Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

Taxes on Income

Taxes on Income
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Taxes on Income



The Company files its income tax report in the State of Israel and is subject to taxation laws applicable in Israel.


1. In December 2016, the Israeli parliament passed the Economic Efficiency Law (Legislative Amendments to Achieve Budget Targets for the 2017 and 2018 Budget), which set a further reduction of corporate tax from 25% to 23%. The provisions of the law included a Temporary Order stipulate that the corporate tax rate in 2017 will be 24%. As a result, the corporate tax rate in effect from 2018 onwards is 23%.
2. The Company has final (considered final) tax assessments through the 2013 tax year.
3. As of December 31, 2019, the Company has carried forward losses for Israeli income tax purposes of approximately $6.9 million which can be offset against future taxable income for an indefinite period of time.
4. Deferred income taxes reflect the net tax effects of net operating loss and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are as follows:


    As of December, 31  
Composition of deferred tax assets:   2019     2018  
Net operating loss carry-forward   $ 1,585,272     $ 991,987  
Research and development credits     112,149       63,439  
Others     8,556       2,946  
Net deferred tax asset before valuation allowance     1,705,976       1,058,371  
Valuation allowance     (1,705,976 )     (1,058,371 )
Net deferred tax assets   $ -     $ -  


    Year Ended December 31,  
    2019     2018     2017  
Tax rate     23 %     23 %     24 %
Tax expense (benefit) at statutory rate   $ 2,054,113     $ 105,234     $ 642,090  
Tax rate differential     -       -       28,057  
Change in taxes from permanent differences in stock-based compensation     639,504       10,964       27,301  
Change in taxes from permanent difference in derivative warrants liabilities and convertible loans     858,307       (212,959 )     304,254  
Change in temporary differences     111,480       -       -  
Others     1,925       -       -  
Loss carryforwards     442,897       307,229       282,478  
Income tax expense (benefit)   $ -     $ -     $ -  


In assessing the realization of deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible and net operating losses are utilized. Based on consideration of these factors, the Company recorded a full valuation allowance at December 31, 2019 and 2018.


1. For the years ended December 31, 2019, 2018 and 2017, the following table reconciles the statutory income tax rate to the effective income tax rate: