Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.22.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

(7) Income Taxes

 

Tax positions must meet a “more likely than not” recognition threshold at the effective date to be recognized. At December 31, 2021 and 2020, the Company did not have any uncertain tax positions. No interest and penalties related to uncertain tax positions were accrued at December 31, 2021 and 2020. Our tax returns for fiscal years 2018, 2019 and 2020 are open to examination.

 

Significant items making up the deferred tax assets and deferred tax liabilities as of December 31, 2021 and 2020 are as follows:

 

    2021     2020  
Long term deferred taxes:                
Inventories   $ 93,570     $ 93,570  
Accrued expenses     91,792       156,699  
Other     15,169       15,169  
Non-cash, stock-based compensation, nonqualified     814,202       1,206,664  
Impairment loss on investment     104,609       104,609  
Operating loss carry forwards and tax credits     28,435,535       22,062,690  
Less: valuation allowance     (29,554,877 )     (23,639,401 )
Total net deferred tax assets   $ -     $ -  

 

A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. Accordingly, we established a valuation allowance in 2021 and 2020 for the full amount of our deferred tax assets for the uncertainty of realization. We believe that based on our projection of future taxable operating income for the foreseeable future, it is more likely than not that we will not be able to realize the benefit of the deferred tax asset at December 31, 2021.

 

We have net operating loss carry-forwards for federal income tax purposes of approximately $98,933,918 as of December 31, 2021. Included in these numbers are loss carry-forwards that were obtained through the acquisition of BioSeq, Inc. and are subject to Section 382 NOL limitations. These net operating loss carry-forwards expire at various dates from 2022 through 2037. Under the Tax Reform Act, NOL’s generated after December 31, 2017 can offset only 80% of a corporation’s taxable income in any year. With limited exceptions, NOL’s generated after 2017, $57,298,328, cannot be carried back, but they can be carried forward indefinitely.

 

 

We have net operating loss carry-forwards for state income tax purposes of approximately $94,663,553 at December 31, 2021. These net operating loss carry-forwards expire at various dates from 2031 through 2038.

 

We have research and development tax credit carry-forwards for federal income tax purposes of approximately $1,288,308 as of December 31, 2021 and research and development tax credit carry-forwards for state income tax purposes of approximately $306,425 as of December 31, 2021. The federal credit carry-forwards expire at various dates from 2022 through 2037. The state credit carry-forwards expire at various dates from 2023 through 2034.

 

The following table reconciles the U.S. Federal statutory tax rate to the Company’s effective tax rate:

 

    2021     2020  
Statutory U.S. Federal tax rate     21 %     21 %
Permanent differences     (0 )%     (0 )%
State tax expense     0 %     0 %
Refundable AMT and R&D tax credit     0 %     0 %
Valuation allowance     (21 )%     (21 )%
Effective tax rate     - %     - %