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12. Income taxes
 12 Months Ended
Dec. 31, 2015
Notes to Financial Statements  
Income taxes - Note 12

12. INCOME TAXES

A provision for income taxes has not been recorded for 2015, 2014 and 2013, due to the valuation allowances placed against the net operating losses and deferred tax assets arising during such periods. A valuation allowance has been recorded for all deferred tax assets. Based on our history of losses since inception, the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred tax assets.

At December 31, 2015, we have net operating loss carry-forwards of approximately $359.7 million for federal income tax reporting purposes. In addition, we have research and development tax credits of $6.7 million. The net operating loss carry-forwards and research and development credits available to offset future taxable income, if any, will expire in varying amounts from 2018 to 2035, if not previously utilized.

In addition to the tax benefits above, we have $786,000 of capital loss carry-forwards that are scheduled to expire between 2016 and 2017. In certain circumstances, as specified in the Internal Revenue Code, a 50% or more ownership change by certain combinations of our shareholders during any three-year period would result in limitations on our ability to utilize our net operating loss carry-forwards.

Deferred tax assets are summarized as follows (in thousands):

      December 31,
      2015     2014
Deferred tax assets, current            
     Reserves   $ 2,581    $ 2,526 
     Other     749      617 
Total gross deferred tax assets, current     3,330      3,143 
             
Deferred tax assets, non-current            
     Net operating loss carryforwards     122,281      116,520 
     R&D credit carryforwards     6,747      6,520 
     Depreciation/amortization deferred     20,848      22,642 
     Other     7,954      7,846 
Total gross deferred tax assets, non-current     157,830      153,528 
             
Net deferred taxes before valuation allowance     161,160      156,671 
Less: Valuation allowance     (161,160)     (156,671)
Deferred tax assets   $ -    $ - 

 

The valuation allowance, permanent items, and the research and development credit carry-forwards account for substantially all of the difference between our effective income tax rate and the federal statutory tax rate of 34%.

Certain net operating losses arise from the deductibility for tax purposes of compensation under nonqualified stock options equal to the difference between the fair value of the stock on the date of exercise and the exercise price of the options. For financial reporting purposes, the tax effect of this deduction, when recognized, is accounted for as a credit to shareholders' equity.

We did not have any unrecognized tax benefits at December 31, 2015 or 2014.

We recognize interest accrued and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2015, 2014, and 2013, we recognized no interest or penalties.

We file income tax returns in the U.S. federal jurisdiction and various states. Due to our operating loss and credit carry-forwards, the U.S. federal statute of limitations remains open for 1998 and onward.