v3.26.3
Income Taxes
 12 Months Ended
Dec. 31, 2025
Chemomab Therapeutics Ltd [Member]  
Income Taxes

Note 11 - Income Taxes

 

  A. Tax rates

 

Ordinary taxable income in Israel is subject to a corporate tax rate of 23%.

 

Capital gain is subject to capital gain tax according to the corporate tax rate in the year the assets are sold.

 

The Company’s US subsidiary, Chemomab Therapeutics Inc. (“Chemomab Inc.) is taxed separately under the U.S. tax laws.

 

Chemomab Inc. is subject to a federal flat income tax rate of 21% and state income taxes as applicable.

 

 

Chemomab Therapeutics Ltd. and its subsidiaries

 

Notes to the Financial Statements as at December 31, 2025

 

 

Note 11 - Income Taxes (cont’d)

 

  B. Tax assessments

 

As of December 31, 2025, the Company’s tax assessments are considered final up to and including the following years: the tax assessment of Chemomab Ltd. for the year ended December 31, 2020, and the tax assessments of Chemomab Therapeutics Ltd. and Chemomab Therapeutics Israel Ltd. for the year ended December 31, 2019.

 

  C. Losses for tax purposes carried forward in future years

 

As of December 31, 2025 and 2024, the Company and its subsidiaries had net operating loss carryforwards of approximately $192 million and $176 million, respectively, which may be carried forward indefinitely to offset future taxable income, subject to applicable tax regulations in the relevant jurisdictions.

 

  D. Deferred taxes

 

    In respect of:

 

   December 31,   December 31, 
   2025   2024 
   USD thousands   USD thousands 
Net operating loss carryforward   44,464    *40,755 
Capital losses   3,271    - 
Share-based compensation expense   374    351 
Capitalized research and development costs   1,742    3,103 
Other   8    10 
Deferred tax assets   49,859    44,219 
Less - valuation allowance   (49,859)   (44,219)
           
Net deferred tax assets, net of valuation allowance   -    - 

 

*This excludes capital losses of approximately $14,223 thousands for which the Company has recorded a full valuation allowance.

 

 

Chemomab Therapeutics Ltd. and its subsidiaries

 

Notes to the Financial Statements as at December 31, 2025

 

 

Note 11 - Income Taxes (cont’d)

 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. A valuation allowance is provided when it is more likely than not that deferred tax assets will not be realized.

 

The Company has established a valuation allowance to offset deferred tax assets as of December 31, 2025 and 2024 due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets.

 

The Company realized a benefit of deferred tax assets in 2025 in the amount of $544 thousand which was offset by a valuation allowance.

 

  E. Roll forward of valuation allowance

 

   USD thousands 
Balance at December 31, 2022  $41,195 
Currency translation Income   (3,295)
Increase in valuation allowance   5,571 
Balance at December 31, 2023  $43,471 
Currency translation Income   (2,459)
Increase in valuation allowance   3,207 
Balance at December 31, 2024   44,219 
Increase in valuation allowance for capital losses   3,271 
Increase in valuation allowance   2,916 
Decrease in valuation allowance   (547)
Net increase during the year   5,640 
Balance at December 31, 2025   49,859 

 

 

Chemomab Therapeutics Ltd. and its subsidiaries

 

Notes to the Financial Statements as at December 31, 2025

 

 

Note 11 - Income Taxes (cont’d)

 

  F. Reconciliation of theoretical income tax expense to actual income tax expense

 

A reconciliation of the Company’s theoretical income tax expense at the Israeli statutory income tax rate, the income tax rate in our country of tax domicile, to actual income tax expense is as follows:

 

   2025 Amount   % 
Israeli statutory income tax rate   (2,069)   23.0%
Nontaxable income or nondeductible expenses:          
Share-based compensation   120    (1.3)%
Other   5    (0.1)%
Change in valuation allowance   2,297    (25.5)%
Other   (344)   3.8%
           
Foreign tax effects   (9)   0.1%
           
Actual income tax expenses   -    0.0%

 

   December 31,   December 31, 
   2024   2023 
   USD thousands   USD thousands 
         
Loss before income taxes   (13,945)   (24,221)
Statutory tax rate   23%   23%
Theoretical tax benefit   (3,207)   (5,571)
           
Change in temporary differences for which deferred taxes were not recognized   858    (1,177)
Tax rate differential   9    10 
Non-deductible expenses   148    346 
Losses and other items for which a valuation allowance was provided or benefit from loss carryforwards   2,192    6,392 
Actual income tax expense (Benefit)   -    - 

 

 

Chemomab Therapeutics Ltd. and its subsidiaries

 

Notes to the Financial Statements as at December 31, 2025

 

 

Note 11 - Income Taxes (cont’d)

 

  G. Income (Loss) Before Income Taxes by Jurisdiction

 

In respect of:

 

   2025   2024   2023 
   USD thousands   USD thousands   USD thousands 
Israel   (9,035)   (13,925)   (23,534)
Foreign   40    (20)   (687)
                
Total   (8,995)   (13,945)   (24,221)

 

  H. Accounting for uncertainty in income taxes

 

As of December 31, 2025, the Company did not have any unrecognized tax benefits and does not expect that the amount of unrecognized tax benefits will change significantly within the next 12 months. The Company’s accounting policy is to accrue interest and penalties related to income taxes as a component of income tax expense.