Company: INDP
Filing Date: 2025-02-12
Form Type: S-1
Source: 0001493152-25-006068
Chunk: 166

Company: Indaptus Therapeutics, Inc.
Filing Date: 2025-02-12
Form: S-1
Chunk 166
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 that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward periods. Because of the Company’s recent history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a full valuation allowance for the years ended December 31, 2023 and 2022. The net change in total valuation allowance for the years ended December 31, 2023 and 2022 was an increase of $ 2.5million and decrease of $ 1.5million respectively.

At December 31, 2023, the Company has United States federal and state net operating loss (NOL) carryforwards of $ 26.9million and $ 7.4million, respectively. The federal NOL carryforwards generated in pre-2018 tax years of $ 0.8million will begin to expire in 2036 while federal NOLs generated after 2017 of $ 26.1million will carry forward indefinitely. The state NOL carryforwards of $ 7.4million will begin to expire in 2035 unless previously utilized. At December 31, 2023, the Company also had Israel NOL carryforwards of $ 198.6million. The Israel NOLs carry forward indefinitely.

The Company’s ability to utilize its net operating losses may be limited under Section 382 and 383 of the Internal Revenue Code. The limitations apply if an ownership change, as defined by Section 382, occurs. Generally, an ownership change occurs when certain shareholders increase their aggregate ownership by more than 50 percentage points over their lowest ownership percentage in a testing period (typically three years). Although the Company has not undergone a Section 382 analysis, it is possible that the utilization of the net operating losses could be substantially limited. Additionally, U.S. tax laws limit the time during which these carryforwards may be utilized against future taxes. As a result, the Company may not be able to take full advantage of these carryforwards for federal and state tax purposes. Future changes in stock ownership may also trigger an ownership change and, consequently, a Section 382 limitation.

The Company recognizes the benefit of tax positions taken or expected to be taken in its tax returns in the consolidated financial statements when it is more likely than not that the position will be sustained