Tevogen Bio Holdings Inc. Income Taxes Disclosure

NOTE 14. INCOME TAXES

 

In December 2023, FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. The Company adopted ASU 2023-09 for the annual period beginning January 1, 2025, using a prospective transition method in accordance with ASC 740-10-65-9. Accordingly, the Company has presented the enhanced income tax disclosures, including disaggregated effective tax rate reconciliation and disaggregated income taxes paid, beginning with the year ended December 31, 2025, and has not restated prior-period comparative disclosures. The adoption of ASU 2023-09 affected only the Company’s income tax disclosures and did not have a material impact on its consolidated financial position, results of operations, or cash flows.

 

Due to the Company’s net losses for 2025 and 2024, as well as the full valuation allowance on its net deferred tax assets as discussed below, the Company did not record any income tax expense or benefit for the years ended December 31, 2025 and 2024.

 

A reconciliation of income tax benefit at the federal statutory income tax rate to the income tax expense at the Company’s effective income tax rate is as follows:

 SCHEDULE OF RECONCILIATION OF INCOME TAX BENEFIT AT THE FEDERAL STATUTORY INCOME TAX RATE

		2025				2024
		Year Ended December 31,
		2025				2024
Federal benefit at statutory rate			(5,517,736	)			(2,882,592	)
Nondeductible/ nontaxable items			76,545				(4,012,313	)
State taxes, net of federal benefit			(270,014	)			(1,685,375	)
Change in valuation allowance			1,459,954				9,124,217
Stock based compensation			5,188,416				(633,496	)
Changes in Unrecognized tax benefit			681,228				-
Other adjustments			(5,400	)			91,309
R&D credit			(932,818	)			-
Deferred true -up			(675,245	)			-
Income Tax Expense			4,750				1,750

 

		2025				2024
		Year Ended December 31,
		2025				2024
Federal benefit at statutory rate			21.0	%			21.0	%
Nondeductible/ nontaxable items			(0.3	)			29.2
State taxes, net of federal benefit			1.0				12.3
Change in valuation allowance			(5.6	)			(66.5	)
Stock based compensation			(19.7	)			4.6
Changes in Unrecognized tax benefit			(2.6	)
Other adjustments			-				(0.6	)
R&D credit			3.6
Deferred true-up			2.6				-
Income Tax Expense			-	%			-	%

 

For the year ended December 31, 2025, state income taxes in New Jersey comprise the state and local income taxes, net of federal income tax effect category.

 

Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of net deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain.

 

 

TEVOGEN BIO HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

The following items comprise the Company’s net deferred tax assets and liabilities as of December 31, 2025 and December 31, 2024:

 SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

		2025				2024
		December 31,
		2025				2024
Deferred tax assets
Net operating loss		$	11,379,856			$	6,808,826
Accrued expenses and other			155,500				385,801
Lease liability			379,086				61,380
Stock-based compensation			1,184,100				6,110,942
Fixed assets			19,938				33,834
Other			31,294				30,823
Capitalized research and development expenditures			3,858,487				2,944,801
Research and development credits			2,261,959				234,478
Total deferred tax assets			19,270,220				16,610,885
Valuation allowance			(18,898,195	)			(16,551,169	)
Deferred tax assets			372,025				59,716
Deferred tax liabilities:
Right of use asset			(372,025	)			(59,716	)
Total deferred tax liabilities			(372,025	)			(59,716	)
Net deferred tax assets		$	-			$	-

 

The Company continually evaluates the likelihood of the realization of deferred tax assets and adjusts the carrying amount of the deferred tax assets by the valuation allowance to the extent the future realization of the deferred tax assets is more likely than not. The Company considers many factors when assessing the likelihood of future realization of its deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectation of future taxable income or loss, the carryforward periods available to the Company for tax reporting purposes, and other relevant factors.

 

As of December 31, 2025, based on the Company’s history of earnings and its assessment of future earnings, management believes that it is more likely than not that future taxable income will not be sufficient to realize the deferred tax assets. Therefore, valuation allowance has been applied to deferred tax assets.

 

On July 4, 2025, the One Big Beautiful Bill was enacted (“OBBBA”), introducing significant and wide-ranging changes to the U.S. federal tax system. Significant components include restoration of 100% accelerated tax depreciation on qualifying property including expansion to cover qualified production property.

 

As of the year ended December 31, 2025, the Company has federal and state net operating loss carryforwards of approximately $43.1 million and $45.4 million, respectively.

 

Federal net operating loss (“NOL”) carryforwards in the amount of $43.1 million have an indefinite life. Federal NOL carryforwards generated after tax year 2018 are subject to an 80% limitation on taxable income, do not expire and will carryforward indefinitely.

 

The utilization of the Company’s net operating losses may be subject to a U.S. federal limitation due to the “change in ownership provisions” under Section 382 of the Internal Revenue Code and other similar limitations in various state jurisdictions. Such limitations may result in a reduction of the amount of net operating loss carryforwards in future years and possibly the expiration of certain net operating loss carryforwards before their utilization.

 

 

TEVOGEN BIO HOLDINGS INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

A summary of changes in the valuation allowance for net deferred tax assets during the year ended December 31, 2025 and 2024 were as follows:

 SCHEDULE OF VALUATION ALLOWANCE FOR NET DEFERRED TAX ASSETS

		2025				2024
		Year Ended December 31,
		2025				2024
Valuation allowance		$	16,551,169			$	7,426,952
Valuation allowance, beginning balance		$	16,551,169			$	7,426,952
Increases recorded to income tax provision			2,347,026				9,124,217
Valuation allowance		$	18,898,195			$	16,551,169
Valuation allowance, ending balance		$	18,898,195			$	16,551,169

 

The Company applies the authoritative guidance on accounting for and disclosure of uncertainty in tax positions, which requires the Company to determine whether a tax position of the Company is more likely than not to be sustained upon examination, including resolution of any related appeals of litigation processes, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the consolidated financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon the ultimate settlement with the relevant taxing authority. There were no material uncertain tax positions as of December 31, 2025.

 

A reconciliation of the unrecognized tax benefit balances is as follows:

 

SCHEDULE OF RECONCILIATION OF UNRECOGNIZED TAX BENEFIT

		2025				2024
		Year Ended December 31,
		2025				2024
Balance at beginning of the year		$	72,758			$	-
Increase for tax positions of prior years			287,868				-
Increase for tax positions of current years			393,360				72,758
Balance at end of the year		$	753,986			$	72,758

 

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense when in a taxable income position. As of December 31, 2025, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statements of operations and comprehensive loss.