Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

v3.25.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Taxes  
Income Taxes

14.   Income Taxes

As of December 31, 2024, the Company has U.S. federal net operating loss carryforwards of approximately $36,669,000, which have an indefinite carryforward and Georgia and Florida state net operating loss carryforwards of approximately $44,443,000 and $1,372,000, respectively, which have a twenty-year carryforward and begin expiring in 2037. As of December 31, 2024, the Company had Canadian non-capital loss carryforwards of approximately $25,277,000, which have a twenty year carryforward and begin expiring in 2025 and Hong Kong tax losses carryforwards or approximately $58,126,000 which have no expiry.

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

​

​

​

​

​

​

​

​

 

Year Ended

​

​

 

December 31, 

​

​

     

2024

     

2023

  

U.S. federal statutory income tax rate

​

21.00

%  

21.00

%

Permanent differences

 

(2.60)

%  

(2.01)

%

State taxes, net of federal benefit

 

2.60

%  

4.30

%

Foreign exchange

​

0.43

%  

—

%

Other adjustments

​

—

%  

0.20

%

Change in valuation allowance

 

(21.43)

%  

(23.49)

%

Effective Income Tax rate

 

—

%  

—

%

​

​

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:

​

​

​

​

​

​

​

​

​

 

As of December 31, 

​

    

2024

    

2023

Deferred tax assets:

​

​

​

​

​

​

Net operating loss carryforwards

​

$

26,081,361

​

$

7,132,019

Research and development tax credits

​

​

8,765,999

​

​

—

Capitalized research and development expenditures

​

​

1,627,842

​

​

1,524,035

Stock compensation

​

 

1,434,890

​

 

1,441,652

Depreciation and amortization

​

​

275,412

​

​

14,049

Lease liabilities

​

​

58,227

​

​

—

Investment in partnership

​

​

30,035

​

​

30,639

Gross deferred tax assets

​

 

38,273,766

​

 

10,142,394

Valuation allowance

​

 

(31,370,027)

​

 

(9,926,772)

Net deferred tax assets

​

​

6,903,739

​

​

215,622

​

​

​

​

​

​

​

Deferred tax liabilities:

​

​

​

​

​

​

Right-of-use asset

​

​

(55,341)

​

​

—

In-process research and development intangible assets

​

​

(17,741,842)

​

​

—

Prepaid expenses

​

​

(421,481)

​

​

(215,622)

Deferred tax liabilities

​

​

(18,218,664)

​

​

(215,622)

​

​

​

​

​

​

​

Net deferred taxes

​

$

(11,314,925)

​

$

—

​

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 2024 and 2023 tax years, the Company has capitalized $2,810,785 and $1,728,078 of research and development expenses, respectively.  

The Company has provided a full valuation allowance for its deferred tax asset as of December 31, 2023 due to the uncertainty surrounding the ability to realize these assets.  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, 2024 is reflected in the consolidated statement of operations.

The Company experienced a net change in valuation allowance of $21,443,255 and $1,244,274 for the years ended December 31, 2024 and 2023, 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 benefit are as follows:

​

​

​

​

​

​

​

​

​

 

As of December 31, 

​

    

2024

    

2023

Current:

​

​

​

​

​

​

Federal

​

$

—

​

$

—

State

​

​

—

​

​

—

Foreign

​

​

—

​

​

—

​

​

$

—

​

$

—

Deferred:

​

​

​

​

​

​

Federal

​

$

—

​

​

—

State

​

 

—

​

 

—

Foreign

​

 

(503)

​

 

—

​

​

$

(503)

​

$

—

​

​

​

​

​

​

​

Total income tax benefit

​

$

(503)

​

$

—

​