InspireMD, Inc. Income Taxes Disclosure

NOTE 10 - TAXES ON INCOME:

 

a.

Tax laws applicable to the Company and its subsidiaries

 

Taxation in the United States

 

The Company is subject to U.S. federal income tax at a statutory rate of 21% and state income taxes at varying rates.

 

Taxation in Israel

 

InspireMD Ltd., the Company’s Israeli subsidiary, is subject to Israeli corporate income tax at a statutory rate of 23%.

 

Taxation in Germany

 

InspireMD GmbH is taxed according to the tax laws in Germany. Accordingly, the applicable tax rates are corporate tax rate of 15.825% and trade tax rate of 17.15% in 2025 and 2024.

 

b.

Tax benefits under the Law for the Encouragement of Capital Investments, 1959 (the “Law”):

 

The Israeli subsidiary may qualify for tax benefits under the Law for the Encouragement of Capital Investments, 1959. As of December 31, 2025 and 2024 the Company has not recognized any material tax benefit related to such incentives due to cumulative losses and the existence of a full valuation allowance.

 

c.

Carry forward tax losses

 

As of December 31, 2025, the Company had U.S. federal net operating loss (“NOLs”) carryforwards of approximately $66 million. Of this amount, approximately $35 million arose prior to January 1, 2018 and expire through 2038. Net operating losses generated after December 31, 2017 may be carried forward indefinitely but are limited to offsetting 80% of taxable income in the year utilized.

 

As of December 31, 2025, and 2024, InspireMD Ltd., the Company’s Israeli subsidiary, had a net carry forward tax loss of approximately $180 and $126 million. Under Israeli tax laws, the carry forward tax losses can be utilized indefinitely.

 

The Company’s Israeli subsidiary is taxed in New Israeli Shekel (“NIS”), which is different from its functional currency (U.S. Dollar). The change in the Company’s Israeli subsidiary NOLs for tax purposes partly resulted by such rate differences.

 

d.

Loss before income taxes

 

The components of loss before income taxes are as follows:

 SCHEDULE OF COMPONENTS OF LOSS BEFORE INCOME TAXES

		Year ended December 31
		2025				2024
		($ in thousands)
Loss before taxes on income:
InspireMD, Inc.		$	(10,834	)		$	(10,385	)
Subsidiaries			(37,889	)			(21,561	)
		$	(48,723	)		$	(31,946	)

 

 

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

 

e.

Changes in valuation allowance

 

The changes in the valuation allowance for the years ended December 31, 2025, and 2024 were as follows:

 SCHEDULE OF CHANGES IN VALUATION ALLOWANCE

		Year ended December 31
		2025				2024
		($ in thousands)
Balance at the beginning of the year		$	48,430			$	42,651
Changes during the year			15,138				5,779
Balance at the end of the year		$	63,568			$	48,430

 

f.

Accounting for Uncertain Tax positions

 

The following is a reconciliation of the total amounts of the Company’s uncertain tax positions during the years ended December 31, 2025, and 2024:

 SCHEDULE OF RECONCILIATION OF UNCERTAIN TAX POSITIONS

		Year ended December 31,
		2025				2024
		($ in thousands)
Balance at beginning of the year		$	225			$	168
Additions related to uncertain tax positions taken this year			61				57
Balance at end of the year		$	286			$	225

 

A summary of open tax years by major jurisdiction is presented below:

 SCHEDULE OF OPEN TAX YEARS BY MAJOR JURISDICTION

Jurisdiction			Years
U.S.			2021-2025
Israel			2021-2025
Germany			2022-2025

 

g.

Deferred income tax:

 SCHEDULE OF DEFERRED INCOME TAX

		2025				2024
		December 31,
		2025				2024
		($ in thousands)
Carry forward tax losses			55,346				41,699
Provision for vacation and recreation pay			98				82
R&D expenses			2,843				2,204
Operating lease right of use assets			(613	)			(525	)
Operating lease liabilities			735				554
Share-based compensation			5,174				4,489
Marketable securities			(41	)			(100	)
Accrued severance pay, net			26				27
Deferred tax assets noncurrent			63,568				48,430
Less-valuation allowance			(63,568	)			(48,430	)
Deferred tax assets			-				-

 

h.

Reconciliation of Statutory Federal Income Tax Rate to the Effective Income Tax Rate:

 

The provision for income taxes differs from the expected amount calculated by applying the Company’s federal statutory rate to loss before tax expenses for 2025 and 2024 as follows:

 SCHEDULE OF EFFECTIVE INCOME TAX RATE

			$				%
		2025								2024
		($ in thousands)
			$				%
US federal statutory			(10,232	)			21				(6,709	)			21
Foreign tax effects
Israel
Statutory tax rate differences between United States and Israel			(758	)			1.6				(428	)			1.3
Difference resulting from using NIS as the measurement basis for tax purposes			(4,627	)			9.5				223				(0.7	)
Changes in valuation allowance			13,096				(26.9	)			3,590				(11.2	)
Non- taxable or non-deductible items			1,171				(2.4	)			1,020				(3.2	)
Other adjustments			(254	)			(0.5	)			-				-
Changes in valuation allowance			2,043				(4.2	)			2,189				(6.9	)
Non- taxable or non-deductible items			27				(-0.1)				1				(0.0	)
Changes in unrecognized tax benefits			61				(-0.1)				57				(0.2	)
Other adjustments			(464	)			1.0				116				(0.4	)
Effective tax expense			63				-				59				-

 

 

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)