Abeona Therapeutics Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

INCOME TAXES

12 Months Ended

Dec. 31, 2016

INCOME TAXES [Abstract]

INCOME TAXES

NOTE 10 - INCOME TAXES

Income tax expense differs from the statutory amounts as follows:

	2016			2015

Income taxes at U.S. statutory rate	$	(7,437,000	)	$	(4,939,000	)
Current year reserve		7,423,000			6,257,000
Other		14,000			(1,318,000	)

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,
	2016			2015
Deferred tax assets (liabilities)
Net operating loss carryforwards	$	73,864,000		$	68,636,000
General business credit carryforwards		2,557,000			2,497,000
State credits		3,089,000			2,055,000
Property, equipment and goodwill		(23,000	)		(25,000	)
Stock options		6,450,000			3,678,000
Derivatives		(92,000	)		(92,000	)
Deferred revenue		1,464,000			1,669,000
Intangible assets		228,000			595,000
Accrued interest		253,000			253,000
Other		231,000			231,000
Gross deferred tax assets		88,021,000			79,497,000
Valuation allowance		(88,021,000	)		(79,497,000	)
Net deferred taxes	$	-		$	-

At December 31, 2016, we had approximately $217,246,000 of net operating loss carryforwards and approximately $2,557,000 of general business credit carryforwards. These carryforwards expire as follows:

	Net operating loss carryforwards		General business credit carryforwards
2017	$	-	$	-
2018		3,324,000		112,000
2019		3,306,000		95,000
Thereafter		210,616,000		2,350,000
	$	217,246,000	$	2,557,000

As a result of a merger on January 25, 1996, a change in control occurred for federal income tax purposes, which limits the utilization of pre-merger net operating loss carryforwards of approximately $3,100,000 to approximately $530,000 per year.

Additionally, we acquired MacroChem Corporation on February 25, 2009 and Somanta Pharmaceuticals, Inc. on January 4, 2008. Both corporations were loss companies at the time of the acquisition. Therefore, the net operating losses related to those acquisitions may be subject to annual limitations as provided by Internal Revenue Code Sec. 382.