Income taxes

For the period from February 26, 2014 (inception) to December 31, 2014, the Company did not record a current or deferred income tax expense or benefit. The Company's loss before income taxes consists solely of a domestic loss.

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:



	December 31, 2014
Deferred tax assets:
U.S. and state net operating loss carryforwards	$	2,708,861
Accruals and other temporary differences	23,829
Amortization	36,742
Stock-based compensation	57,120
Tax credit carryforward	87,762
Total deferred tax assets	2,914,314
Less valuation allowance	(2,751,295		)
Deferred tax assets	163,019
Deferred tax liabilities:
Stock-based compensation	(162,779		)
Depreciation	(240		)
Accruals and other temporary differences	—
Deferred tax liabilities	(163,019		)
Net deferred tax assets	$	—

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based on the Company's operating loss, the Company has concluded that it is more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance against its net deferred tax assets as of December 31, 2014. The valuation allowance increased by $2,751,295 during the period from February 26, 2014 (inception) to December 31, 2014, due primarily to the generation of a net operating loss during the period. The valuation allowance is allocated to both short term and long term gross deferred tax assets, resulting in a long term deferred tax asset and a current deferred tax liability of $50,103.

A reconciliation of income tax expense computed at the statutory federal income tax rate to income taxes as reflected in the financial statements is as follows:



	Period from February 26, 2014 (Inception) to December 31, 2014
Federal income tax expense at statutory rate	35.0	%
State income tax, net of federal benefit	3.7	%
Permanent differences	(0.3	)%
Stock compensation	(5.3	)%
Research credits	1.2	%
Change in valuation allowance	(34.3	)%
Effective tax rate	0.0	%

As of December 31, 2014, the Company had a U.S. federal net operating loss carryforward of approximately $6,850,000, which may be available to offset future income tax liabilities and expires in 2034. As of December 31, 2014, the Company also had a tax effected U.S. state net operating loss carryforward of approximately $481,000, which may be available to offset future income tax liabilities and expires in 2034.

Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company completed financings since its inception which may have resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code, or could result in a change in control in the future.

The Company will recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2014, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company's consolidated statement of operations and comprehensive loss.