XML 36 R13.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | (7) Income Taxes
| (a) | Income Tax Expense
Income tax expense consists of: Schedule of Income Tax Expense
|  | December 31, |
|  | 2021 |  |  | 2020 |
U.S. federal |  | $ | - |  |  | $ | - |
State and local |  |  | 200 |  |  |  | 200 |
Deferred |  |  | - |  |  |  | - |
Total |  | $ | 200 |  |  | $ | 200 |
| (b) | Tax Rate Reconciliation
Income tax expense was $200 and $200, respectively, for the years ended December 31, 2021 and 2020 and differed from the amounts computed by applying the U.S. federal income tax rate of 21% for 2021 and 2020, respectively, to pretax income from continuing operations as a result of the following: Schedule of Pretax Income from Continuing Operations
|  | December 31, |
|  | 2021 |  |  | 2020 |
Computed “expected” tax benefit |  | $ | (133,182 | ) |  | $ | (4,402,570 | )
Increase (reduction) in income taxes resulting from: |  |  |  |  |  |  |  |
Change in valuation allowance |  |  | 476,431 |  |  |  | 4,248,002 |
State and local income taxes, net of federal income tax benefit |  |  | 158 |  |  |  | 158 |
Stock expense |  |  | 97,697 |  |  |  | 86,209 |
Research and development tax credits |  |  | (352,163 | ) |  |  | (485,254 | )
Orphan drug tax credit |  |  | (14,025 | ) |  |  | (4,797 | )
Warrant liability |  |  | (74,737 | ) |  |  | 607,360 |
Other, net |  |  | 21 |  |  |  | (48,908 | )
Total |  | $ | 200 |  |  | $ | 200 |
LIPOCINE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 and 2020
(7) | Income Taxes – (continued)
| (c) | Significant Components of Deferred Taxes
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020 are presented below. Schedule of Deferred Tax Assets and Liabilities
|  | December 31, |
|  | 2021 |  |  | 2020 |
Deferred tax assets: |  |  |  |  |  |  |  |
Stock-based compensation |  | $ | 1,687,480 |  |  | $ | 1,651,482 |
Net operating loss carryforwards |  |  | 34,759,890 |  |  |  | 35,102,326 |
Employee benefits |  |  | 56,009 |  |  |  | 54,108 |
Research and development tax credits |  |  | 4,935,609 |  |  |  | 4,472,003 |
Orphan drug tax credits |  |  | 1,186,582 |  |  |  | 1,168,828 |
Plant and equipment |  |  | - |  |  |  | 959 |
Other deductible tempory differences |  |  | 394,636 |  |  |  | 5,386 |
Total gross deferred tax assets |  |  | 43,020,206 |  |  |  | 42,455,092 |
Deferred tax assets: |  |  |  |  |  |  |  |
Plant and equipment |  |  | (1,871 | ) |  |  | - |
Total gross deferred tax liabilities |  |  | (1,871 | ) |  |  | - |
Net deferred tax liabilities |  | $ | (1,871 | ) |  | $ | - |
Deferred tax asset/deferred tax liability |  |  | 43,018,335 |  |  |  | 42,455,092 |
Less valuation allowance |  |  | (43,018,335 | ) |  |  | (42,455,092 | )
Net deferred tax assets |  | $ | - |  |  | $ | - |
The valuation allowance for deferred tax assets as of December 31, 2021 and 2020 was $43.0 million and $42.5 million. The net change in the valuation allowance was an increase of $0.5 million in 2021 and an increase of $5.2 million in 2020. A valuation allowance has been provided for the full amount of the Company’s net deferred tax assets as the Company believes it is more likely than not that these benefits will not be realized. In assessing the realizability of deferred tax assets, management 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 the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax planning strategies in making this assessment. LIPOCINE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 and 2020
(7) | Income Taxes – (continued)
During the year ended December 31, 2013, the Company experienced a change in ownership, as defined by the Internal Revenue Code, as amended (the “Code”) under Section 382. A change of ownership occurs when ownership of a company increases by more than 50 percentage points over a three-year testing period of certain stockholders. As a result of this ownership change, we determined that our annual limitation on the utilization of our federal net operating loss (“NOL”) and credit carryforwards is approximately $1.1 million per year. We will only be able to utilize $20.2 million of our pre-ownership change NOL carryforwards and will forgo utilizing $5.5 million of our pre-ownership change NOL carryforwards and $1.2 million of our pre-change credit carryforwards as a result of this ownership change. We do not account for forgone NOL and credit carryovers in our deferred tax assets and only account for the NOL and credit carryforwards that will not expire unutilized as a result of the restrictions of Code Section 382. As of December 31, 2021, we had NOL and research and development credit carryforwards for U.S. federal income tax reporting purposes of approximately $135.6 million and $3.5 million, respectively. Approximately $24.6 million of the NOL will expire between 2023 and 2033 and $70.8 million of the NOL will expire 2034 through 2037. Pursuant to the Tax Cuts and Jobs Act of 2017, NOL’s generated in 2018 and subsequent years have an unlimited carryforward therefore the 2020, 2019 and 2018 NOL of $40.2 million can be carried forward indefinitely. The research and development credits will begin to expire in 2033 through 2041. We have orphan drug credit carry forwards of approximately $1.2 million which will expire if unused through 2041. We also have state NOL and research and development credit carry forwards of approximately $127.1 million and $1.4 million, respectively. None of the Company’s state NOL expires in 2022, $34.8 million expires between 2022 and 2029, and $92.3 million will expire in 2030 through 2036. The state research and development credits expire in 2023 through 2035. The Company’s federal and state income tax returns for December 31, 2018 through 2021 are open tax years. A reconciliation of the beginning and ending amount of total unrecognized tax contingencies, excluding interest and penalties, for the years ended December 31, 2021 and 2020 are as follows: Schedule of Reconciliation of the Beginning and Ending Amount of Total Unrecognized Tax Contingencies, Excluding Interest and Penalties
|  | December 31, |
|  | 2021 |  |  | 2020 |
Balance, beginning of year |  | $ | - |  |  | $ | - |
Balance, end of year |  | $ | - |  |  | $ | - |

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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=121826272&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=122134291&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=121826272&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=122134291&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=121826272&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 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration