| INCOME TAXES |
| | A. | The Company files income tax returns in the U.S. federal jurisdiction
and in state and local jurisdictions and is subject to examination by the various taxing authorities. The Company’s income tax returns
since 2020 remain open and subject to examination. The statutory U.S. federal income tax rate is 21%. As of December 31, 2024, the Company
had total net operating losses in the U.S. of approximately $65,638, which may be carried forward and offset against taxable income in
the future. Utilization of carryforward losses and research and development tax credit carryforwards may be subject to an annual limitation
under Sections 382 and 383 of the Internal Revenue Code due to ownership changes that may have occurred previously or that could occur
in the future. These ownership changes may limit the amount of carryforward losses that can be utilized annually to offset future taxable
income. APT’s carryforward losses of $22,131 might be subject to Section 382 limitation. |
| | | |
| | B. | BiomX Israel and RondinX Ltd. file income tax returns in Israel. Their tax assessments through 2018 and 2022, respectively, are deemed to be final. The statutory Israeli income tax rate is 23%. |
| | C. | As of December 31, 2024 and 2023, BiomX Israel had total carryforward
losses in Israel of approximately $124,651 and $108,364 respectively, which may be offset against taxable income in the future for an
indefinite period. |
| | D. | Management has considered the Company’s history of cumulative net losses incurred since inception and its lack of commercialization of any products or generation of any revenue from product sales since inception and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the deferred tax assets as of December 31, 2024 and 2023. Management reevaluates the positive and negative evidence at each reporting period. |
| | | |
| | E. | The Company’s policy is to record estimated interest and penalties
related to uncertain tax positions in income tax expense. The Company has no amounts recorded for any unrecognized tax positions, accrued
interest nor penalties as of December 31, 2024 and 2023. |
| | | |
| | F. | On March 21, 2024, RondinX signed an agreement with the Israeli tax
authority in respect to an assessment for the years 2018-2022. The agreement concluded that RondinX’s IP and employees were transferred
to BiomX Israel on the acquisition date. As a result, RondinX had a capital gain equal to its carryforward losses of $2,785 (NIS 10,036
thousand) and no further payment will be required in respect of the years 2018-2022. |
A reconciliation of the U.S. federal statutory tax rate
and the effective tax rate is as follow:
| |
|
As of December 31, |
|
| |
|
2024 |
|
|
2023 |
|
| |
|
|
|
|
|
|
| Statutory U.S. federal income tax rate |
|
|
(21 |
)% |
|
|
(21 |
)% |
| U.S. vs foreign tax rate differential |
|
|
(2 |
) |
|
|
(2 |
) |
| Change in deferred tax asset valuation allowance |
|
|
23 |
|
|
|
23 |
|
| Effective tax rate |
|
|
- |
% |
|
|
- |
% |
Loss before taxes on income, consists of the following:
| |
|
Year ended
December 31, |
|
| |
|
2024 |
|
|
2023 |
|
| |
|
|
|
|
|
|
| United States |
|
|
(3,511 |
) |
|
|
6,085 |
|
| Israel |
|
|
21,225 |
|
|
|
20,061 |
|
| |
|
|
17,714 |
|
|
|
26,146 |
|
Net deferred tax assets as of December
31, 2024 and 2023 consisted of the following:
| |
|
As of December 31, |
|
| |
|
2024 |
|
|
2023 |
|
| |
|
|
|
|
|
|
| Deferred tax assets: |
|
|
|
|
|
|
| Net operating loss carryforwards |
|
|
42,454 |
|
|
|
29,047 |
|
| Research and development expenses, net |
|
|
10,898 |
|
|
|
2,982 |
|
| Lease liability |
|
|
785 |
|
|
|
898 |
|
| Research and development tax credits (*) |
|
|
601 |
|
|
|
- |
|
| Other |
|
|
838 |
|
|
|
200 |
|
| Total deferred tax assets |
|
|
55,576 |
|
|
|
33,127 |
|
| Deferred tax liabilities: |
|
|
|
|
|
|
|
|
| Right of use assets |
|
|
(847 |
) |
|
|
(964 |
) |
| IPR&D - Intangible Asset |
|
|
(127 |
) |
|
|
- |
|
| Private Placement Warrants |
|
|
(5,571 |
) |
|
|
- |
|
| Fixed assets |
|
|
(190 |
) |
|
|
(16 |
) |
| Total deferred tax liabilities |
|
|
(6,735 |
) |
|
|
(980 |
) |
| Valuation allowance |
|
|
(48,841 |
) |
|
|
(32,147 |
) |
| Net deferred tax assets |
|
|
- |
|
|
|
- |
|
|
(*) |
Research and development tax credits will begin to expire in
2038. |
|