Company: INDP
Filing Date: 2025-03-13
Form Type: 10-K
Source: 0001493152-25-010136
Chunk: 130

Company: Indaptus Therapeutics, Inc.
Filing Date: 2025-03-13
Form: 10-K
Item: Item 1
Chunk 130
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. 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, 2024 and 2023. The net change in total valuation allowance for the years ended December 31, 2024 and 2023 was an increase
of $2.5 million and increase of $2.5 million respectively.

At
December 31, 2024, the Company has United States federal and state net operating loss (NOL) carryforwards of $35.3 million and $7.6 million,
respectively. The federal NOL carryforwards generated in pre-2018 tax years of $0.8 million will begin to expire in 2036 while federal
NOLs generated after 2017 of $34.4 million will carry forward indefinitely. The state NOL carryforwards of $7.6 million will begin to
expire in 2035 unless previously utilized. At December 31, 2024, the Company also had Israel NOL carryforwards of $197.9 million. 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 upon examination by authorities. Recognized tax positions are measured
at the largest amount of benefit that is greater than 50% likely