Kairos Pharma, LTD. Income Taxes Disclosure

NOTE 7 – INCOME TAXES

 

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. A full valuation allowance is established against all net deferred tax assets as of December 31, 2025 and 2024 based on estimates of recoverability. While the Company has optimistic plans for its business strategy, it determined that such a valuation allowance was necessary given the current and expected near-term losses and the uncertainty with respect to its ability to generate sufficient profits from its business model. Because of the impacts of the valuation allowance, there was no income tax expense or benefit for the years ended December 31, 2025 and 2024.

 

 

A reconciliation of the differences between the effective and statutory income tax rates for the years ended December 31, 2025 and 2024 are shown below:

 

SCHEDULE OF RECONCILIATION OF THE DIFFERENCES BETWEEN THE EFFECTIVE AND STATUTORY INCOME TAX RATES 

		Amount				Percent				Amount				Percent
		2025								2024
		Amount				Percent				Amount				Percent
Federal statutory rates		$	(1,144	)			21.0	%		$	(547	)			21.0	%
State income taxes			(381	)			7.0	%			(182	)			7.0	%
Other			-				-	%			(13	)			0.5	%
Valuation allowance against net deferred tax assets			1,525				(28.0	)%			742				(28.5	)%
Effective rate		$	-				-	%		$	-				-	%

 

At December 31, 2024 and 2023, the significant components of the deferred tax assets are summarized below:

SCHEDULE OF SIGNIFICANT COMPONENTS OF THE DEFERRED TAX ASSETS AND LIABILITIES 

		2025				2024
Deferred income tax assets:
Net operating loss carryforwards		$	2,766			$	1,199
Capitalized R&D expenses			482				90
Total deferred income tax assets			3,248				1,289
Less: valuation allowance			(3,009	)			(841	)
Total net deferred income taxes			239				448
Deferred income tax liabilities:
Amortization of intangibles			(17	)			(62	)
Accrual to cash			(222	)			(386	)
Total deferred income tax liabilities			(239	)			(448	)
Total deferred income tax assets		$	-			$	-

 

As of December 31, 2025, the Company has net operating loss (“NOL”) carryforwards of approximately $9,900 and are subject to IRS code section 382 limitations. Of the total federal net operating loss, approximately $9,600 has an indefinite carryforward period as of December 31, 2025. The remaining federal and California net operating loss carryforwards will expire through December 31, 2045, unless previously utilized. NOL carryforwards may be subject to limitation under Sections 382 of the Internal Revenue Code, and similar state provisions which limit the amount carryforwards that can be utilized to offset future taxable income. In general, an ownership change, as defined by Sections 382, results from transactions increasing ownership of certain stockholders in the stock of the corporation by more than 50 percentage points over a three-year period. The Company does not anticipate performing a complete analysis of the limitation on the annual use of the net operating loss carryforwards until the time that it anticipates it will be able to utilize these tax attributes. This could impose an annual limit or reduction on the Company’s ability to utilize net operating loss carryforwards and could cause U.S. federal income taxes to be paid earlier than otherwise would be paid if such limitations were not in effect. The U.S. federal net operating loss carryforwards are stated before any such anticipated limitations. If a change in ownership were to have occurred, the Company’s NOL carryforwards could be eliminated or restricted.