Neuphoria Therapeutics Inc. Income Taxes Disclosure
Note 13. Income Taxes
The components of loss before income taxes for the years ended June 30, 2025 and 2024 are as follows:
|
|
June 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
U.S. |
|
$ |
(7,111,507 |
) |
|
$ |
(1,819,496 |
) |
Non - U.S. |
|
|
6,273,509 |
|
|
|
(13,759,990 |
) |
Total |
|
$ |
(837,998 |
) |
|
$ |
(15,579,486 |
) |
The components of income tax benefit for the years ended June 30, 2025 and 2024 are as follows:
|
|
June 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Current: |
|
|
|
|
|
|
||
Current - Non - U.S. |
|
$ |
(61 |
) |
|
$ |
(51,853 |
) |
Total current |
|
$ |
(61 |
) |
|
$ |
(51,853 |
) |
|
|
|
|
|
|
|
||
Deferred: |
|
|
|
|
|
|
||
Deferred - U.S. |
|
$ |
532,004 |
|
|
$ |
118,946 |
|
Deferred - state |
|
|
113,698 |
|
|
|
20,227 |
|
Deferred - Non - U.S. |
|
|
(925,293 |
) |
|
|
3,999,422 |
|
Less: Change in valuation allowance |
|
|
748,018 |
|
|
|
(3,999,422 |
) |
Total deferred |
|
$ |
468,427 |
|
|
$ |
139,173 |
|
|
|
|
|
|
|
|
||
Total income tax benefit |
|
$ |
468,366 |
|
|
$ |
87,320 |
|
A reconciliation between income tax benefit and the expected tax benefit at the statutory rate for the years ended June 30, 2025 and 2024 are as follows:
|
|
For the Year Ended June 30, |
|
|||||||||||||
|
|
2025 |
|
|
2024 |
|
||||||||||
Loss before taxes: |
|
$ |
(837,998 |
) |
|
|
|
|
$ |
(15,579,486 |
) |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax rate reconciliation: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Benefit at statutory rate |
|
$ |
175,980 |
|
|
|
21.0 |
% |
|
$ |
3,894,872 |
|
|
|
25.0 |
% |
State tax expense |
|
|
113,698 |
|
|
|
13.6 |
% |
|
|
|
|
|
|
||
Fair value adjustment on warrant liability |
|
|
200,831 |
|
|
|
24.0 |
% |
|
|
|
|
|
|
||
Global intangible low-taxed income inclusion |
|
|
(508,437 |
) |
|
|
(60.7 |
)% |
|
|
|
|
|
|
||
Exempt income from government assistance (R&D) |
|
|
76,615 |
|
|
|
9.1 |
% |
|
|
23,804 |
|
|
|
0.2 |
% |
Net (loss) gain arising on changes in fair value of contingent |
|
|
(183,079 |
) |
|
|
(21.8 |
)% |
|
|
460,297 |
|
|
|
3.0 |
% |
Share-based compensation |
|
|
(11,463 |
) |
|
|
(1.4 |
)% |
|
|
(104,757 |
) |
|
|
(0.7 |
)% |
Research & development expenditures |
|
|
(231,386 |
) |
|
|
(27.6 |
)% |
|
|
(54,721 |
) |
|
|
(0.4 |
)% |
Project costs |
|
|
301,513 |
|
|
|
36.0 |
% |
|
|
242,820 |
|
|
|
1.6 |
% |
Temporary difference not recorded as an asset |
|
|
(270,470 |
) |
|
|
(32.3 |
)% |
|
|
|
|
|
|
||
Withholding taxes deducted from fees overseas |
|
|
(62 |
) |
|
|
|
|
|
(51,853 |
) |
|
|
(0.3 |
)% |
|
Effect of different tax rates of subsidiaries operating in other |
|
|
(97,032 |
) |
|
|
(11.6 |
)% |
|
|
42,212 |
|
|
|
0.3 |
% |
Change in valuation |
|
|
748,018 |
|
|
|
89.3 |
% |
|
|
(3,999,422 |
) |
|
|
(25.7 |
)% |
Decrease to state tax benefit |
|
|
|
|
|
|
|
|
(357,738 |
) |
|
|
(2.3 |
)% |
||
RTP Eclipse true-up |
|
|
154,211 |
|
|
|
18.4 |
% |
|
|
|
|
|
|
||
Other |
|
|
(571 |
) |
|
|
(0.1 |
)% |
|
|
(8,194 |
) |
|
|
(0.1 |
)% |
Total income tax benefit |
|
$ |
468,366 |
|
|
|
55.9 |
% |
|
$ |
87,320 |
|
|
|
0.6 |
% |
The effective income tax rate is based upon the income for the year and adjustments, if any, for the potential tax consequences, benefits, or resolutions of audits or other tax contingencies. The Company's effective tax rate for the years ended June 30, 2025 and 2024 were 55.9% and 0.6%, respectively. In December 2024, the Company completed its redomiciliation to the U.S. The company's
effective tax rate was impacted by the change in statutory rates as well as an adjustment to the Company's net deferred tax liability of its U.S. subsidiary.
