TAXES ON INCOME:

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

TAXES ON INCOME:

NOTE 11 - TAXES ON INCOME:

a. Tax laws applicable to the Company and its subsidiaries

Taxation in the United States

InspireMD, Inc. is taxed under U.S. tax laws. Accordingly, the applicable federal corporate tax rate in 2024 and 2023 is 21%. The applicable state income tax rate in 2024 and 2023 is 3.42%.

Taxation in Israel

InspiredMD, Ltd is taxed under Israeli tax laws. Accordingly, the applicable corporate tax rate in 2024 and 2023 is 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 2024 and 2023

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

On December 29, 2016, the Investment Law was amended (“73 Amendment”), which includes, inter alia, two new tax incentive opportunities. These are the Preferred Technological Enterprise (“PTE”) and Special Preferred Technological Enterprise (“SPTE”). In order to benefit from either of these options, a company must meet certain qualifications and receive formal approval from the Israel Innovation Authority (“IIA”) which allows the company to use the reduced corporate tax rate of 12% on its “Preferred Technological Income” (earned from enterprises located in Development outside of Zone A) in the case of a “preferred technology enterprise”, or 6% on its “preferred technology income” (earned from enterprises located in Development Zone A or outside it) in the case of a “special preferred technology enterprise”. Additionally, any “technology income”, as this term is defined by the Law, not classified as “preferred technology income” is subject to the corporate tax rate.

Furthermore, according to the provisions regarding “preferred technology enterprise” and “special preferred technology enterprise” in the Law and the regulations thereunder, and to the extent the income is attributable to manufacturing, this income is classified as “preferred income” and is taxed at 7.5% or 16% according to the development zone. To the extent the income is from an intangible asset used for marketing, it is subject to the normal corporate tax rate.

Additionally, when income of a company originating from “preferred technology income” is distributed as dividend to a foreign-resident corporation, tax withholding from the dividend is 4%, provided that 90% or more of that company’s shares are directly held by one or more foreign corporations, and the profits resulted after they acquired the shares.

c. Carry forward tax losses

As of December 31, 2024, the Company had a net carry forward tax loss of approximately $60 million, of which approximately $35 million (arising before January 1, 2018), expires until 2038, and approximately $25 million, which does not expire, but is limited to offset 80% of the net income in the year it is utilized.

Under the U.S. tax laws, for net operating losses (NOLs) arising after December 31, 2017, the Tax Cuts and Jobs Act enacted on December 22, 2017 (the “2017 Act”) limits a taxpayer’s ability to utilize NOL carryforwards to 80% of taxable income.

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

In addition, NOLs arising after 2017 can be carried forward indefinitely, but carryback is generally prohibited. NOLs generated in tax years beginning before January 1, 2018, will not be subject to the foregoing taxable income limitation and will continue to have a two-year carryback and twenty-year carryforward period.

As of December 31, 2024 and 2023, InspireMD Ltd., an Israeli subsidiary, had a net carry forward tax loss of approximately $126 and $107 million. Under Israeli tax laws, the carry forward tax losses can be utilized indefinitely.

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

d. Loss before income taxes

The components of loss before income taxes are as follows:

	Year ended December 31
	2024			2023
	($ in thousands)
Loss before taxes on income:
InspireMD, Inc.	$	(10,385	)	$	(5,772	)
Subsidiaries		(21,561	)		(14,079	)
	$	(31,946	)	$	(19,851	)

NOTE 11 - TAXES ON INCOME (continued):

e. Current taxes on income

The main reconciling item between the statutory tax rate of the Company and its subsidiaries and the effective tax rate is the change in valuation allowance in respect of tax benefits from carried forward tax losses due to uncertainty of the realization of such tax benefits.

The changes in the valuation allowance for the years ended December 31, 2024 and 2023 were as follows:

	Year ended December 31
	2024		2023
	($ in thousands)
Balance at the beginning of the year	$	42,651	$	40,071
Changes during the year:
Losses during the year (including foreign exchange rate effect)		5,779		2,580
Balance at the end of the year	$	48,430	$	42,651

INSPIREMD, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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, 2024 and 2023:

	Year ended December 31,
	2024		2023
	($ in thousands)
Balance at beginning of the year	$	168	$	106
Additions related to uncertain tax positions taken this year		57		62
Balance at end of the year	$	225	$	168

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

Jurisdiction	Years
U.S.	2021-2024
Israel	2020-2024
Germany	2021-2024

NOTE 11 - TAXES ON INCOME (continued):

g. Deferred income tax:

	December 31,
	2024			2023
	($ in thousands)
Provision for vacation and recreation pay		82			68
R&D expenses		2,204			1,691
Operating lease right of use assets		(525	)		(339	)
Operating lease liabilities		554			367
Share-based compensation		4,489			3,492
Marketable securities		(100	)		-
Carry forward tax losses		41,699			37,342
Accrued severance pay, net		27			30
		48,430			42,651
Less-valuation allowance		(48,430	)		(42,651	)
		-			-