11 .	Income Taxes

December 31, 2018,

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

$72.5

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

2019

through

2038.

Additionally, we have approximately

$1,064,000

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

2022

through

2038

unless utilized earlier.

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.

December 22, 2017,

the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law in the United States. The Tax Act made broad changes to the U.S. tax code, including, but

not

limited to, reducing the U.S. federal corporate tax rate from

35%

21%.

With regard to the Tax Act impact to the Company for the year ended

December 31, 2017,

we have recognized the impact of tax reform related to the revaluation of deferred tax assets and liabilities based on the rates we expect them to reverse in the future, which is generally

21%.

The amount recorded as tax expense related to the remeasurement of the deferred tax balance was approximately

$10.1

million, which was fully offset by a reduction in the valuation allowance.

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, 2018

and

2017:

	2018			2017
Deferred tax assets:
Net operating loss carryforward	$	16,681,908		$	16,273,259
Research and development tax credit carryforward		1,063,877			949,340
Stock-based compensation expense		1,808,509			1,709,867
Accrued salaries and directors’ fees		317,246			185,961
Depreciation		8,414			5,532
Total deferred tax assets		19,879,954			19,123,959
Deferred tax liabilities		-			-
Net deferred tax assets		19,879,954			19,123,959
Valuation allowance		(19,879,954	)		(19,123,959	)
Net deferred tax asset after reduction for valuation allowance	$	-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:

	2018			2017			2016
U.S. federal statutory rate applied to pretax loss	$	(537,620	)	$	(737,855	)	$	(1,112,378	)
Permanent differences		549			436			2,012
Research and development credits		(53,884	)		(57,109	)		(59,087	)
Impact of Tax Act		-			10,086,795			-
Change in valuation allowance		590,955			(9,292,267	)		1,169,453
Reported income tax expense	$	-0-		$	-0-		$	-0-