Income Taxes

12 Months Ended

Dec. 31, 2025

NOTE 12: INCOME TAXES

The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, on a prospective basis effective January 1, 2025. A reconciliation of the income tax benefit calculated at the U.S. federal statutory rate to the recognized income tax benefit and effective income tax rate is as follows (in thousands, except percentages):


	As of December 31, 2025
	Amount			Percent
Income tax benefit at the U.S. federal statutory rate	$	(7,302	)		21.0	%
State income taxes, net of federal income tax effect		—			0.0	%
Foreign tax effects
Australia
Statutory tax rate difference between Australia and U.S.		(31	)		0.1	%
Change in valuation allowance		22			-0.1	%
Other		85			-0.2	%
Effect of changes in tax laws or rates enacted in the current period		—			0.0	%
Effect of cross border tax laws		(76	)		0.2	%
Tax credits		—			0.0	%
Change in valuation allowance		7,278			-20.9	%
Non taxable or non deductible items
Other non-taxable income & disallowed expenses		173			-0.5	%
Other		(149	)		0.4	%
Changes in unrecognized tax benefits		—			0.0	%
Income tax benefit	$	—			0.0	%



	As of December 31, 2024
Expected federal income tax benefit at statutory rate	$	(5,356	)
Disallowed R&D expenses		3
Non-taxable R&D rebate		—
Other permanent items		235
Return to provision		57
Stock-based compensation		246
Foreign rate differential		(76	)
Other		21
Effect of change in valuation allowance		4,870
Income tax benefit	$	—

The following table summarizes the significant components of the Company's deferred tax assets and liabilities (in thousands):


	As of December 31,
	2025			2024
Deferred tax assets
Accrued bonus	$	143		$	274
Accrued vacation		45			47
Stock-based compensation		4,887			4,265
Capitalized R&D expenses		300			7,825
Rebate reserve		153			220
Intangible assets, net		113			181
Investment in equity securities		987			987
Net operating loss carryforwards		30,091			15,716
Other		98			48
Total gross deferred tax asset		36,817			29,563
Valuation allowance		(36,817	)		(29,516	)
Net deferred tax assets		—			47
Deferred tax liabilities
Bonus compensation		—			(47	)
Net deferred tax assets	$	—		$	—

As of December 31, 2025 and 2024, a valuation allowance was established against the Company's net deferred tax assets due to the uncertainty regarding the realization of such assets as evidenced by the cumulative losses from operations through December 31, 2025 and 2024. The total valuation allowance increased by $7.3 million for the year ended December 31, 2025 primarily as a result of an increase in net operating loss carryforwards, partially offset by a reduction in deferred tax assets related to previously capitalized R&D expenses.

The Company has incurred net operating losses since inception. At December 31, 2025, the Company had domestic federal net operating loss (NOL) carryforwards of $186.7 million and foreign NOL carryforwards of $1.7 million. The 2017 Tax Cut and Jobs Act (the Act) generally allows federal losses generated after 2017 to be carried forward indefinitely, but also limits the NOL deduction to the lesser of the NOL carryover or 80% of a corporation's taxable income (subject to Section 382 of the Internal Revenue Code of 1986, as amended (the IRC). Additionally, there is no carryback for losses generated after 2017. Losses generated prior to 2018 are deductible using the lesser of a corporation's NOL carryover or 100% of a corporation's taxable income and have a 20 year carryforward period. Federal NOL carryforwards generated prior to 2018 expire at various dates beginning 2029 through 2037. Foreign NOLs do not expire.

The future utilization of the federal NOL carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that may have occurred previously or may occur in the future. The IRC limits a Company's ability to utilize certain NOL carry forwards in the event of a cumulative change in ownership in excess of 50% (by value) defined in the IRC. The Company has not completed a study to assess whether an ownership change, as defined by the IRC, had occurred since its inception.

The Company has no unrecognized tax positions as of December 31, 2025 or 2024 and does not believe there will be any material changes in its unrecognized tax positions over the next 12 months. The Company has not incurred any interest or penalties related to unrecognized tax positions for the years ended December 31, 2025 or 2024.

The Company files income tax returns in the U.S. and Australia. The Company has incurred net losses since inception and has not been audited for any open taxation years. As such, all tax years remain open for federal tax examinations in the U.S. For Australia, tax years from 2020 to present remain open and subject to audit.

- Definition

The entire disclosure for income tax.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 942
-SubTopic 740
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477617/942-740-50-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480738/235-10-S50-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 944
-SubTopic 740
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478822/944-740-50-1

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12

Reference 5: http://www.xbrl.org/2003/role/exampleRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 231
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482663/740-10-55-231

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12C
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12B
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 270
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477891/740-270-50-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 6.I.5.Q1)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-13

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/740/tableOfContent

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-14

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-21

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 17
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-17

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2

Reference 17: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482603/740-30-50-2

+ Details

ATOSSA THERAPEUTICS, INC. 10-K