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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes consists of the following components (in thousands):
|  | December 31, 2017 |  | December 31, 2016
Current Expense (Benefit): |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |
State |  | — |  |  | — |
Current Income Tax Expense |  | $ | — |  |  | $ | — |
Deferred Expense (Benefit): |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |
State |  | — |  |  | — |
Deferred Income Tax Expense |  | $ | — |  |  | $ | — |
Net Deferred Taxes |  | $ | — |  |  | $ | — |
The following summarizes activity related to the Company’s valuation allowance (in thousands):
|  | December 31, 2017 |  | December 31, 2016
Valuation Allowance at Beginning of Period |  | $ | 1,397 |  |  | $ | 155 |
Income Tax Benefit |  | 1,164 |  |  | 1,242 |
Release of Valuation Allowance |  | — |  |  | — |
Valuation Allowance at End of Period |  | $ | 2,561 |  |  | $ | 1,397 |
A reconciliation of the income tax benefit computed using the federal statutory income tax rate to the Company’s effective income tax rate is as follows (in thousands):
|  | December 31, 2017 |  | December 31, 2016
(amounts in thousands) |  | Amount |  | Percent |  | Amount |  | Percent
Federal Tax Benefit at Statutory Rate |  | $ | 3,334 |  |  | 34.00 | % |  | $ | 1,335 |  |  | 34.00 | %
State Tax Benefit Net of Federal |  | (117 | ) |  | (1.20 | )% |  | 137 |  |  | 3.48 | %
IPO Costs |  | (76 | ) |  | (0.77 | )% |  | (227 | ) |  | (5.78 | )%
Stock Warrant Costs |  | (395 | ) |  | (4.03 | )% |  | — |  |  | — | %
Other Permanent Differences |  | (9 | ) |  | (0.09 | )% |  | (3 | ) |  | (0.08 | )%
Change in Deferred Tax Rate due to Tax Reform |  | (1,562 | ) |  | (15.93 | )% |  | — |  |  | — | %
Other |  | (11 | ) |  | (0.11 | )% |  | — |  |  | — | %
Increase in Valuation Allowance |  | (1,164 | ) |  | (11.87 | )% |  | (1,242 | ) |  | (31.62 | )%
Total Tax (Expense) / Benefit |  | $ | — |  |  | — | % |  | $ | — |  |  | — | %
The Company’s deferred tax assets and liabilities were remeasured to reflect the reduction in the U.S. corporate income tax rate from 35% to 21%, resulting in a deferred tax expense of $1.56 million for the year ended December 31, 2017 that is still fully valued against as of December 31, 2017. This expense is attributable to the Company being in a net deferred tax asset position at the time of remeasurement. As the company maintains fully valuation allowance, this amount can be seen on the rate reconciliation as an adjustment to deferred tax asset and corresponding valuation allowance. The principal components of the Company’s deferred tax assets and liabilities consist of the following at December 31, 2017 and 2016 (in thousands):
|  | December 31, 2017 |  | December 31, 2016
Deferred Tax Assets: |  |  |  |  |  |
Start Up Costs |  | $ | 1,105 |  |  | $ | 735 |
Federal Net Operating Loss Carryforwards |  | 1,275 |  |  | 520 |
State Tax Loss Carryforwards |  | 9 |  |  | 50 |
Deferred Compensation |  | 176 |  |  | 96 |
Total Deferred Tax Assets |  | $ | 2,565 |  |  | $ | 1,401 |
Less Valuation Allowance |  | (2,561 | ) |  | (1,397 | )
Net Deferred Tax Assets |  | $ | 4 |  |  | $ | 4 |
Deferred Tax Liabilities: |  |  |  |  |  |
Fixed Assets |  | (4 | ) |  | (4 | )
Total Deferred Tax Liabilities |  | $ | (4 | ) |  | $ | (4 | )
Net Deferred Taxes |  | $ | — |  |  | $ | — |
The Company has incurred net operating losses since inception. As of December 31, 2017, the Company had total federal operating loss carry forwards of approximately $6.07 million which expire commencing in 2037. The value of these carryforwards depends on the Company’s ability to generate taxable income. Additionally, because federal tax laws limit the time during which the net operating loss carryforwards may be applied against future taxes, if the Company fails to generate taxable income prior to the expiration dates of the carry forwards the Company may not be able to fully utilize the net operating loss carryforwards to reduce future income taxes. Finally, the Company has not undertaken a detailed analysis of the application of IRC Section 382 with respect to limitations on the utilization of net operating loss carryforwards and other deferred tax assets. However, the Company believes that this matter is not material to the overall tax position within the financial statements due to the full valuation allowance against the net operating losses and the lack of utilization of the net operating losses during tax years open under statute. The Company conducts business in various locations and, as a result, files income tax returns in the United States Federal jurisdiction and in multiple state jurisdictions. As of December 31, 2017, the Company had state operating losses of approximately $5.81 million which expire commencing in 2037. Since the Company is in a loss carryforward position, the Company is generally subject to examination by the U.S. federal, state and local income tax authorities for all tax years in which a loss carryforward is available. Management has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. The Company has cumulative losses and there is no assurance of future taxable income, therefore, valuation allowances have been recorded to fully offset the deferred tax asset at December 31, 2017. Management has determined that it is more likely than not that the Company will not recognize the benefits of its federal and state deferred tax assets, and as a result, a valuation allowance of $2.56 million and $1.40 million has been established at December 31, 2017 and 2016, respectively. The change in the valuation allowance for the year ended December 31, 2017 was primary due to additional operating losses and capitalized research costs. The Company may be eligible to claim research and development tax credits in the future, but has not conducted a study to date. There are no unrecognized tax benefits from any federal, state or foreign jurisdictions. The only tax years open under statute for the Company are December 31, 2017 and December 31, 2016. The Company’s policy is to recognize interest and penalties related to any unrecognized tax liabilities as additional tax expense. No interest or penalties have been accrued at December 31, 2017 and 2016, as the Company has not recorded any uncertain tax positions. The Company believes it has appropriate and adequate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. Although the Company believes its recorded assets and liabilities are reasonable, tax regulations are subject to interpretation and tax litigation is inherently uncertain; therefore, the Company’s assessments can involve both a series of complex judgments about future events and rely heavily on estimates and assumptions. Although the Company believes that the estimates and assumptions supporting its assessments are reasonable, the final determination of tax audit settlements and any related litigation could be materially different from that which is reflected in historical income tax provisions and recorded assets and liabilities. If the Company were to settle an audit or a matter under litigation, it could have a material effect on the income tax provision, net income, or cash flows in the period or periods for which that determination is made. Any accruals for tax contingencies are provided for in accordance with U.S. GAAP. The Company does not believe that its tax positions will significantly change due to any settlement and/or expiration of statutes of limitations prior to December 31, 2017. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of foreign earnings. We have estimated our provision for income taxes in accordance with the Tax Act and guidance available as of the date of this filing but have kept the full valuation allowance. As a result have recorded no income tax expense in the fourth quarter of 2017, the period in which the legislation was enacted. On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The deferred tax expense recorded in connection with the remeasurement of deferred tax assets is a provisional amount and a reasonable estimate at December 31, 2017 based upon the best information currently available. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Act. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter of 2018 when the analysis is complete. The accounting is expected to be complete when the 2017 U.S. corporate income tax return is filed in 2018.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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