|
NOTE 12 - INCOME TAXES:
| |
a. |
The Company and its Subsidiary
are subject to U.S. and Israeli income tax laws. |
| | b. | The US entity is subject to a federal income tax rate of 21% in 2019 and thereafter and State taxes of 9%. The Subsidiary is subject to ordinary corporate income tax rate of 23% in 2019 and thereafter. |
| |
c. |
Carryforward tax losses: |
As of December 31, 2025, the Company
net operating loss carry forwards is 0.
As of December 31, 2025, the Company’s
subsidiary has net operating loss carry forwards of approximately $127 million. Net operating loss carry forwards relating to activity
in Israel have an indefinite carry forward period.
Utilization of the U.S. federal and state
net operating losses may be subject to a substantial limitation due to the change in ownership limitations provided by the Internal Revenue
Code of 1986, as amended and similar to state provisions. The annual limitation may result in the expiration of the net operating losses
and credits before their utilization.
| | d. | Loss before taxes on income are comprised as follows: |
| |
|
Year Ended
December 31 |
|
| |
|
2025 |
|
|
2024 |
|
| |
|
U.S. dollars in thousands |
|
| Domestic |
|
|
(1,672 |
) |
|
|
(1,439 |
) |
| Foreign Subsidiary |
|
|
(6,589 |
) |
|
|
(2,935 |
) |
| Total |
|
|
(8,261 |
) |
|
|
(4,374 |
) |
| |
e. |
Reconciliation of the theoretical
tax expense to actual tax expense: |
The main reconciling item between the statutory
tax rate of the Company and the effective rate is the provision for a full valuation allowance in respect of tax benefits from carry
forward tax losses due to the uncertainty of the realization of such tax benefits.
| |
f. |
The Company’s major
tax jurisdictions are the United States and Israel. Due to unutilized net operating losses and research credits, the tax years from
2018 remain open and subject to examinations by the appropriate governmental agencies in the United States. For the Company’s
subsidiary, the tax years from 2019 and later remain open for examination by the tax authorities. |
| | g. | The components of the Company’s net deferred tax assets were as follows: |
| |
|
Year Ended
December 31 |
|
| |
|
2025 |
|
|
2024 |
|
| |
|
U.S. dollars in thousands |
|
| Deferred tax assets: |
|
|
|
|
|
|
| Loss carryforwards |
|
|
30,759 |
|
|
|
29,299 |
|
| Valuation allowance |
|
|
(30,759 |
) |
|
|
(29,299 |
) |
| Total net deferred tax assets |
|
|
- |
|
|
|
- |
|
The valuation allowance could
be reduced or eliminated based on future earnings and future estimates of taxable income.
Changes in valuation allowance for deferred
tax assets were as follows:
| |
|
Year Ended
December 31 |
|
| |
|
2025 |
|
|
2024 |
|
| |
|
U.S. dollars in thousands |
|
| Valuation allowance at beginning of year |
|
|
29,299 |
|
|
|
28,746 |
|
| Changes in valuation allowance |
|
|
1,460 |
|
|
|
553 |
|
| Valuation allowance at end of year |
|
|
30,759 |
|
|
|
29,299 |
|
|