PDS Biotechnology CorpPDSB
PDS Biotechnology Corp Income Taxes Disclosure
Note 10 – Income Taxes
The income tax provision consisted of the following for the years ended December 31, 2025 and December 31, 2024:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Current:
|
||||||||
|
Federal
|
$
|
-
|
$
|
-
|
||||
|
State & local
|
(1,169,820
|
)
|
(869,169
|
)
|
||||
|
(1,169,820
|
)
|
(869,169
|
)
|
|||||
|
Deferred tax expense:
|
||||||||
|
Federal
|
-
|
-
|
||||||
|
State & local
|
-
|
-
|
||||||
|
Net income tax benefit
|
$
|
(1,169,820
|
)
|
$
|
(869,169
|
)
|
||
A reconciliation of the statutory U.S. federal income tax rate to the Company’s effective tax rate for the year ended
December 31, 2025, after the adoption of ASU 2023-09, is as follows:
|
December 31,
2025
|
||||||||
|
Amount
|
Percent
|
|||||||
|
U.S. Federal statutory tax rate
|
$
|
(7,489,718
|
)
|
21.0
|
%
|
|||
|
State and local income taxes, net of federal benefit (1)
|
(924,158
|
)
|
2.6
|
%
|
||||
|
Tax credits
|
||||||||
|
Research and development tax credits
|
(1,338,403
|
)
|
3.8
|
%
|
||||
|
True-Ups
|
438,164
|
(1.2
|
)%
|
|||||
|
Changes in valuation allowances
|
8,143,238
|
(22.8
|
)%
|
|||||
|
Nontaxable or nondeductible items
|
||||||||
|
Meals & entertainment
|
1,057
|
-
|
||||||
| Total |
$
|
(1,169,820
|
)
|
3.4
|
%
|
|||
|
(1)
|
The state and local
jurisdictions that contribute to the majority (greater than 50%) of the tax effect in this category is the State of .
|
A reconciliation of the statutory U.S. federal income tax rate to the Company’s effective tax rate for the year ended
December 31, 2024 before the adoption of ASU 2023-09 is as follows:
|
December 31,
|
||||
|
2024
|
||||
|
Statutory rate
|
21.0
|
%
|
||
|
State tax recovery, net of federal benefit
|
2.2
|
%
|
||
|
Permanent differences
|
(6.0
|
)%
|
||
|
Research and development
|
3.6
|
%
|
||
|
State taxes/ Sale of NOL
|
2.3
|
%
|
||
|
Valuation allowance
|
(20.8
|
)%
|
||
|
Effective tax rate
|
2.3
|
%
|
||
Deferred tax assets as of December 31, 2025 and December 31, 2024 are related to the following:
|
December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Fixed assets
|
$
|
710,573
|
$
|
727,367
|
||||
|
Intangible assets
|
12,066
|
17,571
|
||||||
|
License agreement
|
2,261,307
|
2,491,266
|
||||||
|
Accrued expenses
|
76,022
|
6,129
|
||||||
|
Lease liability
|
17,483
|
35,349
|
||||||
|
Stock based compensation
|
4,159,573
|
3,649,378
|
||||||
|
Charitable contributions
|
9,123
|
9,278
|
||||||
| 163j |
1,016
|
1,033
|
||||||
|
Research & development
|
10,458,138
|
13,189,388
|
||||||
|
Net operating loss
|
47,363,506
|
37,698,779
|
||||||
|
R&D credits
|
8,355,813
|
6,876,852
|
||||||
|
Total gross deferred tax assets
|
73,424,620
|
64,702,389
|
||||||
|
Less valuation allowance
|
(73,389,708
|
)
|
(64,655,056
|
)
|
||||
|
Deferred tax assets, net
|
$
|
34,912
|
$
|
47,334
|
||||
|
Business insurance
|
-
|
(711
|
)
|
|||||
|
Right of use asset
|
$
|
(34,912
|
)
|
$
|
(46,623
|
)
|
||
|
Total gross deferred tax liabilities
|
(34,912
|
)
|
(47,334
|
)
|
||||
|
Deferred tax, net
|
$
|
-
|
$
|
-
|
||||
In assessing the realizability of the net deferred tax assets, the Company considers all relevant positive and negative
evidence to determine whether it is more likely than not that some portion of the deferred income tax will not be realized. The realization of the gross deferred tax assets is dependent on several factors, including the generation of
sufficient taxable income prior to the expiration of the net operating loss carryforwards. As of December 31, 2025 and 2024, the Company has recorded a full valuation allowance against its net deferred tax assets of approximately $73.4 and $64.7 million,
respectively. The change in the valuation allowance during the year ended 2025 was approximately $8.7 million.
The Tax Cuts and Jobs Act of 2017
(TCJA) has modified the IRC 174 expenses related to research and development for the tax years beginning after December 31, 2021. Under the TCJA, the Company must now capitalize the expenditures related to research and development
activities and amortize over five years for U.S. activities and 15 years for non-U.S. activities using a mid-year convention. Therefore, the capitalization of research and development costs in accordance with IRC 174 resulted in a deferred
tax asset of $10.5 million and $13.2
million as of December 31, 2025 and 2024, respectively.
As of December 31, 2025, the Company had federal net operating loss (“NOL”) carryforwards of approximately $197.4 million. As of December 31, 2025, the Company had federal research and development credit carryforwards of approximately $7.5 million. The federal net operating loss carryforwards begin to
expire in 2028, losses generated in 2018 or later of $167.4 million will carry forward indefinitely. The federal credit
carryforwards begin to expire in . Section 382 and 383 of the Internal Revenue Code of 1986 subject to future utilization of
net operating losses and certain other tax attributes, such as research and experimental tax credits, to an annual limitation in the event certain ownership changes, as defined. The Company may be subject to the net operating loss
utilization provisions of Section 382 of the Internal Revenue Code. The effect of an ownership change would be the imposition of an annual limitation on the use of NOL carryforwards attributable to periods before the change. The amount of
the annual limitation depends upon the value of the Company immediately before the change, changes to the Company’s capital during a specified period prior to the change, and the federal published interest rate. Although the Company has
not completed an analysis under Section 382 of the Code, it is likely that the utilization of the NOLs will be limited.
As of December 31, 2025, the Company had
approximately $86.4 million of State of New Jersey NOLs which expire between and . As of December
31, 2025, the Company had approximately $1.1 million of the State of New Jersey research
development credits carryforwards. The State of New Jersey has enacted legislation permitting certain corporations located in New Jersey to sell state tax loss carryforwards and state research and development credits, or net loss
carryforwards. The Technology Business Tax Certificate Transfer Program enables qualified, unprofitable NJ-based technology or biotechnology companies with fewer than 225 US employees (including the parent company and all subsidiaries) to
sell a percentage of New Jersey NOLs and research and development (“R&D”) tax credits to unrelated profitable corporations. In 2025, the Company sold New Jersey NOL carryforwards and R&D Credits,
resulting in the recognition of $1.2 million of income tax benefit, net of transaction costs. There is no certainty as to
whether this program will continue.
Entities are also required to evaluate, measure, recognize and disclose any uncertain income tax provisions taken on their
income tax returns. The Company has analyzed its tax positions and has concluded that as of December 31, 2025, there were no
uncertain positions. The Company’s U.S. federal and state net operating losses have occurred since its inception in 2009 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. Interest and penalties, if any, as they relate to income taxes assessed, are included in the income tax provision. The Company did
not have any unrecognized tax benefits and has not accrued any interest or penalties for the years ended December 31, 2025 and 2024.
The amounts of cash income taxes paid by the Company were as follows:
|
Year Ended December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Federal
|
$
|
-
|
$
|
-
|
||||
|
State & local
|
(1,162,953
|
)
|
(924,158
|
)
|
||||
|
Income taxes, net of amount refunded
|
$
|
(1,162,953
|
)
|
$
|
(924,158
|
)
|
||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 30, 2026 | Showing above |
| 2024 | Mar 27, 2025 | |
| 2023 | Mar 28, 2024 | |
| 2022 | Mar 28, 2023 | |
| 2021 | Mar 31, 2022 | |
| 2020 | Mar 18, 2021 | |
| 2019 | Mar 27, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 2, 2017 | |
| 2015 | Mar 8, 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.