KIORA PHARMACEUTICALS INCKPRX
KIORA PHARMACEUTICALS INC Income Taxes Disclosure
Income Taxes
The components of (loss) income before income tax expense are as follows:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Domestic | $ | (7,288,452) | $ | 1,994,760 | |||||||
| Foreign | (4,828,851) | 3,664,978 | |||||||||
| Total (Loss) Income Before Income Taxes | $ | (12,117,303) | $ | 5,659,738 | |||||||
The components of income tax expense are as follows:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Current Taxes: | |||||||||||
| Federal | $ | (943,072) | $ | 1,034,972 | |||||||
| State | 64,244 | 312,323 | |||||||||
| Foreign | (14,784) | 1,006,461 | |||||||||
| Total Current Taxes | $ | (893,612) | $ | 2,353,756 | |||||||
| Deferred Taxes: | |||||||||||
| Federal | $ | 4,145 | $ | (75,375) | |||||||
| State | (98,682) | (213,376) | |||||||||
| Foreign | (294,000) | — | |||||||||
| Total Deferred Taxes | $ | (388,537) | $ | (288,751) | |||||||
| Income Tax Expense | $ | (1,282,149) | $ | 2,065,005 | |||||||
The difference between the effective rate reflected in the provision for income taxes and the amounts determined by applying the applicable statutory U.S. tax rate are analyzed below:
| Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
| Federal statutory income tax rate | $ | (2,544,634) | 21.00 | % | |||||||
| State income taxes, net of federal benefit * | (35,668) | 0.30 | % | ||||||||
| Foreign tax effects | |||||||||||
| Australia | |||||||||||
| Nondeductible R&D Expenses | 212,444 | (1.76) | % | ||||||||
| Prior Period Nondeductible Expenses | 295,447 | (2.44) | % | ||||||||
| Foreign Credits | (379,164) | 3.14 | % | ||||||||
| Other | (114,810) | 0.92 | % | ||||||||
| Austria | |||||||||||
| Adjustment to Prior Year Statutory Income | 351,885 | (2.91) | % | ||||||||
| Changes in Valuation Allowance | 231,205 | (1.91) | % | ||||||||
| Remeasurement of PY Deferred Taxes | 143,086 | (1.18) | % | ||||||||
| Other | (34,817) | 0.29 | % | ||||||||
| Changes in Valuation Allowance | 4,448,220 | (36.81) | % | ||||||||
| Tax credits | |||||||||||
| R&D Credits | (131,499) | 1.09 | % | ||||||||
| Nontaxable or Nondeductible Items | |||||||||||
| Equity Compensation | 558,370 | (4.62) | % | ||||||||
| Contingent Consideration | (262,956) | 2.18 | % | ||||||||
| Other | 5,742 | (0.05) | % | ||||||||
| Changes in unrecognized tax benefits | 31,760 | (0.26) | % | ||||||||
| Other | |||||||||||
| Reinstated NOL Carryover | (3,249,550) | 26.89 | % | ||||||||
| Other PY True Up | (807,210) | 6.68 | % | ||||||||
| Provision for Income Taxes | $ | (1,282,149) | 10.50 | % | |||||||
*The state that contributed to the majority (greater than 50%) if the tax effect in this category for the year ended December 31, 2025 was California.
As previously disclosed, prior to the adoption of ASU 2023-09, the difference between the provision (benefit) for income taxes and the amount computed by applying the U.S. federal income tax rate for the year ended December 31, 2024 is as follows:
| Year Ended December 31, | |||||
| 2024 | |||||
| United States Federal Income Tax Rate | 21.00 | % | |||
| State Taxes, Net of Federal Benefit | 83.60 | % | |||
| Contingent Consideration | (3.46) | % | |||
| GILTI Inclusion | 21.39 | % | |||
| 382 Limited Amortization - RBIL | 11.60 | % | |||
| ASC 718 - ISOs | 0.60 | % | |||
| Other Permanent Differences | 0.55 | % | |||
| Section 250 Deduction | (10.69) | % | |||
| Change in Valuation Allowance | (349.18) | % | |||
| Research and Development Credits | (0.47) | % | |||
| Tax Rate Differential | 2.69 | % | |||
| Foreign Stock Compensation | 0.98 | % | |||
| Foreign Credits to Expire Unused | 44.76 | % | |||
| True-up Other | 9.39 | % | |||
| 382 Limited NOLs - RBIL | 33.65 | % | |||
| NOLs to Expire Unused | 169.82 | % | |||
| Other | 0.03 | % | |||
| Effective Tax Rate Expense | 36.26 | % | |||
The Company’s deferred tax assets and liabilities consist of the following:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net Deferred Tax Liability: | |||||||||||
| Net Operating Loss Carryforwards | $ | 14,202,833 | $ | 9,240,807 | |||||||
| Research and Development Credit Carryforwards | 97,746 | — | |||||||||
| Capitalized Research and Development | 2,332,010 | 4,169,983 | |||||||||
| Stock-Based Compensation | 265,856 | 871,698 | |||||||||
| Cash Versus Accrual Adjustments | 377,639 | 61,681 | |||||||||
| Total Deferred Tax Assets | 17,276,084 | 14,344,169 | |||||||||
| Valuation Allowance | (16,862,945) | (13,139,483) | |||||||||
| Net Deferred Tax Asset | 413,139 | 1,204,686 | |||||||||
| In-Process Research and Development | (453,253) | (1,695,376) | |||||||||
| Other, Net | (62,038) | — | |||||||||
| Net Deferred Tax Liability | $ | (102,152) | $ | (490,690) | |||||||
The Company has recorded a valuation allowance against its United States and foreign deferred tax assets in each of the years ended December 31, 2025, and 2024 because the Company’s management believes that it is
more likely than not that these assets will not be realized. The valuation allowance changed by approximately $3.7 million and $(19.9) million during the years ended December 31, 2025 and 2024, respectively.
