Genprex, Inc. Income Taxes Disclosure

Note 9 – Income Taxes

 

Components of income tax expense for the years ended December 31, 2025 and 2024, respectively, are as follows:

 

		December 31, 2025				December 31, 2024
Current Tax Expense (Benefit):
Federal		$	—			$	—
State			—				2,650
Total		$	—			$	2,650
Deferred Tax Expense (Benefit):
Federal			—				—
State			—				—
Total			—				—
Total Provision for Income Taxes		$	—			$	2,650

 

The total provision for income taxes for the year ended December 31, 2024, was accounted for in the Consolidated Statement of Operations within General and Administrative Expenses.

 

Temporary differences between financial statement carrying amount and tax basis of assets and liabilities that give rise to significant portions of the deferred tax assets and liabilities at  December 31, 2025 and 2024, respectively, are as follows:

 

		December 31, 2025				December 31, 2024
Deferred tax assets:
Intangible Assets - R&D Expenses		$	3,950,937			$	5,298,509
Accrued Expenses			446,430				529,639
Tax Credits			728,701				728,701
Stock Compensation Expense			1,106,464				1,302,638
Net Operating Losses			24,756,877				20,215,112
Other			59,820				87,089
Total Deferred Income Tax Assets			31,049,229				28,161,688
Deferred Income Tax Liabilities:
Fixed Assets			—				—
Prepaid Expenses			(473,475	)			(537,405	)
Lease - Right of Use			—				—
Total Deferred Income Tax Liabilities			(473,475	)			(537,405	)
Less Valuation Allowance			(30,575,754	)			(27,624,283	)
Net Deferred Income Tax Asset		$	—			$	—

 

For the years ended December 31, 2025 and 2024, the Company recorded pre-tax book losses of approximately $16.2 million and approximately $21.1 million, respectively.

 

At December 31, 2025 and 2024, the Company had federal net operating losses of approximately $117.5 million and approximately $95.2 million, respectively. Net deferred tax assets are mainly comprised of temporary differences between financial statement carrying amount and tax basis of assets and liabilities.

 

In assessing the ability to realize the 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 on the generation of future taxable income during the period in which these temporary differences become deductible. Management considers the projected future taxable income and prudent and feasible tax planning strategies in making this assessment. As of December 31, 2025 and 2024, valuation allowances of approximately $30.6 million and approximately $27.6 million have been recorded, respectively. 

 

The Company has federal research and development (“R&D”) credit carryforwards of $0.8 million which will begin to expire in 2037.

 

		Year Ended												Year Ended
		December 31, 2025												December 31, 2024*
		Amounts				Adjusted				Rate				Amounts				Adjusted				Rate
U.S. Statutory Tax Rate		$	(16,228,953	)		$	(3,408,080	)			21.00	%		$	(21,388,282	)		$	(4,491,539	)			21.00	%
State and Local Income Taxes, Net of Federal Income Tax Effect			—				—				0.00	%			—				(23,612	)			0.11	%
Foreign Tax Effects			—				—				—				—				—				—
Effect of Changes in Tax Laws or Rates Enacted in the Current Period			—				—				0.00	%			(73,178	)			(73,178	)			0.34	%
Effect of Cross-Border Tax Laws			—				—				—								—				—
Tax Credits			—				—				0.00	%			706,150				706,150				(3.30	)%
Change in Valuation Allowances			—			$	2,946,220				(18.15	)%			—				4,203,531				(19.65	)%
Nontaxable or Nondeductible Items			—			$	189,910				(1.17	)%			2,251,326				472,778				(2.21	)%
Changes in Unrecognized Tax Benefits			—				—				—				—				—				—
Other Adjustments			—				—				—				—				—				—
Prior Year True-Ups			—			$	(8,368	)			0.05	%			—				(791,480	)			3.70	%
Share-based compensation			—			$	280,318				(1.73	)%			—				—				—
Income tax expense and effective income tax rate		$	(16,228,953	)		$	—				0.00	%		$	(18,503,984	)		$	2,650				(0.01	)%

 

* While the underlying tax effects remain unchanged from the prior year, certain reconciling items have been reallocated consistent with the required ASU 2023-09 disclosure.

 

Effective January 1, 2009 the Company adopted ASC 740-10, the provision formerly FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” (“FIN48”) and began evaluating tax positions utilizing a two-step process. The first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination based on the technical merits of the position. The second step is to measure the benefit to be recorded from tax positions that meet the more-likely-than-not recognition threshold by determining the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement and recognizing that amount in the consolidated financial statements. 

 

The following table reflects changes in the gross unrecognized tax benefits:

 

		December 31, 2025				December 31, 2024
Unrecognized tax benefits at beginning of period		$	(80,967	)		$	(159,428	)
Gross increases – tax positions in current period			—				—
Gross decreases – tax positions in prior period			—				78,461
Settlements			—				—
Lapse of Statute of Limitations			—				—
Unrecognized tax benefits at end of period		$	(80,967	)		$	(80,967	)

 

The Company classifies uncertain tax positions as non-current unrecognized tax liabilities unless expected to be paid within one year or otherwise directly related to an existing deferred tax asset, in which case the uncertain tax position is recorded as an offset to the asset on the balance sheets. As of December 31, 2025 and 2024, $80,967 of the Company’s gross unrecognized tax benefits were recorded as a reduction of the related deferred tax assets.