BiomX Inc. Income Taxes Disclosure
| NOTE 16 - | INCOME TAXES |
| A. | The Company files income tax returns in the U.S. federal jurisdiction and in and is subject to examination by the various taxing authorities. The Company’s income tax returns since 2021 remain open and subject to examination. The statutory U.S. federal income tax rate is 21%. As of December 31, 2025, the Company had total net operating losses in the U.S. of approximately $85,570, 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 files income tax returns in Israel. Its tax assessments through 2020 are deemed to be final. The statutory Israeli income tax rate is 23%. |
| C. | As of December 31, 2025 and 2024, BiomX Israel had total carryforward losses in Israel of approximately $146,128 and $126,428 respectively. |
| 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, 2025 and 2024. 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, 2025 and 2024. |
The following table presents the reconciliation between the Company’s theoretical income tax and effective income tax for the year ended December 31, 2025 after the adoption of ASU 2023-09:
| 2025 | 2024 | |||||||||||||||
| $ | % | $ | % | |||||||||||||
| U.S. federal Statutory tax rate | (7,600 | ) | (21 | ) | (3,720 | ) | (21 | ) | ||||||||
| Foreign tax effects: | ||||||||||||||||
| Israel | ||||||||||||||||
| Statutory tax rate difference | (481 | ) | (1.33 | ) | (428 | ) | (2.42 | ) | ||||||||
| Change in valuation allowance | 5,336 | 14.74 | 4,190 | 23.65 | ||||||||||||
| Stock-based compensation | 428 | 1.18 | 329 | 1.86 | ||||||||||||
| Other nondeductible items | (18 | ) | (0.05 | ) | (18 | ) | (0.1 | ) | ||||||||
| Nontaxable or Nondeductible items: | ||||||||||||||||
| Stock-based compensation | 154 | 0.87 | ||||||||||||||
| Gain from early lease termination | (819 | ) | (2.26 | ) | ||||||||||||
| Change in valuation allowance | 3,440 | 9.5 | (924 | ) | (5.22 | ) | ||||||||||
| Other adjustments | (279 | ) | (0.76 | ) | 430 | 2.43 | ||||||||||
| Total Effective Tax Rate | 7 | 0.02 | 13 | 0.07 | ||||||||||||
Loss before taxes on income, consists of the following:
| Year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Domestic - United States | 12,145 | (3,511 | ) | |||||
| Foreign - Israel | 24,047 | 21,225 | ||||||
| 36,192 | 17,714 | |||||||
Net deferred tax assets as of December 31, 2025 and 2024 consisted of the following:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforwards | 51,579 | 42,454 | ||||||
| Research and development expenses, net | 8,737 | 10,898 | ||||||
| Lease liability | 785 | |||||||
| Research and development tax credits (*) | 601 | 601 | ||||||
| Fixed assets | 310 | |||||||
| IPR&D - Intangible Asset | 2,192 | |||||||
| Other | 1,038 | 838 | ||||||
| Total deferred tax assets | 64,457 | 55,576 | ||||||
| Deferred tax liabilities: | ||||||||
| Right of use assets | (847 | ) | ||||||
| IPR&D - Intangible Asset | (127 | ) | ||||||
| Private Placement Warrants | (6,840 | ) | (5,571 | ) | ||||
| Fixed assets | (190 | ) | ||||||
| Total deferred tax liabilities | (6,840 | ) | (6,735 | ) | ||||
| Valuation allowance | (57,617 | ) | (48,841 | ) | ||||
| Net deferred tax assets | ||||||||
| (*) | Research and development tax credits will begin to expire in 2038. |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.