INCOME TAXES

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

At December 31, 2022, the Company has available $153.5 million and $177.1 million of unused net operating loss ("NOL") carryforwards for federal and state tax purposes, respectively, that may be applied against future taxable income. The Company also has $163.9 million of unused NOL carryforwards for New York City purposes. The NOL carryforwards will begin to expire in the year 2035 if not utilized prior to that date.

Under Section 382 and Section 383 of the Internal Revenue Code of 1986, if a corporation undergoes an ownership change, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. On each of August 10, 2015 and February 22, 2019 the Company experienced an ownership change. The Company anticipates a significant portion of its pre-change NOLs to be limited, but has not yet completed a formal Section 382 analysis.

The Company maintains a full valuation allowance against its net deferred tax assets. The valuation allowance increased by $10.4 million and decreased by $26.5 million during the years 2022 and 2021, respectively. The increase in valuation allowance in 2022 is primarily due to increases in NOL carryforwards and capitalized research and experimentation costs.

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows:

	December 31,
	2022		2021
Deferred tax assets/liabilities:
Net operating loss carryforwards	$	55,472,573	$	49,086,998
Intangible assets	6,332,176		7,121,484
Capitalized research and development costs	4,246,071		—
Stock-based compensation	4,384,751		4,663,578
Lease liability	3,544,624		—
Research and development tax credits	3,046,253		2,422,331
Accrued compensation	—		(28,243)
Charitable contributions	—		87,672
Depreciation	(241,096)		(51,920)
Right-of-use asset	(3,198,857)		—
Other	97,494		—
Total gross deferred tax assets/liabilities	73,683,989		63,301,900
Valuation allowance	(73,683,989)		(63,301,900)
Net deferred tax assets (liabilities)	$	—	$	—

A reconciliation of the statutory U.S. Federal rate to the Company’s effective tax rate is as follows:

	December 31,
	2022		2021
Federal income tax benefit at statutory rate	21.00		21.00
State income tax, net of federal benefit	(0.27)		1.05
Permanent items	(1.26)		0.53
Change in valuation allowance	(18.50)		(21.39)
Research and development tax credits	1.28		(1.05)
Other	(2.25)		0.93
Effective income tax expense rate	0.00	%	1.07	%

The Company’s reserves related to taxes are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies related to the tax benefit. For the years ended December 31, 2022 and 2021, the Company had no unrecognized tax benefits or related interest and penalties accrued. The Company would recognize both accrued interest and penalties related to unrecognized benefits in provision for income taxes. The Company’s uncertain tax positions yet to be determined would be related to years that remain subject to examination by relevant tax authorities. Since the Company is in a loss carryforward position, the Company is generally subject to examination by the U.S. federal, state and local income tax authorities for all tax years in which a loss carryforward is available.