Note 4 - Income Taxes

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 4:     Income Taxes

For the year ended December 31, 2022, there was no provision for income taxes or unrecognized tax benefits recorded.

The significant components of gain (loss) before income taxes are as follows:

	Years Ended December 31,
	2022			2021
U.S. operations	$	(9,828,427	)	$	(13,115,869	)
Foreign operations		93,169			45,618
Total loss before provision for income taxes	$	(9,735,258	)	$	(13,070,251	)

The Company has no current or deferred income tax for the years ended December 31, 2022 and 2021.

The income tax provision differs from the expense amount that would result from applying the federal statutory rates to income before income taxes due to permanent differences, state income taxes and a change in the deferred tax valuation allowance.

The reconciliation between the statutory tax rate and the Company’s actual effective tax rate is as follows:

	Years Ended December 31,
	2022			2021
Tax at U.S. statutory rate		(21.00	)%		(21.00	)%
State taxes, net of federal benefit		(4.35	)		(4.52	)
Non-deductible items		—			(0.84	)
Change in valuation allowance		24.77			28.09
True-up adjustment		0.34			0.06
Foreign operations		0.24			0.09
Change in tax rate		—			(1.88	)
Other		—			—
Effective income tax rate		—	%		—	%

The significant components of the Company’s net deferred income tax assets are as follows:

	December 31,
	2022			2021
Stock option expense	$	1,341,900		$	947,400
NOL carryforward		11,524,900			10,509,900
Research and development credits		1,623,100			1,656,500
Section 174 - R&D expenses		1,046,400			—
Unrealized gain from investment in Alphazyme		—			(72,100	)
Other		(78,200	)		(6,100	)
Deferred tax asset, net of deferred tax liabilities		15,458,100			13,035,600
Valuation allowance		(15,458,100	)		(13,035,600	)
Net deferred tax asset	$	—		$	—

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In assessing the realizability of deferred tax assets, Management evaluates 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 taxable income and tax planning strategies in making this assessment. Based on Management’s evaluation, the net deferred tax asset, was offset by a full valuation allowance as of December 31, 2022 and 2021. 

The Company had net operating loss (“NOL”) carryforwards available as of December 31, 2022, and 2021, in the amount of approximately $44.0 million and $39.9 million, respectively. Approximately $41.1 million of the net operating loss carryforwards will be carried forward indefinitely and will be available to offset 80% of taxable income. The remaining amount of the net operating loss carryforwards will expire at varying dates through 2037.

The Tax Cuts and Jobs Act eliminated the current year deduction election for research and experimental expenditures. Instead, a taxpayer must charge such expenditures to a capital account and is allowed to amortize such expenditures ratably over a five-year period (or fifteen-year period for expenditures attributable to foreign research), beginning with the midpoint of the tax year in which such expenditures are paid or incurred.