The principal components of the Company’s deferred tax liabilities at June 30, 2025 and 2024 are as follows:
|
|
June 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
U.S. net operating loss |
|
$ |
962,686 |
|
|
$ |
646,812 |
|
Non - U.S. net operating loss |
|
|
23,891,685 |
|
|
|
25,697,108 |
|
Capital expenditures not deducted |
|
|
1,418,616 |
|
|
|
1,168,484 |
|
Provision for leave |
|
|
78,891 |
|
|
|
81,513 |
|
Accrued expenses |
|
|
9,091 |
|
|
|
56,122 |
|
Patent costs |
|
|
470,594 |
|
|
|
509,498 |
|
Warrant costs |
|
|
|
|
|
164,725 |
|
|
U.S. tax credit |
|
|
32,061 |
|
|
|
32,061 |
|
Other adjustments |
|
|
93,152 |
|
|
|
15,942 |
|
Total deferred tax assets |
|
|
26,956,776 |
|
|
|
28,372,265 |
|
|
|
|
|
|
|
|
||
Deferred tax liabilities |
|
|
|
|
|
|
||
Eclipse acquisition |
|
|
1,312,669 |
|
|
|
1,493,727 |
|
Accrued interest income |
|
|
60 |
|
|
|
71 |
|
Other adjustments |
|
|
|
|
|
154,217 |
|
|
Total deferred tax liability |
|
|
1,312,729 |
|
|
|
1,648,015 |
|
|
|
|
|
|
|
|
||
Less: Valuation allowance |
|
|
26,139,160 |
|
|
|
27,687,790 |
|
Net deferred tax liability |
|
$ |
495,113 |
|
|
$ |
963,540 |
|
In the United States, on July 4, 2025, H.R. 1, also known as the One Big Beautiful Bill Act, was signed into Law. We are evaluating the impacts of this legislation and will reflect its impact in our financial statements in fiscal year 2026. At this time, we do not anticipate the financial impact of the required changes to be material.
Deferred income taxes reflect future tax effects of temporary differences between the tax and financial reporting basis of the Corporation’s assets and liabilities measured using enacted tax laws and statutory tax rates applicable to the periods when the temporary differences will affect taxable income. Certain items in the above table for the year ended June 30, 2024 have been reclassified to conform to the current year presentation. When necessary, deferred tax assets are reduced by a valuation allowance if, based on the weight of available positive and negative evidence, it is more likely than not that some portion or all the deferred tax assets will not be realized. As of June 30, 2025 and 2024, respectively, the Company has $26.1 million and $27.7 million in valuation allowance against its deferred tax assets. The decrease in the valuation allowance from 2024 to 2025 was due to a change in the statutory tax rate as well as a one time milestone payment the Company does not anticipate receiving in the foreseeable future.
At June 30, 2025, the Company had U.S. net operating losses ("NOL") carryforwards of $1.0 million with a 20-year carryforward period that starts expiring in 2032 and $2.8 million with an indefinite carryforward period, state NOL carryforwards of $2.5 million with a 20-year carryforward period that starts expiring in 2043, and Australian NOL carryforwards of $95.6 million with an indefinite carryforward period. At June 30, 2024, the Company had U.S. NOL carryforwards of $1.0 million with a 20-year carryforward period and $1.7 million with an indefinite carryforward period and state NOL carryforwards of $1.3 million with a 20-year carryforward period which would start expiring in 2043, and Australian NOL carryforwards of $155.4 million with an indefinite carryforward period.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the "Code") if a corporation undergoes an ‘‘ownership change,’’ the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income and taxes may be limited. In general, an ‘‘ownership change’’ occurs if there is a cumulative change in the Company’s ownership by ‘‘5-percent shareholders’’ that exceeds 50 percentage points over a rolling three-year period. The Company is still assessing whether an ownership change within the meaning of IRC Sections 382 and 383 has occurred to date.
ASC 740 prescribes the accounting for uncertainty in income taxes recognized in the financial statements. We regularly assess the outcome of potential examinations in each of the taxing jurisdictions when determining the adequacy of the amount of unrecognized
tax benefit recorded. We recognize tax benefits from uncertain tax positions only if it more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit which is more likely than not to be realized upon ultimate settlement. As of June 30, 2025, the Company has no uncertain tax positions.
The Company files taxes in Australia, the U.S., and the Commonwealth of Massachusetts. The Company is not currently under audit for the open years 2021 - 2024 in the U.S. or Massachusetts. Carryforward attributes that were generated in earlier periods remain subject to examination to the extent the year in which they were used or will be used remains open for examination. The Company is not currently under audit for the open years 2020 - 2024 in Australia.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Sep 29, 2025 | Showing above |
| 2024 | Sep 30, 2024 | |
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.