Note 9 - Income Taxes

6 Months Ended

12 Months Ended

Jun. 30, 2015

Dec. 31, 2014

Notes to Financial Statements

Income Tax Disclosure [Text Block]

9.     Income Taxes

Because of our historically significant net operating losses, we have not paid income taxes since inception. We maintain deferred tax assets that 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. These deferred tax assets are comprised primarily of net operating loss carryforwards and also include amounts relating to nonqualified stock options and research and development credits. The net deferred tax asset has been fully offset by a valuation allowance because of the uncertainty of our future profitability and our ability to utilize the deferred tax assets. Utilization of operating losses and credits may be subject to substantial annual limitations due to ownership change provisions of Section 382 of the Internal Revenue Code. The annual limitation may result in the expiration of net operating losses and credits before utilization.

11 . Income Taxes

At December 31, 2014, we have a consolidated federal net operating loss (“NOL”) carryforward of approximately $64.6 million, available to offset against future taxable income which expires in varying amounts in 2019 through 2034. Additionally, we have approximately $826,000 in research and development (“R&D”) tax credits that expire in 2022 through 2034 unless utilized earlier. No income taxes have been paid to date.

Section 382 of the Internal Revenue Code contains provisions that may limit our utilization of our NOL and R&D tax credit carryforwards in any given year as a result of significant changes in ownership interests that have occurred in past periods or may occur in future periods.

Deferred income taxes reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities included the following at December 31, 2014 and 2013:

	2014			2013
Deferred tax assets:
Net operating loss carryforward	$	22,831,626		$	21,983,109
Research and development tax credit carryforward		825,896			799,248
Stock-based compensation expense		2,396,805			2,233,909
Total deferred tax assets		26,054,327			25,016,266
Deferred tax liabilities
Depreciation		(7,149	)		(13,386	)
Total deferred tax liabilities		(7,149	)		(13,386	)
Net deferred tax assets		26,047,178			25,002,881
Valuation allowance		(26,047,178	)		(25,002,881	)
	$	-0-		$	-0-

We have established a full valuation allowance equal to the amount of our net deferred tax assets due to uncertainties with respect to our ability to generate sufficient taxable income to realize these assets in the future. A reconciliation of the income tax benefit on losses at the U.S. federal statutory rate to the reported income tax expense is as follows:

	2014			2013			2012
U.S. federal statutory rate applied to pretax loss	$	(929,409	)	$	(776,881	)	$	(725,948	)
Permanent differences		1,734			3,138			2,674
Research and development credits		26,648			14,047			21,236
Change in valuation allowance		901,027			759,696			702,038
Reported income tax expense	$	-0-		$	-0-		$	-0-