iSpecimen Inc. Income Taxes Disclosure

12. INCOME TAXES

 

There was no provision for income taxes for the years ended December 31, 2025 and 2024 due to the Company’s operating losses and a full valuation allowance on deferred tax assets.

 

The Company completed research and development studies covering all tax years currently under the applicable statute of limitations.

 

Significant components of the Company’s deferred tax assets and liabilities as of December 31 are as follows:

 

		2025				2024
Deferred tax assets:
Operating loss carryforwards		$	17,786,885			$	15,387,300
Research and development tax credit			2,220,972				2,155,100
Other			892,216				868,700
Total deferred tax assets			20,900,073				18,411,100
Deferred tax liability:
Other			(73,500	)			(80,500	)
Intangibles			(59,400	)			(124,800	)
Total deferred tax liabilities			(132,900	)			(205,300	)
Net deferred tax assets before valuation allowance			20,767,173				18,205,800
Valuation allowance			(20,767,173	)			(18,205,800	)
Net deferred tax asset		$	—			$	—

The Company has provided a valuation allowance against the deferred tax assets as it has incurred significant losses since its inception. Management currently believes that it is more likely than not that the deferred tax assets will not be realized in the future. The change in the valuation allowance during 2024 was an increase of $3,044,600.

 

As of December 31, 2025 and December 31, 2024, the Company had federal net operating loss carryforwards of approximately $72,600,000 and $62,300,000, respectively, of which approximately $13,000,000 expires at various periods through 2037 and approximately $59,600,000 can be carried forward indefinitely. As of December 31, 2025 and December 31, 2024, the Company had state net operating loss carryforwards of approximately $39,767,000 and $35,600,000, respectively, that expire at various periods through 2045, respectively. At December 31, 2025 and December 31, 2024, the Company had federal and state tax credits of approximately $2,221,000 and $2,031,000, respectively, available for future periods that expire at various periods through 2045. The Company has recorded a full valuation allowance against net deferred income tax assets due to a history of losses generated since inception.

 

Due to changes in ownership provisions of the Internal Revenue Code, the availability of the Company’s NOL carryforwards may be subject to annual limitations under Section 382 of the Internal Revenue Code against taxable income in the future period, which could substantially limit the eventual utilization of such carryforwards.

 

The Company applies the standards on uncertainty in income taxes. The Company did not have any significant unrecognized tax benefits during the year ended December 31, 2025. The Company’s U.S. federal operating losses have occurred since its inception and as such, tax years subject to potential tax examination could apply from that date because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities.

 

The Company’s income tax provision was computed using the federal statutory rate and average state statutory rates, net of related federal benefit. The following represents a reconciliation of the statutory income tax rates to the effective rates at December 31:

 

		2025				2024
Reconciliation to statutory rates
Expected federal income taxes benefit at statutory rates			(21.0	)%			(21.0	)%
Expected state tax benefit at statutory rates, net of federal benefit			(6.4	)			(6.4	)
Change in valuation allowance			27.4				27.4
Income tax expense (benefit)			—	%			—	%