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Note 8 - Income Taxes
 9 Months Ended 12 Months Ended
Sep. 30, 2023
Dec. 31, 2022
Notes to Financial Statements    
Income Tax Disclosure [Text Block]

8.

Income Taxes

 

No provision for income taxes was recorded in either of the nine-month periods ended September 30, 2023 and 2022. The Company remains in a cumulative loss position with a full valuation allowance recorded against its net deferred income tax assets as of September 30, 2023.

 

 

8.

Income Taxes

 

At December 31, 2022, we have a consolidated federal net operating loss (“NOL”) carryforward of approximately $76 million available to offset against future taxable income of which approximately $38.5 million expires in varying amounts in 2023 through 2037. Additionally, we have approximately $2.2 million in research and development (“R&D”) tax credits that expire in 2023 through 2042 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. 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. The table below presents significant components of our deferred tax assets and liabilities at December 31, 2022 and 2021.

 

   

2022

    

2021

  

Deferred tax assets:

                

Net operating loss carryforward

   $ 19,764,569     $ 18,449,694  

Research and development tax credit carryforward

     2,202,603       1,566,293  

Stock-based compensation expense

     330,553       129,475  

Accrued expenses

     663,211       69,940  

Total deferred tax assets

     22,960,936       20,215,402  

Deferred tax liabilities

                

Depreciation

     51,466       30,945  

Net deferred tax assets

     22,909,470       20,184,457  

Valuation allowance

     (22,909,470

)

     (20,184,457

)

Net deferred tax asset after reduction for valuation allowance

   $ -0-     $ -0-  

 

A reconciliation of the U.S. federal income tax rate to the Company’s effective tax rate is as follows:

 

   

2022

    

2021

  

U.S. federal statutory rate applied to pretax loss

     21.0

%

     21.0

%

State income tax (benefit)

     3.9       4.0  

Permanent differences

     (0.0

)

     0.2  

NOL carryforward expiration

     (15.6

)

     (5.3

)

R&D tax credits, net of expiration

     4.6       2.0  

Change in valuation allowance and other adjustments

     (13.9

)

     (21.9

)

Effective tax rate

     0.0

%

     0.0

%