Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

(7) Income Taxes

Tax positions must meet a “more likely than not” recognition threshold at the effective date to be recognized. At December 31, 2022 and 2021, the Company did not have any uncertain tax positions. No interest and penalties related to uncertain tax positions were accrued at December 31, 2022 and 2021. Our tax returns for fiscal years 2021, 2020 and 2019 are open to examination.

Significant items making up the deferred tax assets and deferred tax liabilities as of December 31, 2022 and 2021 are as follows:

	2022			2021
Long term deferred taxes:
Inventory reserve	$	268,548		$	93,570
Other accruals		99,362			91,792
Other		15,715			15,169
Non-cash, stock-based compensation, nonqualified		872,967			814,202
Impairment loss on investment		104,609			104,609
Operating loss carry forwards and tax credits		31,026,899			28,435,535
Less: valuation allowance		(32,388,100	)		(29,554,877	)
Total net deferred tax assets	$	-		$	-

A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. Accordingly, we established a valuation allowance in 2022 and 2021 for the full amount of our deferred tax assets for the uncertainty of realization. We believe that based on our projection of future taxable operating income for the foreseeable future, it is more likely than not that we will not be able to realize the benefit of the deferred tax asset at December 31, 2022.

We have net operating loss carry-forwards for federal income tax purposes of approximately $110,385,351 as of December 31, 2022. Included in these numbers are loss carry-forwards that were obtained through the acquisition of BioSeq, Inc. and are subject to Section 382 NOL limitations. These net operating loss carry-forwards expire at various dates from 2023 through 2037. Under the Tax Reform Act, NOL’s generated after December 31, 2017 can offset only 80% of a corporation’s taxable income in any year. With limited exceptions, NOL’s generated after 2017, $70,711,859, cannot be carried back, but they can be carried forward indefinitely.

We have net operating loss carry-forwards for state income tax purposes of approximately $106,651,967 at December 31, 2022. These net operating loss carry-forwards expire at various dates from 2031 through 2038.

We have research and development tax credit carryforwards for federal income tax purposes of approximately $1,338,308 as of December 31, 2022 and research and development tax credit carryforwards for state income tax purposes of approximately $356,424 as of December 31, 2022. The federal credit carryforwards expire at various dates from 2022 through 2037. The state credit carryforwards expire at various dates from 2023 through 2034.

The following table reconciles the U.S. Federal statutory tax rate to the Company’s effective tax rate:

	2022			2021
Statutory U.S. Federal tax rate		21	%		21	%
Permanent differences		(0	)		(0	)
State tax expense		(0	)		(0	)
Refundable AMT and R&D tax credit		(0	)		(0	)
Valuation allowance		(21	)		(21	)
Effective tax rate		0	%		0	%