GRI Bio, Inc.GRI
GRI Bio, Inc. Income Taxes Disclosure
INCOME TAX.
A reconciliation of income tax expense (benefit) at the US federal statutory income tax rate and the income tax provision in the financial statements is as follows:
| December 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| $ | % | $ | % | ||||||||||||||||||||
| Expected income tax benefit at the U.S. federal statutory tax rate | (2,511) | 21.0 | (1,723) | 21.0 | |||||||||||||||||||
State and local taxes, net of federal benefit(1) | 2 | — | 1 | — | |||||||||||||||||||
Tax credits | |||||||||||||||||||||||
Research and development credits | — | — | 136 | (1.7) | |||||||||||||||||||
| Change in valuation allowance | 2,195 | (18.4) | 1,842 | (22.4) | |||||||||||||||||||
Nontaxable or nondeductible items | |||||||||||||||||||||||
Equity compensation | 316 | (2.6) | 6 | (0.1) | |||||||||||||||||||
Other nontaxable or nondeductible items | 1 | — | 54 | (0.6) | |||||||||||||||||||
Deferred tax adjustment | — | — | (314) | 3.8 | |||||||||||||||||||
| Total | 3 | — | 2 | — | |||||||||||||||||||
_________________
(1) During the years ended December 31, 2025 and 2024, state taxes in California made up the majority (greater than 50%) of the tax effect in this category.
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
The principal components of the Company’s deferred tax assets and liabilities are as follows:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Federal and state net operating loss carryforwards | $ | 16,784 | $ | 14,537 | |||||||
| Share based compensation | — | 200 | |||||||||
| Accruals and other | — | 94 | |||||||||
| Lease liabilities | 20 | 34 | |||||||||
| Capitalized research and development costs | 3,161 | 1,846 | |||||||||
Depreciation - Federal and state | 2 | 2 | |||||||||
Amortization - Federal and state | 4 | 5 | |||||||||
| Gross deferred tax assets | $ | 19,971 | $ | 16,718 | |||||||
| Less: deferred tax liabilities | (20) | (34) | |||||||||
| Less: valuation allowance | (19,951) | (16,684) | |||||||||
| Net deferred tax assets | $ | — | $ | — | |||||||
Based on the Company’s history of losses, the Company recorded a full valuation allowance against its deferred tax assets as of December 31, 2025 and 2024. The Company increased its valuation allowance by approximately $3,267 for the year ended December 31, 2025. The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support a reversal of the allowance.
As of December 31, 2025, the Company had federal, state and local net operating loss carryforwards of $59,173, $69,754, and $5,563, respectively; $53,048 of the federal net operating loss carryforwards do not expire and the remaining $6,124 begin to expire in 2029. The state losses also begin to expire in 2029. The local net operating losses began to expire in 2024. Under the provisions of Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (IRC), these net operating losses, credit carryforwards and other tax attributes may be subject to limitation based on previous significant changes in ownership and upon future significant changes in ownership of the Company, as defined by the IRC.
Under the provisions of Sections 382 and 383 of the IRC, certain substantial changes in the Company’s ownership may have limited, or may limit in the future, the amount of net operating loss and credit carryforwards that can be used to reduce future income taxes if there has been a significant change in ownership of the Company, as defined by the IRC. Future owner or equity shifts could result in limitations on net operating loss and credit carryforwards. The Company has not conducted a Section 382 analysis to determine the potential limitations on the utilization of its net operating loss carryforwards and other tax attributes. Management does not believe that any such limitations, if applicable, would have a material impact on the Company’s consolidated financial statements.
The Company files income tax returns in the US federal jurisdiction as well as California, Pennsylvania and Philadelphia. The tax years 2021 to 2024 remain open to examination by the major jurisdictions in which the Company is subject to tax. Fiscal years outside the normal statute of limitation remain open to audit by tax authorities due to tax attributes generated in those early years, which have been carried forward and may be audited in subsequent years when utilized.
The Company evaluates tax positions for recognition using a more-likely-than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information. As of December 31, 2025 and 2024, the Company had no unrecognized income tax benefits that would affect the Company’s effective tax rate if recognized. The Company would recognize both accrued interest and penalties related to unrecognized benefits in income tax expense. The Company’s uncertain tax positions yet to be determined would be related to years that remain subject to examination by relevant tax authorities. Since the Company is in a loss carryforward position, the Company is generally subject to examination by the U.S. federal, state and local income tax authorities for all tax years in which a loss carryforward is available.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jan 30, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
| 2023 | Mar 28, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 14, 2022 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.