted the provisions in ASC 740 relating to the accounting for uncertain tax positions. This provision requires that the Company recognize the impact of a tax position in its financial statements if the position is more likely than not to be sustained upon examination and on the technical merits of the position. The Company also has a policy to recognize interest and/or penalties on the income tax expense related to uncertain tax positions. The Company had no material uncertain tax positions as of December 31, 2025 and 2024, respectively, and consequently, no interest or penalties have been accrued by the Company.

 

The Company is subject to taxation in the United States and state jurisdictions. The Company’s tax years for 2010 and forward are subject to examination by the United States and California tax authorities due to the carry forward of unutilized net operating losses.