Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

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

NOTE 15 – INCOME TAXES

 

Income tax expense differs from the statutory amounts for each of the following years (in thousands):

 

    2022     2021  
    For the year ended December 31,  
    2022     2021  
             
Income taxes at U.S. statutory rate   $ (8,336 )   $ (17,836 )
Current year reserve     9,539       12,539  
Expenses not deductible     (1,203 )     5,297  
Total tax expense   $ —     $ —  

 

Deferred taxes are provided for the temporary differences between the financial reporting bases and the tax bases of the Company’s assets and liabilities. The temporary differences that give rise to deferred tax assets and liabilities were as follows (in thousands):

 

    2022     2021  
    For the year ended December 31,  
    2022     2021  
             
Deferred tax assets (liabilities):                
Net operating loss carryforwards   $ 75,544     $ 71,001  
General business credit carryforwards     4,497       4,741  
State credits     2,780       2,780  
Property, equipment and goodwill     380       200  
Stock options     10,797       10,537  
Deferred revenue     —       62  
Intangible assets     612       367  
Accruals     211       16  
Accruals     5,480       —  
Gross deferred tax assets     100,301       89,704  
Valuation allowance     (100,301 )     (89,704 )
Net deferred taxes   $ —     $ —  

 

 

As of December 31, 2022, the Company had approximately $359.0 million of net operating loss carryforwards and approximately $4.5 million of general business credit carryforwards. These carryforwards expire as follows (in thousands):

 

   

Net operating

loss carryforwards

    

General business credit

carryforwards

  
             
2023   $ 5,434     $ 362  
2024     8,711       287  
2025     2,370       182  
2026     7,160       72  
2027     9,977       93  
Thereafter     80,439       3,501  
    $ 114,091     $ 4,497  

 

Losses incurred post 2017 do not expire and can only be used to offset 80% of taxable income in any tax year. As of December 31, 2022, the Company had approximately $245.0 million of net operating loss carryforwards that do not expire and can be carried forward indefinitely. Such net operating loss carryforwards can only be used to offset 80% of taxable income in any given tax year. In addition, the Company’s net operating loss carryforwards may be subject to limitation due to ownership changes.

 

The Company acquired MacroChem Corporation on March 25, 2009 and Somanta Pharmaceuticals, Inc. on January 4, 2008. Both of these corporations were loss-making entities at the time of acquisition. As a result, the net operating losses related to those acquisitions may be subject to annual limitations.