9. INCOME TAXES

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

INCOME TAXES

The provision for income taxes is comprised of the following:

	Year Ended
	December 31,
	2016			2015
Federal:
Current	$	7		$	4
Deferred		(3	)		34
Total	$	4		$	38
State:
Current	$	13		$	32
Deferred		3			(34	)
Total	$	16		$	(2	)
Total income tax expense (benefit)	$	20		$	36

The provision for income taxes differs from the amount computed by applying the U.S. statutory income tax rate before income taxes for the reasons set forth below.

	Year Ended
	December 31,
	2016			2015
Income tax (expense) benefit at federal statutory rate		(34.00)	%		34.00	%
State taxes, net of federal expense (benefit)		(6.36)	%		0.73	%
Return to provision adjustments		0.00	%		(1.08	)%
Valuation allowance		29.12	%		(35.60	)%
Research and development credits		6.01	%		0.65	%
Other permanent differences		(4.88)	%		(0.70	)%
Other, net		(0.76)	%		0.00	%
Total effective rate		(10.87)	%		(2.00	)%

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, as well as operating loss and tax credit carry forwards.  The tax effects of the temporary differences and carry forwards are as follows:

	As of
	December 31,
	2016			2015
Deferred tax assets:
Amortization of intangibles	$	68		$	61
Net operating loss		5,439			5,300
Share-based compensation		1,137			1,206
Investment in joint venture		0			3,972
Other		574			651
Total deferred tax assets	$	7,218		$	11,190
Deferred tax liabilities:
Depreciation and amortization on property, plant and equipment	$	(1,664	)	$	(1,656	)
Allowance for doubtful accounts		(55	)		70
Total deferred tax liabilities	$	(1,719	)	$	(1,586	)
Less: valuation allowance		(5,499	)		(9,604	)
Net deferred tax position	$	–		$	–

We have $15,745 in federal and state net operating loss (“NOL”) carry forwards and $531 in research and development credits available to offset future taxable income. These federal NOL’s will expire at various dates through 2035. Management analyzed its current operating results and future projections and determined that a full valuation allowance was needed due to our cumulative losses in recent years. We have no uncertain tax positions at December 31, 2016. Accordingly, we do not have any accruals for penalties or interest related to our tax returns. Should an examination or audit arise, we would evaluate the need for an accrual and record one, if necessary. Our tax returns from the tax years ended December 31, 2010 through December 31, 2015 are open to examination by the IRS.

Deferred tax asset of $3,972 as of December 31, 2015 related to investment in joint venture was written off during 2016 against a full valuation allowance. We have determined that this deferred tax asset should not have been reported at December 31, 2015 because the joint venture was liquidated in 2014. We have assessed the impact and determined it was not material to warrant a correction of December 31, 2015. As discussed, there was no impact on our consolidated results of operations, financial position or statement of cash flows for the year ended December 31, 2016 because it had a full valuation allowance.