14.   Income Taxes

As of December 31, 2025, the Company has U.S. federal net operating loss carryforwards of approximately $45,410,000, which have an indefinite carryforward and Georgia and Florida state net operating loss carryforwards of approximately $58,689,000 and $1,750,000, respectively, which have a twenty-year carryforward and begin expiring in 2037. As of December 31, 2025, the Company had Canadian non-capital loss carryforwards of approximately $22,024,000, which have a twenty year carryforward and begin expiring in 2026 and Hong Kong tax losses carryforwards of approximately $58,026,000 which have no expiry. These net operating loss carryforwards may be limited under Section 382 of the internal revenue code. The Company will need to perform a formal Section 382 study to determine how the equity transactions discussed above impact the limitation on the utilization of its net operating loss carryforwards.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. The OBBBA did not change the US federal corporate income-tax rate and did not materially affect Dogwood’s US income-tax position. The OBBBA did reinstate the immediate expensing of domestic research and development (“R&D”) expenditures under Section 174A, effective for tax years beginning after December 31, 2024. This change reverses the prior requirement to capitalize and amortize R&D costs over five years. The Company has elected to continue to capitalize R&D expenditures under Section 174A and amortize these costs over 60-months. Therefore there was no remeasurement of deferred tax assets due to the OBBBA’s enactment and there was no impact on the Company’s income tax provision for the year ended December 31, 2025. The Company maintains a full

valuation allowance against its deferred tax assets, including those related to net operating loss carryforwards and R&D credits.

The Company adopted ASU 2023-09 effective January 1, 2025, applying the guidance prospectively, as permitted by the standard. Comparative prior-year disclosures have not been restated. The adoption of ASU 2023-09 did not affect the Company’s recognition or measurement of income tax amounts, as the ASU amends disclosure requirements only and does not modify the underlying accounting guidance in ASC 740.

Income taxes paid by the Company are as follows:

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A reconciliation of the worldwide consolidated income tax rate to the Company’s effective tax rate as of December 31, 2025 is as follows:

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A reconciliation of the worldwide consolidated income tax rate to the Company’s effective tax rate as of December 31, 2024 is as follows:

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Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets are comprised of the following:

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For tax years beginning on or after January 1, 2022, the 2017 Tax Cuts and Jobs Act amended Section 174 of the code to eliminate current-year deductibility of research and development expenses and requires taxpayers to capitalize and amortize them over five years for research activities performed in the United States and fifteen years for research activities performed outside of the United States. For the 2025 and 2024 tax years, the Company has capitalized $8,871,522 and $2,810,785 of research and development expenses, respectively.  

At December 31, 2024, the Company evaluated the realizability of its deferred tax assets and determined that the valuation allowance should be adjusted for the consideration of the acquired in-process research and development intangible assets.  An income tax benefit for the year ended December 31, 2025 is reflected in the consolidated statement of operations.

The Company experienced a net change in valuation allowance of $5,582,085 and $21,443,255 for the years ended December 31, 2025 and 2024, respectively.  The large valuation adjustment for the year ended December 31, 2024, primarily related to the Combination of Pharmagesic and acquired in-process research and development intangible assets.

The components of the income tax expense (benefit) are as follows:

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