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INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 8 - INCOME TAXES 

 

The Company identified its federal and New York tax returns as its “major” tax jurisdictions. The period its income tax returns are subject to examination for these jurisdictions is 2018 through 2022. The Company believes its income tax filing positions and deductions will be sustained on audit, and it does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no liabilities for uncertain tax positions have been recorded.

 

 

At December 31, 2022, the Company had approximately $59,900,000 and $10,300,000, respectively, of federal and state net operating losses that may be available to offset future taxable income. As a result of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), certain future carryforwards do not expire. At December 31, 2022, approximately $8,000,000 of federal net operating losses will expire from 2030 to 2038 and approximately $51,900,000 have no expiration. In accordance with Section 382 of the Internal Revenue Code, the usage of the Company’s net operating loss carryforwards are subject to annual limitations due to several greater than 50% ownership changes. The Section 382 limitations resulted in approximately $28,200,000 of federal NOLs not being realizable as of December 31, 2022 and 2021 and the cumulative reversal of approximately $9,600,000 of net operating loss deferred tax assets.

 

The Company has not performed a formal analysis for the year ended December 31, 2022, but it believes its ability to use such net operating losses and tax credit carryforwards in the future is subject to annual limitations due to change of control provisions under Sections 382 and 383 of the Internal Revenue Code, which will significantly impact its ability to realize these deferred tax assets.

 

The Company’s net deferred tax assets, liabilities and valuation allowance as of December 31, 2022 and 2021 are summarized as follows:

   2022   2021 
   December 31, 
   2022   2021 
Deferred tax assets:          
Net operating loss carryforwards  $13,200,000   $11,100,000 
Stock-based compensation   13,810,000    10,500,000 
Research and development costs   655,000    - 
Research & development tax credits   330,000    358,000 
Total deferred tax assets   27,995,000    21,958,000 
           
Deferred tax liabilities:          
Depreciation   (106,000)   - 
Intangible assets   (113,000)   (4,000)
Total deferred tax liabilities   (219,000)   (4,000)
           
Net deferred tax assets   27,776,000    21,954,000 
           
Valuation allowance  $(27,776,000)  $(21,954,000)
           
Deferred tax asset, net of valuation allowance  $-   $- 
           
Change in valuation allowance  $(5,822,000)  $(7,856,000)

 

The income tax provision (benefit) as of December 31, 2022 and 2021 consists of the following:

 

   2022   2021 
   December 31, 
   2022   2021 
Federal:              
Current  $-   $- 
Deferred   -    - 
           
State and local:          
Current   -    - 
Deferred   -    - 
           
Total income tax provision (benefit)  $-   $- 

 

 

A reconciliation of the statutory federal income tax benefit to actual tax benefit for the years ended December 31, 2022 and 2021 is as follows:

 

   2022   2021 
Federal statutory blended income tax rates   21.0%   21.0%
State statutory income tax rate, net of federal benefit   5.6    5.6 
Permanent differences   (1.8)   (8.9)
Tax return to provision adjustment   6.7    - 
Change in valuation allowance   (31.5)   (17.7)
Effective tax rate   -%   -%

 

As of the date of this filing, the Company has not filed its 2022 federal and state corporate income tax returns. The Company expects to file these documents as soon as practicable.