PROKIDNEY CORP. Income Taxes Disclosure

Note 4: Income Taxes

Prior to the Domestication and other Restructuring transactions, ProKidney was considered an exempted Cayman Islands company and was not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. The Company’s subsidiary, PKLP, was organized as a limited partnership under the laws and regulations of Ireland and was classified as a partnership for U.S. income tax purposes. Further, the Company’s subsidiary, ProKidney-KY, had been granted, by the Government in Council of the Cayman Islands, tax concessions under an undertaking certificate exempting it from any tax levied on profits, income, gains or appreciations in relation to its operations or in the nature of estate duty or inheritance tax for a period of twenty years from January 20, 2016. ProKidney-KY elected to be treated as disregarded as separate from its owner, PKLP, for U.S. tax purposes, and as a result, it did not record an income tax provision.

The Domestication and other Restructuring transactions resulted in the Company becoming subject to corporate level income taxes in the U.S. Further, the Post-Domestication Reorganization, which was effective on September 1, 2025, resulted in certain of the Company’s subsidiaries becoming part of a consolidated group and ProKidney-US becoming disregarded as separate from its owner, “PK Holdings” for U.S. federal income tax purposes.

For periods prior to the Domestication and Post-Domestication Reorganization, the difference between the Company’s effective tax rates and the Cayman statutory rate of 0% was primarily attributable to the recording of a tax provision for U.S. federal and state taxes for the Company’s subsidiaries, ProKidney-US and ProKidney Acquisition Company, which were treated as a C corporation for U.S. federal income tax purposes. For periods subsequent to the Domestication and Post-Domestication Reorganization, the difference between the Company’s effective tax rates and the U.S. statutory rate of 21% was primarily attributable to the valuation allowance against the Company’s expected net operating losses.

The amount of cash income taxes paid by the Company during the years December 31, 2024 and 2023 was $73,000 and $2,857,000, respectively.

As discussed in Note 6, the Company is party to a tax receivable agreement with a related party which provides for the payment by the Company to holders of PK Holdings prior to the Closing (“Closing ProKidney Unitholders”) of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that the Company actually realizes (or, in some circumstances, the Company is deemed to realize) as a result of certain transactions. As no transactions have occurred which would trigger a liability under this agreement, the Company has not recognized any liability related to this agreement as of December 31, 2025.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, available taxes in the carryback periods, projected future taxable income and tax planning strategies in making this assessment. Accordingly, management has concluded that it is not more likely than not that it will recognize the deferred tax assets, and the Company has provided a valuation allowance of $17,527,000 and $6,928,000, respectively for December 31, 2025 and 2024, to offset the net deferred tax assets.

As of December 31, 2025 and 2024, the ProKidney Acquisition Company has net operating loss carryforwards of $1,120,000 and $626,000, respectively, for federal and state purposes. For federal purposes, these net operating loss carryforwards have an indefinite life and for state income tax purposes, the losses begin to expire in 2038. At December 31, 2025, ProKidney Acquisition Company has a net capital loss carryforward of $7,606,000. For federal purposes, the capital loss has a carryforward of five years and a carryback period of three years at December 31, 2025. ProKidney Corp. has net operating loss carryforwards of $41,496,000 for federal purposes.

There were no net unrecognized tax benefits as of December 31, 2025 which, if recognized, would affect our effective tax rate.

Tax years 2021 through 2025 remain subject to examination by federal and state authorities.