9.	Income Taxes

At December 31, 2015, the Company has a net operating loss carryforward for Federal income tax purposes of $19,531,876 which begins to expire in varying amounts in tax year 2026. The Company has a research and development tax credit carryforward of $877,092 for Federal tax purposes with no expiration date.

In assessing the ability to realize its 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, projected future results of operations, and tax planning strategies in making this assessment. Based upon the level of historical taxable income, significant book losses during the current and prior periods, and projections for future results of operations over the periods in which the deferred tax assets are deductible, among other factors, management continues to conclude that the Company does not meet the “more likely than not” requirement of ASC 740 in order to recognize deferred tax assets and a valuation allowance has been recorded for the Company’s net deferred tax assets at December 31, 2015. The Company recorded an increase in the valuation allowance of $1,898,618 for the year ended December 31, 2015.

The components of the Company’s deferred tax asset are as follows:

	December 31,
	2015		2014		2013
Deferred Tax Assets

Accrued Bonuses	$	76,779	$	48,408	$	15,725
Accrued Vacation		22,594		-		-
Net Operating Loss (NOL) Carryover		6,640,838		5,025,174		3,727,259
Technology Licenses Amortization		63,534		66,697		69,859
Research & Development Tax Credits		877,092		668,611		520,891
Share Based Expense		293,324		256,568		201,490
Other		(10,085)		-		-
Total Deferred Tax Asset		7,964,076		6,065,458		4,535,224
Less: Valuation Allowance		(7,964,076)		(6,065,458)		(4,535,224)
Net Deferred Tax Asset	$	-	$	-	$	-

Reconciliation between income taxes at the statutory tax rate (34%) and the actual income tax provision for continuing operations follows:

	December 31,
	2015		2014		2013

Loss Before Income Taxes	$	(5,466,794)	$	(4,560,481)	$	(3,266,013)
Tax (Benefit) @ Statutory Tax Rate		(1,858,710)		(1,550,564)		(1,110,444)
Effects of:
Exclusion of Incentive Stock Option Expense		89,112		82,333		217,813
R&D Tax Credits		(131,884)		(131,722)		(90,964)
Increase in Valuation Allowance		1,898,618		1,530,234		945,347
Carryforward Adjustment		-		21,439		-
Other		2,864		48,280		38,248
Provision for Income Taxes	$	-	$	-	$	-

As of December 31, 2015, 2014 and 2013, the Company has no unrecognized income tax benefits. The Company’s policy for classifying interest and penalties associated with unrecognized income tax benefits is to include such items as tax expense. No interest or penalties have been recorded during the years ended December 31, 2015, 2014 and 2013 and no interest or penalties have been accrued as of December 31, 2015, 2014 and 2013.

As a general rule, the Company’s open years for Internal Revenue Service (IRS) examination purposes are 2014, 2013 and 2012. However, since the Company has operating loss carryforwards, the IRS has the ability to make adjustments to items that originate in a year otherwise barred by the statute of limitations under Section 6501 of the Internal Revenue Code of 1986, as amended (the ”code”), in order to redetermine tax for an open year to which those items are carried. Therefore, in a year in which a net operating loss deduction was claimed, the IRS may examine the year in which the net operating loss was generated and adjust it accordingly for purposes of assessing additional tax in the year the net operating loss was claimed. The Company is currently not under examination by the IRS or any other taxing authorities.