Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Taxes  
Income Taxes

10.   Income Taxes

As of December 31, 2023, the Company has U.S. federal net operating loss carryforwards of approximately $26,496,000, which have an indefinite carryforward and Georgia and Florida state net operating loss carryforwards of approximately $33,700,000 and $851,086, respectively, which have a twenty-year carryforward and begin expiring in 2037.

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

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​

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Year Ended

​

​

 

December 31, 

​

​

     

2023

     

2022

  

U.S. federal statutory income tax rate

​

21.00

%  

21.00

%

Permanent differences

 

(2.01)

%  

(0.57)

%

State taxes, net of federal benefit

 

4.30

%  

4.83

%

Other adjustments

​

0.20

%  

0.06

%

Change in valuation allowance

 

(23.49)

%  

(25.32)

%

Effective Income Tax rate

 

—

%  

—

%

​

Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets are comprised of the following:

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As of December 31, 

​

    

2023

    

2022

Deferred tax assets:

​

​

​

​

​

​

Net operating loss carryforwards

​

$

7,132,019

​

$

5,692,533

Capitalized research and development expenditures

​

​

1,524,035

​

​

1,873,211

Stock compensation

​

 

1,441,652

​

 

1,411,624

Investment in partnership

​

​

30,639

​

​

30,771

Amortization

​

​

14,049

​

​

15,223

Gross deferred tax assets

​

 

10,142,394

​

 

9,023,362

Valuation allowance

​

 

(9,926,772)

​

 

(8,682,497)

Net deferred tax assets

​

​

215,622

​

​

340,865

​

​

​

​

​

​

​

Deferred tax liabilities:

​

​

​

​

​

​

Prepaid expenses

​

​

(215,622)

​

​

(340,865)

Deferred tax liabilities

​

​

(215,622)

​

​

(340,865)

​

​

​

​

​

​

​

Net deferred taxes

​

$

—

​

$

—

​

For tax years beginning on or after January 1, 2022, the 2017 Tax Cuts and Jobs Act amended Section 174 of the code to eliminate current-year deductibility of research and development expenses and requires taxpayers to capitalize and amortize them over five years for research activities performed in the United States and fifteen years for research activities performed outside of the United States. For the 2023 and 2022 tax years, the Company has capitalized $1,728,078 and $8,099,702 of research and development expenses, respectively. The initial capitalization in 2022 of research and development expenses resulted in an increase in the deferred tax asset associated with capitalized research and development by $1,873,211.

As of December 31, 2023, the Company has not generated sufficient positive evidence for future earnings to support a position that it will be able to realize its net deferred tax asset. The Company has significant negative evidence to overcome in the form of cumulative pre-tax losses from continuing operations since its formation, as well as projected losses for the current year. Therefore, it will continue to maintain a full valuation allowance on its U.S. federal and state net deferred tax asset. The change in the valuation allowance offset the income tax benefit related to the pre-tax loss for the year ended December 31, 2023. The Company does not have any material unrecognized tax benefits as of December 31, 2023.

The Company experienced a net change in valuation allowance of $1,244,274 and $3,100,898 for the years ended December 31, 2023 and 2022, respectively.