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INCOME TAXES | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE 9 – INCOME TAXES Income tax expense differs from the statutory amounts as follows:
|  | 2017 |  | 2016 |
Income taxes at U.S. statutory rate |  | $ | (9,289,000) |  | $ | (7,437,000) |
Current year reserve |  |  | (25,175,000) |  |  | 7,423,000 |
Expenses not deductible |  |  | 46,000 |  |  | 14,000 |
Rate change |  |  | 34,418,000 |  |  | - |
Total tax expense |  | $ | - |  | $ | - |
Deferred taxes are provided for the temporary differences between the financial reporting bases and the tax bases of our assets and liabilities. The temporary differences that give rise to deferred tax assets and liabilities were as follows:
|  | December 31, |
|  | 2017 |  | 2016 |
Deferred tax assets (liabilities): |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 50,029,000 |  | $ | 73,864,000 |
General business credit carryforwards |  |  | 3,227,000 |  |  | 2,557,000 |
State credits |  |  | 3,089,000 |  |  | 3,089,000 |
Property, equipment and goodwill |  |  | (28,000) |  |  | (23,000) |
Stock options |  |  | 5,122,000 |  |  | 6,450,000 |
Derivatives |  |  | (57,000) |  |  | (92,000) |
Deferred revenue |  |  | 778,000 |  |  | 1,464,000 |
Intangible assets |  |  | 379,000 |  |  | 228,000 |
Accrued interest |  |  | 156,000 |  |  | 253,000 |
Other |  |  | 143,000 |  |  | 231,000 |
Gross deferred tax assets |  |  | 62,838,000 |  |  | 88,021,000 |
Valuation allowance |  |  | (62,838,000) |  |  | (88,021,000) |
Net deferred taxes |  | $ | - |  | $ | - |
At December 31, 2017, we had approximately $238,235,000 of net operating loss carryforwards and approximately $2,654,000 of general business credit carryforwards. These carryforwards expire as follows:
|  | Net operating loss carryforwards |  | General business credit carryforwards |
2018 |  | $ | 3,324,000 |  | $ | 112,000 |
2019 |  |  | 3,306,000 |  |  | 95,000 |
2020 |  |  | 5,125,000 |  |  | 226,000 |
2021 |  |  | 5,378,000 |  |  | 56,000 |
Thereafter |  |  | 221,102,000 |  |  | 2,165,000 |
|  | $ | 238,235,000 |  | $ | 2,654,000 |
As a result of a merger on January 25, 1996, a change in control occurred for federal income tax purposes, which limits the utilization of pre-merger net operating loss carryforwards of approximately $3,100,000 to approximately $530,000 per year. Additionally, we acquired MacroChem Corporation on February 25, 2009. The corporation was a loss company at the time of the acquisition. Therefore, the net operating losses related to the acquisition may be subject to annual limitations as provided by Internal Revenue Code Sec. 382. On December 22, 2017, President Donald Trump signed the Tax Cuts and Jobs Act. The Act reduces the US federal corporate tax rate from 34% to 21%. At December 31, 2017 we have not completed our accounting for the tax effects of enactment of the Act. However, in certain cases, as described below, we have made a reasonable estimate of the effects on our existing deferred tax balances. Deferred tax assets and liabilities: We recalculated the deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, we are still analyzing certain aspects of the Act and refining our calculations, which could potentially affect the recalculation of these balances. The provisional amount recorded related to the recalculation of deferred tax balances is $34,418,000.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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