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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 8 - INCOME TAXES

 

No provision or benefit for federal or state income taxes has been recorded because the Company has incurred net losses for all periods presented and has recorded a valuation allowance against its deferred tax assets.

 

The components of the Company’s deferred tax assets are as follows at:

 

   December 31,
2021		   December 31,
2020		 
Deferred tax assets:        
Federal net operating loss  $19,434,000   $15,227,000 
State net operating loss   12,508,000    9,361,000 
Research and development tax credits   5,333,000    3,407,000 
Capitalized R&D   38,360,000    14,387,000 
Nonqualified Stock Options   15,511,000    7,352,000 
Accruals   655,000    645,000 
Intangibles and Fixed Assets   4,394,000    41,000 
Less: valuation allowance   (96,195,000)   (50,420,000)
Total  $
-
   $
-
 

 

On March 27, 2020, the Coronavirus Aid Relief and Economic Security (“CARES”) Act was signed into law.  The Act contains several new or changed income tax provisions, including but not limited to the following: increased limitation threshold for determining deductible interest expense, class life changes to qualified improvements (in general, from 39 years to 15 years) and the ability to carry back net operating losses (“NOLs”) incurred from tax years 2018 through 2020 up to the five preceding tax years.  Most of these provisions are either not applicable or have no material effect on the Company. 

 

The Company has maintained a full valuation allowance against its deferred tax assets at December 31, 2021 and 2020. A valuation allowance is required to be recorded when it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Since the Company cannot be assured of realizing the net deferred tax asset, a full valuation allowance has been provided. The valuation allowance increased/(decreased) for the years ended December 31, 2021 and 2020 by approximately $45,775,000 and $24,469,000, respectively. Deferred tax asset for net operating loss carryforwards at December 31, 2021 was adjusted with the corresponding offset to valuation allowance.

 

At December 31, 2021, the Company had federal, New York State and New York City net operating loss (NOL) carryforwards of approximately $92,543,000, $91,755,000 and $91,371,000 respectively, which begin expiring in 2027, 2032 and 2032 respectively. Approximately $47,072,000 federal NOL can be carried forward indefinitely but it is limited to 80% of future taxable income. The Company also has federal research and development tax credit carryforwards of approximately $5,308,000 that will begin to expire in 2028. The Company's ability to use its NOL carryforwards may be limited if it experiences an "ownership change" as defined in Section 382 ("Section 382") of the Internal Revenue Code of 1986, as amended. An ownership change generally occurs if certain stockholders increase their aggregate percentage ownership of a corporation's stock by more than 50 percentage points over their lowest percentage ownership at any time during the testing period, which is generally the three-year period preceding any potential ownership change. The Company has not completed an analysis to determine whether any such limitations have been triggered as of December 31, 2021.  

 

A reconciliation of the statutory tax rate to the effective tax rate is as follows:

 

   Year Ended
December 31,
2021		   Year Ended
December 31,
2020		 
Statutory federal income tax rate   21.00%   21.00%
State (net of federal benefit)   14.22%   15.50%
Non-deductible expenses   (0.38)%   0.42%
R&D Credit   1.53%   3.21%
Other   0.02%   1.01%
Change in valuation allowance   (36.41)%   (41.15)%
Effective income tax rate   0%   0%

 

The Company does not have any uncertain tax positions at December 31, 2021 and 2020, that would affect its effective tax rate. The Company does not anticipate a significant change in the amount of unrecognized tax benefits over the next twelve months. Because the Company is in a loss carryforward position, the Company is generally subject to US federal and state income tax examinations by tax authorities for all years for which a loss carryforward is available. If and when applicable, the Company will recognize interest and penalties as part of income tax expense.