Note 11 - Income Taxes

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

11

.          Income Taxes

At

December

31,

2016,

we have a consolidated federal net operating loss (“NOL”) carryforward of approximately

$69.5

million, available to offset against future taxable income which expires in varying amounts in

2019

through

2036.

Additionally, we have approximately

$892,000

in research and development (“R&D”) tax credits that expire in

2022

through

2036

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,

2016

and

2015:

	2016			2015
Deferred tax assets:
Net operating loss carryforward	$	24,689,298		$	23,822,431
Research and development tax credit carryforward		892,231			893,797
Stock-based compensation expense		2,748,899			2,419,892
Depreciation		1,331			-
Total deferred tax assets		28,331,759			27,136,120
Deferred tax liabilities
Depreciation		-			(5,086	)
Total deferred tax liabilities		-			(5,086	)
Net deferred tax assets		28,331,759			27,131,034
Valuation allowance		(28,331,759	)		(27,131,034	)
	$	-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:

	2016			2015			2014
U.S. federal statutory rate applied to pretax loss	$	(1,112,378	)	$	(936,936	)	$	(906,830	)
Permanent differences		2,012			2,914			1,734
Research and development credits		59,087			67,901			26,648
Change in valuation allowance		1,051,279			866,121			878,448
Reported income tax expense	$	-0-		$	-0-		$	-0-