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Income Taxes
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes

(5) Income Taxes

 

Since inception, the Company has incurred losses from operations and as a result has not recorded income tax expense. Benefits related to net operating loss carry-forwards and deferred items have been fully reserved because it is not more likely than not that the Company will achieve profitable operations. The difference between the total income taxes at the federal statutory rate for each of the years ended December 31, 2020 and 2019 and the fact that no income tax benefit was recorded in each of these years are attributable to the change in the valuation allowance recorded in each year.

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at December 31, 2020 and 2019 are presented below:

 

    2020     2019  
Deferred tax assets:                
Depreciation   $ 117,000     $ 102,000  
Allowance for bad debts     202,000       243,000  
Net operating loss carry-forwards     14,755,000       15,314,000  
Stock option expense     403,000       354,000  
Research and other credits     952,000       1,099,000  
Other temporary differences     15,000       15,000  
Total gross deferred tax assets     16,444,000       17,127,000  
Less valuation allowance     (16,444,000 )     (17,127,000 )
    $ -     $ -  

 

The reconciliation of the income tax expense (benefit) computed at the Federal statutory tax rates to income tax expense (benefit) is as follows:

 

    2020     2019  
             
Income tax provision at federal statutory rate   $ (485,000 )   $ (800,000 )
                 
Permanent differences     (43,000 )     136,900  
Credits     -       (5,000 )
Expired carryforwards and other     1,211,000       823,100  
Valuation allowance     (683,000 )     (155,000 )
    $ -     $ -  

 

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future taxable income during the period in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon its historical operating losses, utilization of deferred tax assets cannot currently be determined. Accordingly, the Company has recorded a full valuation allowance against the deferred tax assets due to the uncertainty regarding the future utilization of the deferred tax assets for all periods presented.

 

At December 31, 2020, the Company had net operating loss carryforwards for federal income tax purposes of approximately $68,951,000. Net operating loss carryforwards accumulated through December 31, 2017 of approximately $62,129,000 will expire in varying amounts from 2021 through 2037. Net operating losses generated in 2018, 2019 and 2020, totaling approximately $6,822,000, will carryforward indefinitely, but cannot offset more than 80 percent of taxable income. Research and other credit carryforwards of approximately $952,000 are available to the Company to reduce income taxes payable in future years principally through 2039. The Company’s ability to utilize its net operating loss carryforwards and its current year tax credits in future periods could be subject to the 382 limitation. The Company will need to complete an analysis to determine whether its net operating losses are subject to the 382 limitation.