As of December 31, 2025, the Company has federal net operating loss carryforwards of approximately $53.8 million, to offset future taxable income. All of the federal NOL carryforwards were generated during the years ended December 31, 2018 and forward and they will carry forward indefinitely, but their utilization will be limited to 80% of taxable income. The Company has foreign net operating loss carryforwards of $12.6 million as of December 31, 2025, which can be carried forward indefinitely, but their utilization will be limited to 75% of taxable income. The Company has no state NOL carryforwards.
As of December 31, 2025, the Company had federal and state research and development tax credit carryforwards of $93.2 thousand and $47.0 thousand, respectively, to offset future income taxes. The federal credits will begin to expire in 2045. The state credits can be carried forward indefinitely.
Pursuant to Internal Revenue Code (IRC) Sections 382 and 383, future utilization of the Company's net operating loss and research and development credit carryforwards to offset future taxable income and tax respectively, may be subject to an annual limitation as a result of ownership changes that may have occurred or that could occur in the future. An ownership change occurs when a cumulative change in ownership of more than 50% occurs within a three-year period.
In 2024, the Company performed a Section 382/383 analysis which determined that multiple ownership changes occurred. As a result, the Company reduced a portion of its federal and state net operating losses and R&D credit carryforwards. Further, the Company limited the deduction for amortization of its intangible assets which gave rise to a Net Unrealized Built in Loss (NUBIL). A portion of the NUBILs were converted to pre-change NOLs which may be carried forward indefinitely subject to the Section 382 annual limitation.
The Company has not completed a 382 analysis to determine if an ownership change occurred post-2024. If a change in ownership were to have occurred in 2025 or occurs in the future, the use of the Company's federal and state NOL and tax credit carryforwards may be limited or reduced. If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company's effective tax rate.
The amounts of cash income taxes paid/(refunded) by the Company for the year ended December 31, 2025 is as follows:
| Year Ended December 31, | |||||
| 2025 | |||||
| Federal | $ | 1,125,000 | |||
| State | |||||
| California | 345,512 | ||||
| Other States | 2,180 | ||||
| Foreign | |||||
| Australia | 951,165 | ||||
| Total | $ | 2,423,857 | |||
As of December 31, 2025 the Company had unrecognized tax benefits of $34.0 thousand. As of December 31, 2024, the Company had no unrecognized tax benefits. Due to the existence of the valuation allowance, none of the unrecognized benefits would affect the effective tax rate. The Company's policy is to recognize interest and penalties from uncertain tax positions in income tax expense. The Company did not record any interest or
penalties for the years ended December 31, 2025 or 2024 and had no accrued interest on the balance sheets as of December 31, 2025 or 2024.
The Company files United States federal and state income tax returns as well as foreign tax returns for its subsidiaries in Austria and Australia. The Company is not under examination by any jurisdiction for any tax year. The Company is generally open to federal examination since 2018 due to the carryforward NOLs, state examination since 2021, and foreign examination since 2021 due to the carryforward of NOLs.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 25, 2026 | Showing above |
| 2024 | Mar 25, 2025 | |
| 2023 | Mar 25, 2024 | |
| 2022 | Mar 23, 2023 | |
| 2021 | Apr 15, 2022 | |
| 2020 | Mar 25, 2021 | |
| 2019 | Mar 4, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 2, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Mar 30, 2016 | |
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.