SenesTech, Inc.SNES

SenesTech, Inc. Income Taxes Disclosure

10-KFiled Mar 13, 20263 min read
INCOME TAXES
Our losses before income taxes for the years ended December 31, 2025 and 2024 were generated entirely from U.S. operations.
We have no current or deferred provision for income taxes from continuing operations for the years ended December 31, 2025 and 2024.
The significant differences between the U.S. Federal statutory rate and our effective rate for financial reporting purposes are as follows:
Years Ended December 31,
20252024
Amount
Rate
Amount
Rate
Tax (benefit) at the U.S. statutory rate$(1,340)(21.0)%$(1,299)(21.0)%
State income taxes, net of federal income tax effect— — — — 
Change in valuation allowance1,269 19.9 1,237 20.0 
Nontaxable or nondeductible items:
Stock-based compensation65 1.0 48 0.8 
Other6 0.1 14 0.2 
Provision for income taxes$— — %$— — %
Arizona represents the majority of the Company’s state and local income tax impact.
Deferred income tax assets and liabilities consist of the following (in thousands):
As of December 31,
20252024
Deferred income tax assets:
Federal and state net operating loss carryovers$25,108 $23,376 
Operating leases related to ROU assets615 — 
Capitalized research costs604 859 
Stock-based compensation269 283 
Compensation accruals and other77 45 
Deferred revenue8 3 
Depreciation— 13 
Total deferred income tax assets26,681 24,579 
Valuation allowance for deferred income tax assets(26,082)(24,579)
Deferred income tax assets, net of valuation allowance599 — 
Deferred income tax liabilities:
ROU assets(581)— 
Depreciation(18)— 
Total deferred income tax liabilities(599)— 
Deferred income tax assets, net$— $— 
A valuation allowance has been recognized to offset the net deferred tax assets as realization of such deferred tax assets have not met the more likely than not threshold.
As of December 31, 2025, we had federal and state net operating loss carryforwards of approximately $103.0 million and $90.0 million, respectively, not considering the Internal Revenue Code Section 382 annual limitation discussed below. The federal loss carryforwards begin to expire in 2029, unless previously utilized. In addition, we have approximately $58.6 million of the total $103.0 million of net operating losses that do not expire, as these losses were generated after the law change introduced as part of the Tax Cuts and Jobs Act. The state net operating losses begin to expire if not utilized by 2045.
Additionally, the utilization of the net operating loss carryforwards could be subject to an annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, and similar state tax provisions due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes limit the amount of net operating loss carryforwards and other tax attributes that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Sections 382 and 383, results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage points over a three-year period. We have not conducted an analysis of an ownership change under Section 382. If we experience an ownership change, our use of our pre-change net operating losses and other tax attributes to offset post-change taxable income or taxes could be limited.
We did not have any unrecognized tax benefits at the beginning and end of the years ended December 31, 2025 and 2024.
We file income tax returns in the United States and Arizona with general statutes of limitations of three and four years, respectively. Due to net operating losses incurred, our tax returns from 2005 to date are subject to examination by taxing authorities. Our policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. As of December 31, 2025, we had no interest or penalties accrued related to uncertain tax positions.

Historical Timeline

Fiscal YearFiled
2025Mar 13, 2026Showing above
2024Mar 13, 2025
2023Feb 21, 2024
2022Mar 17, 2023
2021Mar 29, 2022
2020Mar 29, 2021
2019Mar 17, 2020
2018Mar 29, 2019
2017Mar 30, 2018

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.

Other Available Disclosures

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