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Note 9 - Income Taxes | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | 9. Income Taxes Since inception, the Company has incurred net losses, and until 2018, had not recorded any U.S. federal or state income tax benefits for the losses. In 2018, as a result of the change in net operating loss carryforward period associated with the 2017 Tax Act, the Company recognized an income tax benefit to reflect the adjustment allowed by the 2017 Tax Act to utilize indefinite deferred tax liabilities as a source of income against indefinite lived portions of the Company's deferred tax assets. In 2019, as a result of a change in ownership under the provisions of Internal Revenue Code Section 382, the cumulative benefit of net operating losses was remeasured which resulted in tax expense to reverse the 2018 benefit recorded and record a benefit relative to losses incurred in 2019 after the date of the change in ownership. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect for years in which differences are expected to reverse. Significant components of the Company's deferred tax assets for federal income taxes consisted of the following:
Deferred tax assets |  | December 31, 2020 |  |  | December 31, 2019 |
Net operating loss carryforwards |  | $ | 3,864,189 |  |  | $ | 1,504,496 |
Stock-based compensation |  |  | 1,571,227 |  |  |  | 1,381,750 |
Orphan Drug credits |  |  | 541,384 |  |  |  | 81,700 |
Lease liability |  |  | 38,394 |  |  |  | 63,589 |
Capitalized start-up costs and other |  |  | 10,709,631 |  |  |  | 9,187,898 |
Valuation allowance |  |  | (14,906,646 | ) |  |  | (12,051,440 | )
Deferred tax assets |  |  | 1,818,179 |  |  |  | 167,993 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Intangible assets |  |  | (2,223,678 | ) |  |  | (2,223,678 | )
Right of use asset |  |  | (38,394 | ) |  |  | (63,589 | )
Deferred tax liabilities |  |  | (2,262,072 | ) |  |  | (2,287,267 | )
Net deferred tax liability |  | $ | (443,893 | ) |  | $ | (2,119,274 | )
The Company does not have unrecognized tax benefits as of December 31, 2020 or December 31, 2019. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. The Company had NOL carryforwards for federal and state income tax purposes at December 31, 2020 and 2019 of approximately:
Combined NOL Carryforwards: |  | December 31, 2020 |  |  | December 31, 2019 |
Federal |  | $ | 15,013,388 |  |  | $ | 5,844,972 |
State |  |  | 15,007,966 |  |  |  | 5,844,972 |
The pre- 2018 net operating loss carryforwards begin expiring in 2020 for both federal and state income tax purposes. In November 2019, as a result of a change of ownership, under the provisions of Internal Revenue Code Section 382 and similar state provisions, the Company's ability to utilize their net operating loss carryforwards to offset future income was limited. The Company recorded a valuation allowance against a portion of their deferred tax assets as of December 31, 2020 because of the uncertainty of their realization. A reconciliation of income tax benefit at the statutory federal income tax rate and income taxes as reflected in the consolidated financial statements is as follows:
Rate reconciliation: |  | December 31, 2020 |  |  | December 31, 2019 |
Federal tax benefit at statutory rate |  |  | (21.0 | )% |  |  | (21.0 | )%
State tax, net of Federal benefit |  |  | (4.7 | )% |  |  | (2.5 | )%
Orphan drug credit |  |  | (2.9 | )% |  |  | 25.3 | %
Change in valuation allowance |  |  | 18.1 | % |  |  | (7.5 | )%
Stock compensation |  |  | — | % |  |  | 8.6 | %
Other |  |  | — | % |  |  | 0.1 | %
Total provision |  |  | (10.5 | )% |  |  | 3.0 | %
The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company's 2017 to 2019 tax years remain open and subject to examination.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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