Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes [Abstract]

Income Taxes

Note 10 – Income Taxes

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

	December 31,
	2024			2023
Federal statutory rate		21.0	%		21.0	%
State taxes		2.2	%		7.9	%
Extraordinary gain		0.0	%		0.0	%
Permanent differences		(6.0	)%		(0.9	)%
Research and development		3.6	%		4.1	%
State Taxes/Sale of NOL		2.3	%		3.2	%
Valuation Allowance		(20.8	)%		(32.1	)%
Other		0.0	%		0.0	%
Effective tax rate		2.3	%		3.2	%

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

	December 31,
	2024			2023
Federal net operating losses	$	33,122,997		$	28,599,086
State net operating losses		4,575,782			4,648,978
Stock options		3,649,378			4,668,417
Federal tax credit		6,128,255			4,730,921
State tax credits		748,597			582,605
Research and Development Capitalization (IRC 174)		13,189,388			10,017,958
License Agreement		2,491,266			2,639,961
Amortization		17,571			23,131
Accrued expense		106			104
Depreciation		727,367			725,305
Lease liabilities		35,349			50,564
Other		15,623			15,374
Total gross deferred tax assets		64,701,679			56,702,404
Less valuation allowance		(64,655,056	)		(56,645,587	)
Deferred tax assets, net	$	46,623		$	56,817
Right of use asset	$	(46,623	)	$	(56,817	)
Total gross deferred tax liabilities		(46,623	)		(56,817	)
Deferred tax, net	$	–		$	–

In assessing the realizability of the net deferred tax assets, the Company considers all relevant positive and negative evidence to determine whether it is more likely than not that some portion of the deferred income tax will not be realized. The realization of the gross deferred tax assets is dependent on several factors, including the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards. At December 31, 2024 and 2023, the Company has recorded a full valuation allowance against its net deferred tax assets of approximately $64.7 and $56.6 million, respectively. The change in the valuation allowance during the year ended 2024 was approximately $8.0 million.

The Tax Cuts and Jobs Act of 2017 (TCJA) has modified the IRC 174 expenses related to research and development for the tax years beginning after December 31, 2021. Under the TCJA, the Company must now capitalize the expenditures related to research and development activities and amortize over five years for U.S. activities and 15 years for non-U.S. activities using a mid-year convention. Therefore, the capitalization of research and development costs in accordance with IRC 174 resulted in a deferred tax asset of $13.2 million and $10.0 million as of December 31, 2024 and 2023, respectively.

At December 31, 2024, the Company had federal net operating loss (“NOL”) carryforwards of approximately $157.7 million. At December 31, 2024, the Company had federal research and development credit carryforwards of approximately $6.1 million. The federal net operating loss carryforwards begin to expire in 2028, losses generated in 2018 or later of $127.8 million will carry forward indefinitely. The federal credit carryforwards begin to expire in 2032. Section 382 and 383 of the Internal Revenue Code of 1986 subject the future utilization of net operating losses and certain other tax attributes, such as research and experimental tax credits, to an annual limitation in the event certain ownership changes, as defined. The Company may be subject to the net operating loss utilization provisions of Section 382 of the Internal Revenue Code.  The effect of an ownership change would be the imposition of an annual limitation on the use of NOL carryforwards attributable to periods before the change.  The amount of the annual limitation depends upon the value of the Company immediately before the change, changes to the Company’s capital during a specified period prior to the change, and the federal published interest rate.  Although the Company has not completed an analysis under Section 382 of the Code, it is likely that the utilization of the NOLs will be limited.

At December 31, 2024, the Company had approximately $67.2 million of State of New Jersey NOLs which expire between 2029 and 2043. At December 31, 2024, the Company had approximately $0.9 million of the State of New Jersey research development credits carryforwards.  The State of New Jersey has enacted legislation permitting certain corporations located in New Jersey to sell state tax loss carryforwards and state research and development credits, or net loss carryforwards. The Technology Business Tax Certificate Transfer Program enables qualified, unprofitable NJ-based technology or biotechnology companies with fewer than 225 US employees (including the parent company and all subsidiaries) to sell a percentage of New Jersey NOLs and research and development (“R&D”) tax credits to unrelated profitable corporations. In 2024, the Company sold New Jersey NOL carryforwards and R&D Credits, resulting in the recognition of $0.9 million of income tax benefit, net of transaction costs.  There is no certainty as to whether this program will continue.

Entities are also required to evaluate, measure, recognize and disclose any uncertain income tax provisions taken on their income tax returns. The Company has analyzed its tax positions and has concluded that as of December 31, 2024, there were no uncertain positions. The Company’s U.S. federal and state net operating losses have occurred since its inception in 2009 and as such, tax years subject to potential tax examination could apply from that date because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities. Interest and penalties, if any, as they relate to income taxes assessed, are included in the income tax provision. The Company did not have any unrecognized tax benefits and has not accrued any interest or penalties for the years ended December 31, 2024 and 2023.