SeaStar Medical Holding Corp Income Taxes Disclosure

Note 13. Income Taxes

 

The Company recorded approximately $3 thousand and $3 of current income tax expense for the years ended December 31, 2025 and 2024, respectively. The Company paid approximately $2 thousand to California, and less than $1 thousand each to North Carolina and New Jersey during the year ended December 31, 2025, comprised of statutory minimum taxes. 

 

The table before provides the updated requirements of ASU 2023-09 for 2025 (see Note 2. Summary of Significant Accounting Policies – Recent accounting pronouncements for additional details on the adoption of ASU 2023-09.

 

The effective income tax rate of the Company’s provision for income taxes for the year ended December 31, 2025, differed from the federal statutory rate as follows (in thousands and percentages):

 

 

		Year Ended December 31, 2025
		Amount				Percent
Federal tax at statutory rate		$	(2,551	)		$	21.00	%
State Tax net of federal benefits			4				-0.03	%
R&D tax credit			(275	)			2.27	%
Nontaxable or nondeductible items			(3	)			0.01	%
Change in Valuation Allowance			2,740				-22.44	%
Other Adjustments			88				-0.85	%
Tax Expense		$	3			$	-0.03	%

 

As previously disclosed for the years ended December 31, 2024, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income rate as follows:

 

		Year Ended December 31, 2024
		Amount				Percentages
Federal tax at statutory rate		$	(5,214	)		$	21.00	%
State income tax			776				-3.12	%
R&D tax credit			(197	)			0.79	%
Stock compensation expense			18				-0.07	%
Unrealized gains and losses, net, for liability classified warrants			146				-0.59	%
Unrealized gains and losses, net, for convertible debt			1,291				-5.20	%
Adjustment to prior period federal deferred tax assets			95				-0.38	%
Non-deductible expenses			6				-0.03	%
Other			172				-0.68	%
Change in valuation allowance			2,910				-11.72	%
Total effective income tax rate		$	3			$	0.00	%

 

Significant components of deferred tax assets for federal and state income taxes were as follows:

 

		December 31,				December 31,
		2025				2024
Deferred tax assets:
Net operating losses		$	26,779			$	23,936
Finance charges and origination fees			—				133
Accrued compensation			141				314
Stock-based compensation			87				47
Section 174 research and development capitalization			2,099				2,771
Section 59(e) research and development capitalization			1,292				—
Capitalized start-up fees			197				209
Tax credits			1,394				1,103
Total deferred tax assets			31,989				28,513
Valuation allowance			(31,989	)			(28,513	)
Net deferred tax assets		$	—			$	—

 

In accordance with U.S. GAAP, a valuation allowance should be provided if it is more likely than not that some or all of the Company’s deferred tax assets will not be realized. The Company’s ability to realize the benefit of its deferred tax assets will depend on the generation of future taxable income. Due to the uncertainty of future profitable operations and taxable income, the Company has recorded a full valuation allowance against its net deferred tax assets. For the years ended December 31, 2025 and 2024, the net increase in the valuation allowance was approximately $3.5 million and $2.8 million, respectively.

 

As of December 31, 2025 and 2024, the Company had federal net operating loss carryforwards of approximately $117.9 million and $108.4 million, respectively, of which approximately $65.0 million of federal net operating loss carryforwards post 2017 will be carried forward indefinitely. The remaining $52.8 million of federal net operating loss carryforwards begin expiring in 2027. The Company has also generated approximately $11.4 million of net operating loss carryforwards in California carryforward for 20 years, first expiring in 2039, $4.0 million of Florida net operating losses that carryforward indefinitely; $7.1 million of Illinois net operating loss carryforwards that carryforward for 20 years, first expiring in 2044 and $1.7 million of net operating loss carryforwards in Virginia that carryforward indefinitely. The Company has not used any net operating loss carryforwards to date.

 

The Company has not claimed any federal or state Research Credit carryforwards pre-2022. The Company believes that the Company has qualified research activities and qualified research expenses, but missed claiming the R&D credits in prior years. The tax provision reports no pre-2022 R&D credit carryforwards, consistent with the tax return filings through 2021. The Company will record R&D credit deferred tax assets (and the related valuation allowance) if/when the Company amends prior year tax filings to claim R&D credits.

 

The Company had federal energy credit carryforwards of approximately $0.6 million as of December 31, 2025 and 2024, which will expire starting in 2027 if not utilized. The Company has federal research and development credit carryforwards of approximately $0.7 million and $0.5 million as of December 31, 2025 and 2024, respectively, which will expire starting in 2042 if not utilized.

 

Pursuant to Internal Revenue Code (“IRC”) Sections 382 and 383, the Company’s ability to use net operating losses (“NOL”) and research tax credit carryforwards to offset future taxable income may be limited if the Company experiences a cumulative change in ownership of more than 50% within a three-year testing period. The Company has not completed an ownership change analysis pursuant to IRC Section 382. If ownership changes within the meaning of IRC Section 382 are identified as having occurred, the amount of NOL and research tax credit carryforwards available to offset future taxable income and income tax liabilities in future years may be significantly restricted or eliminated. Further, deferred tax assets associated with such NOLs, and research tax credits could be significantly reduced upon realization of an ownership change within the meaning of IRC Section 382.

 

The Company files U.S. federal and state tax returns with varying statutes of limitations. Due to net operating loss and credit carryforwards, the 2019 to 2024 tax years remain subject to examination by the U.S. federal and some state authorities. The actual amount of any taxes due could vary significantly depending on the ultimate timing and nature of any settlement.

 

Uncertain Tax Benefits

 

The Company uses the “more likely than not” criterion for recognizing the income tax benefit of uncertain income tax positions and establishing measurement criteria for income tax benefits. As of December 31, 2025, the Company has approximately $1.1 million of uncertain tax benefits, all of which are accounted for as contra deferred tax assets. The following schedule provides the roll forward of the Company’s uncertain tax positions during the year ended December 31, 2025:

 

		Uncertain Tax Position
Balance as of December 31, 2024		$	944
Increase in prior year			—
Increase in current year			127
Balance as of December 31, 2025		$	1,071

 

The Company has no accrued interest related to the uncertain tax benefits. The Company does not anticipate any significant changes to unrecognized tax benefits over the next 12 months as of December 31, 2025.