Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.20.1
Income Taxes
 12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 10 - INCOME TAXES

 

Income tax expense differs from the statutory amounts for each of the following years:

 

    2019     2018     2017  
Income taxes at U.S. statutory rate   $ (16,020,000 )   $ (11,901,000 )   $ (9,289,000 )
Current year reserve     15,976,000       11,877,000       (25,175,000 )
Expenses not deductible     44,000       24,000       46,000  
Rate change     -       -       34,418,000  
Total tax expense   $ -     $ -     $ -  

 

Deferred taxes are provided for the temporary differences between the financial reporting bases and the tax bases of our assets and liabilities. The temporary differences that give rise to deferred tax assets and liabilities were as follows:

 

    December 31, 2019     December 31, 2018  
Deferred tax assets (liabilities):                
Net operating loss carryforwards   $ 50,802,000     $ 38,761,000  
General business credit carryforwards     3,939,000       3,214,000  
State credits     2,934,000       3,012,000  
Property, equipment and goodwill     (28,000 )     (72,000 )
Stock options     7,960,000       6,316,000  
Derivatives     -       (57,000 )
Deferred revenue     62,000       62,000  
Intangible assets     1,625,000       399,000  
Other     28,000       80,000  
Gross deferred tax assets     67,322,000       51,715,000  
Valuation allowance     (67,322,000 )     (51,715,000 )
Net deferred taxes   $ -     $ -  

  

At December 31, 2019, we had approximately $241.9 million of net operating loss carryforwards and approximately $3.9 million of general business credit carryforwards. These carryforwards expire as follows:

 

    Net operating
loss carryforwards		     General business credit
carryforwards		  
2020   $ 5,125,000     $ 226,000  
2021     5,378,000       56,000  
2022     8,230,000       431,000  
2023     5,434,000       362,000  
2024     8,711,000       287,000  
Thereafter     99,946,000       2,536,000  
    $ 132,824,000     $ 3,898,000  

 

At December 31, 2019, we had approximately $109.1 million of net operating loss carryforwards that do not expire and can be carried forward indefinitely.

 

We acquired MacroChem Corporation on February 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 as well.

 

On December 22, 2017, President Donald Trump signed the Tax Cuts and Jobs Act (the “TCJA”). The TCJA reduces the U.S. federal corporate tax rate from 34% to 21%. At December 31, 2017, we recalculated our deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%, and recorded a provisional adjustment of $34.4 million. In 2018, the accounting for the income tax enactment-date effects of the TCJA were completed and there was no adjustment to the provisional amount recorded in 2017.