Insight Molecular Diagnostics Inc. Income Taxes Disclosure

12. Income Taxes

In 2025, the Company incurred $50.2 million of pretax book losses in the United States and $16,000 of net operating loss internationally. In 2024, the Company incurred $60.7 million of pretax book losses in the United States and $37,000 of net operating income internationally.

The Company did not record any provision or benefit for income taxes for the years ended December 31, 2025 and 2024, as the Company had a full valuation allowance for the periods presented. iMDx will file a consolidated return with its subsidiaries for the year ended December 31, 2025.

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. The primary components of the deferred tax assets and liabilities were as follows:

Income taxes differed from the amounts computed by applying the applicable U.S. federal income tax rates indicated to pretax losses. A reconciliation of the difference between the federal statutory tax rates and the Company’s effective tax rates is as follows:

As of December 31, 2025, iMDx had net operating loss (“NOL”) carryforwards of approximately $240.6 million for U.S. federal income tax purposes and $112.4 million for state income tax purposes. The federal net operating losses generated on or prior to December 31, 2017 expire in varying amounts, while the federal net operating losses generated after December 31, 2017 carryforward indefinitely. The state net operating losses expire in varying amounts between 2029 and 2045. iMDx also has capital loss carryforwards of approximately $25.7 million, for both federal and state income tax purposes, which expire in 2028.

As of December 31, 2025, iMDx has research and development credit carryforwards for federal and state purposes of $871,000 and $3.3 million, respectively. The federal credits will expire in 2045, while the state credits have no expiration.

A valuation allowance is provided when it is more-likely-than-not that some portion of the deferred tax assets will not be realized. iMDx has established a full valuation allowance for all periods presented due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets. The change in the valuation allowance was a $15.2 million increase and a $2.9 million decrease for the years ended December 31, 2025 and 2024, respectively.

iMDx has unrecognized tax benefits (“UTBs”) totaling $1.6 million and $1.1 million as of December 31, 2025 and 2024, respectively, which were netted against deferred tax assets subject to a valuation allowance. The UTBs had no effect on the effective tax rate and there would be no cash tax impact for any period presented. iMDx recognizes interest and penalties related to UTBs, when they occur, as a component of income tax expense. There were no interest or penalties recognized for the years ended December 31, 2025 and 2024.

Income Taxes Paid

Income taxes paid, net of refunds received, for the years ended December 31, 2025 and 2024 were zero. No individual state represents 5% or more of the total income taxes paid, net of refunds received.

Other Income Tax Matters

Internal Revenue Code Section 382 places a limitation (“Section 382 Limitation”) on the amount of taxable income that can be offset by NOL carryforwards after a change in control (generally greater than 50% change in ownership within a three-year period) of a loss corporation. California has similar rules. Generally, after a change in control, a loss corporation cannot deduct NOL carryforwards in excess of the Section 382 Limitation. Due to these “change in ownership” provisions, utilization of the NOL and tax credit carryforwards may be subject to an annual limitation regarding their utilization against taxable income in future periods. iMDx has performed a 382 analysis as of December 31, 2025 and determined an ownership change as of October 2024. The federal and state NOL and tax credit carryforwards are stated net of any such anticipated limitations.

In general, iMDx is no longer subject to tax examination by the Internal Revenue Service or state taxing authorities for years before 2020. Although the federal and state statutes are closed for purposes of assessing additional income tax in those prior years, the taxing authorities may still make adjustments to the NOL and credit carryforwards used in open years. Therefore, the tax statutes should be considered open as it relates to the NOL and credit carryforwards used in open years. For tax years that remain open to examination, potential examinations may include questioning of the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with the Internal Revenue Code or state tax laws.