v3.8.0.1

Note 18 - Income Taxes | 12 Months Ended
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Dec. 31, 2017
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | 18. Income Taxes The Company recorded a benefit for income taxes of $0.7 million during the year ended December 31, 2017, and a benefit for income taxes of $34.0 thousand during the year ended December 31, 2016. The Company recorded a provision for income taxes of $0.8 million during the year ended December 31, 2015. The provision (benefit) for income taxes consisted of the following (in thousands):
|  | December 31, 201 7 |  |  | December 31, 201 6 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | (702 | ) |  | $ | (39 | )
State |  |  | 1 |  |  |  | 6 |
Total Current |  |  | (701 | ) |  |  | (33 | )
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | — |  |  |  | (1 | )
State |  |  | — |  |  |  | — |
Total D eferred |  |  | — |  |  |  | (1 | )
Provision (benefit) for income taxes |  | $ | (701 | ) |  | $ | (34 | )
Net deferred tax assets as of D ecember 31, 2017 and 2016 consist of the following (in thousands):
|  | December 31, 201 7 |  |  | December 31, 201 6 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accruals and other |  | $ | 2,717 |  |  | $ | 3,746 |
Research credits |  |  | 6,530 |  |  |  | 5,670 |
Net operating loss carryforward |  |  | 31,064 |  |  |  | 36,224 |
Section 59(e) R&D expenditures |  |  | 12,156 |  |  |  | 16,782 |
Deferred revenue |  |  | 18,384 |  |  |  | 24,836 |
AMT credit |  |  | — |  |  |  | 703 |
Total deferred tax assets |  |  | 70,851 |  |  |  | 87,961 |
Valuation allowance |  |  | (70,851 | ) |  |  | (87,961 | )
Net deferred tax assets |  | $ | — |  |  | $ | — |
Reconciliations of the statutory federal income tax to the Company ’s effective tax during the years ended December 31, 2017, 2016 and 2015 are as follows (in thousands):
|  | Year Ended December 31, |
|  | 201 7 |  |  | 2016 |  |  | 2015 |
Tax at statutory federal rate |  | $ | (17,751 | ) |  | $ | (14,685 | ) |  | $ | (8,037 | )
State tax —net of federal benefit |  |  | 350 |  |  |  | (73 | ) |  |  | 2,853 |
PIPE Warrant liability |  |  | (70 | ) |  |  | (260 | ) |  |  | (726 | )
General Business credits |  |  | (316 | ) |  |  | (360 | ) |  |  | (455 | )
Stock Options |  |  | 42 |  |  |  | 1,115 |  |  |  | 1,559 |
Other |  |  | 51 |  |  |  | 33 |  |  |  | 73 |
Change in valuation allowance |  |  | (17,110 | ) |  |  | 14,196 |  |  |  | 5,493 |
Tax Reform – Tax Rate Change |  |  | 34,103 |  |  |  | — |  |  |  | — |
Provision for income taxes |  | $ | (701 | ) |  | $ | (34 | ) |  | $ | 760 |
ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of deferred tax assets is dependent on future taxable income, if any, the timing and the amount of which are uncertain. Accordingly, the deferred tax assets have been fully offset by a valuation allowance. The valuation allowance decreased by $17.1 million during year ended December 31, 2017 and increased by $14.2 million and $5.5 million during the years ended 2016 and 2015, respectively. As of December 31, 2017, the Company had federal net operating loss carryforwards of $115.6 million, which begin to expire in 2029. As of December 31, 2017, the Company had state net operating loss carryforwards of $97.2 million, which begin to expire in 2028. As of December 31, 2017, the Company had a federal alternative minimum tax credit carryover of $0.7 million which is now refundable under the tax reform enacted on December 22, 2017 and classified as a non-current receivable on the Company’s balance sheet. As of December 31, 2017, the Company had federal research credit carryovers of $5.9 million, which begin to expire in 2026. As of December 31, 2017, the Company had state research credit carryovers of $3.6 million, which will carryforward indefinitely. The Company has adopted ASU 2016 - 09 in calendar year end December 31, 2017. As a result of this adoption, the Company is reflecting the excess tax benefit related to share based compensation in the current year. The impact of this adoption results in a gross increase of $2.9 million and $2.0 million to federal and state NOLs respectively. The Company has recorded a full valuation allowance against its deferred tax assets. Under Section 382 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research credits, to offset its post-change income may be limited. Based on an analysis performed by the Company as of December 31, 2013, it was determined that two ownership changes have occurred since inception of the Company. The first ownership change occurred in 2006 at the time of the Series A financing and, as a result of the change, $1.4 million in federal and state net operating loss carryforwards will expire unutilized. In addition, $26,000 in federal and state research and development credits will expire unutilized. The second ownership change occurred in July 2013 at the time of the underwritten public offering; however, the Company believes the resulting annual imposed limitation on use of pre-change tax attributes is sufficiently high that the limit itself will not result in unutilized pre-change tax attributes. If it is determined that an ownership change occurred post 2013, the Company’s tax attributes may be subject to limitation. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law resulting in significant changes to the Internal Revenue Code. The Act reduces the federal corporate income tax rate decrease from 35% to 21% effective for tax periods beginning after December 31, 2017, changes U.S international taxation from a worldwide tax system to a territorial system, and a one -time transition tax on the untaxed cumulative foreign earnings and profits as of December 31, 2017. The Act also includes provisions for the elimination of the Alternative Minimum Tax, among other changes. The Company has calculated its best estimate of the impact of the Act in its year end income tax provision in accordance with its understanding of the Act and guidance available as of the date of this filing and as a result has recorded $0.7 million as an additional income tax benefit in the fourth quarter of 2017, the period in which the legislation was enacted. The provisional amount of $0.7 million related to the reversal of AMT credits which are now refundable credits under the provisions of the Act. The Company has remeasured the deferred tax assets and liabilities based on the rate at which they are expected to reverse in the future. No provision or benefit has been recorded as the Company has recorded a full valuation allowance against its deferred tax assets. The effects of other provisions of the Act are not expected to have a material impact on the Company’s financial statements. Uncertain Tax Positions A reconciliation of the beginning and ending balances of the unrecognized tax benefits during t he years ended December 31, 2017, 2016 and 2015 is as follows (in thousands):
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Unrecognized benefit —beginning of period |  | $ | 2,162 |  |  | $ | 1,939 |  |  | $ | 1,667 |
Gross decreases —prior period tax positions |  |  | — |  |  |  | — |  |  |  | — |
Gross increases —current period tax positions |  |  | 203 |  |  |  | 223 |  |  |  | 272 |
Unrecognized benefit —end of period |  | $ | 2,365 |  |  | $ | 2,162 |  |  | $ | 1,939 |
The entire amount of the unrecognized tax benefits would not impact the Company ’s effective tax rate if recognized. Accrued interest and penalties related to unrecognized tax benefits are classified as income tax expense and were immaterial. The Company files income tax returns in the United States and in California. The tax years 2005 through 2017 remain open in both jurisdictions. The Company is not currently under examination by income tax authorities in federal, state or other foreign jurisdictions. The Company does not anticipate any significant changes within 12 months of this reporting date of its uncertain tax positions.

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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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