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Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

(9)

Income Taxes

Our net income tax provision, including both current and deferred, related to U.S. federal and state income taxes, is none.

A reconciliation of income tax expense to the amount computed by applying the Federal income tax rate to loss before provision for income taxes as of December 31, 2018 and 2017 is as follows:

		2018				2017
Income tax credit at statutory rates		$	(437	)		$	(268	)
Nondeductible expenses			4				2
State income tax, net of federal benefits			(156	)			(45	)
Expiration of NOL			1,559				—
Effect of US tax rate change			—				9,284
Expiration of stock options			180				188
Change in valuation allowance			(1,148	)			(9,161	)
		$	—			$	—

Deferred income taxes reflect the net tax effects 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 income taxes consist of the following:

		As of December 31,
		2018				2017
Deferred tax assets:
Net operating loss carryforwards		$	22,560			$	23,520
Inventory and other allowances			35				12
Charitable contribution carryforwards			2				2
Excess (tax) book depreciation			524				577
Excess (tax) book amortization			57				53
Share-based compensation			749				885
Other accrued costs			141				167
Total deferred tax assets			24,068				25,216

Less: Valuation allowance			(24,068	)			(25,216	)
Deferred income taxes		$	—			$	—

The valuation allowance decreased approximately $1.1 million and decreased $9.2 million for the years ended December 31, 2018 and 2017, respectively (net of approximately $1.6 million and $0 million for the years ended December 31, 2018 and 2017, respectively, for expiring net operating loss carryforwards) due principally to the expiring of net operating loss carryforwards. Under the Internal Revenue Code, certain ownership changes, including the prior issuance of preferred stock and our public offering of common stock, may subject us to annual limitations on the utilization of our net operating loss carryforward. As of December 31, 2018, the amounts subject to limitations have not yet been determined.

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act tax reform legislation. This legislation makes significant changes in U.S. tax law, including a reduction in the corporate tax rates, changes in net operating loss carryforwards and carrybacks and a repeal of the corporate alternative minimum tax. The legislation reduced the U.S. corporate tax rate from the current rate of 34% to 21%. As a result of the enacted law, the Company was required to revalue deferred tax assets and liabilities at the enacted rate. This revaluation resulted in a reduction in the deferred tax asset and valuation allowance of $9.3 million. The other provisions of the Tax Cuts and Jobs Act did not have a material impact on the financial statements as of December 31, 2017 and for the year then ended. With the new legislation, the Securities and Exchange Commission issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118“) directing taxpayers to consider the impact of the U.S. legislation as “provisional“ when it does not have the necessary information prepared or analyzed in reasonable detail to complete its accounting for the change in tax law. There was no impact on the income tax expense for the federal corporate tax rate change for the period ended December 31, 2017 due to the tax period’s taxable loss and the calculation related to the change is complete.

We have net operating loss carryforwards for tax purposes of approximately $79 million on December 31, 2018. $77 million expire between 2019 and 2037. All net operating loss carryforwards generated after January 1, 2018, do not expire. Therefore, the $2 million generated this year will not expire.