Note 11 - Income Taxes

12 Months Ended

Dec. 31, 2015

11 .	Income Taxes

At December 31, 2015, we have a consolidated federal net operating loss (“NOL”) carryforward of approximately $67.2 million, available to offset against future taxable income which expires in varying amounts in 2019 through 2035. Additionally, we have approximately $894,000 in research and development (“R&D”) tax credits that expire in 2022 through 2035 unless utilized earlier. No income taxes have been paid to date. Section 382 of the Internal Revenue Code contains provisions that may limit our utilization of our NOL and R&D tax credit carryforwards in any given year as a result of significant changes in ownership interests that have occurred in past periods or may occur in future periods.

Deferred income taxes reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities included the following at December 31, 2015 and 2014:

	2015			2014
Deferred tax assets:
Net operating loss carryforward	$	23,822,431		$	22,806,391
Research and development tax credit carryforward		893,797			825,896
Stock-based compensation expense		2,419,892			2,396,805
Total deferred tax assets		27,136,120			26,029,092

Deferred tax liabilities
Depreciation		(5,086	)		(7,149	)
Total deferred tax liabilities		(5,086	)		(7,149	)

Net deferred tax assets		27,131,034			26,021,943
Valuation allowance		(27,131,034	)		(26,021,943	)
	$	-0-		$	-0-

We have established a full valuation allowance equal to the amount of our net deferred tax assets due to uncertainties with respect to our ability to generate sufficient taxable income to realize these assets in the future.

A reconciliation of the income tax benefit on losses at the U.S. federal statutory rate to the reported income tax expense is as follows:

	2015			2014			2013
U.S. federal statutory rate applied to pretax loss	$	(936,936	)	$	(906,830	)	$	(776,881	)
Permanent differences		2,914			1,734			3,138
Research and development credits		67,901			26,648			14,047
Change in valuation allowance		866,121			878,448			759,696
Reported income tax expense	$	-0-		$	-0-		$	-0-