9. INCOME TAXES

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

INCOME TAXES

The provision for income taxes is comprised of the following:

	Year Ended
	December 31,
	2017			2016
Federal:
Current	$	–		$	7
Deferred		1			(3	)
Total	$	1		$	4
State:
Current	$	5		$	13
Deferred		(1	)		3
Total	$	4		$	16
Total income tax expense	$	5		$	20

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

	Year Ended December 31,
	2017		2016
Income tax benefit (expense) at federal statutory rate		34.00%		(34.00)%
State taxes, net of federal expense		2.52%		(6.36)%
Valuation allowance		1662.43%		29.12%
Remeasurment of deferred taxes from 34% to 21%		(1,710.52)%		0.00%
Research and development (“R&D”) credits		2.21%		6.01%
Other permanent differences		(15.63)%		(4.88)%
Other, net		20.84%		(0.76)%
Total effective rate		(4.15)%		(10.87)%

Comprehensive tax reform legislation enacted in December 2017, commonly referred to as the Tax Cuts and Jobs Acts (“2017 Tax Act”), has significantly changed U.S. federal income tax laws. The 2017 Tax Act, among other things, reduced the corporate income tax rate from 34% to 21%, limits the deductibility of business interest expense and net operating losses, provides additional limitations on the deductibility of executive compensation, imposes a one-time tax on unrepatriated earnings from certain foreign subsidiaries, taxes offshore earnings at reduced rates regardless of whether they are repatriated, and allows the immediate deduction of certain new investments instead of deductions for depreciation expense over time. As a result of the 2017 Tax Act, the Company recorded deferred tax expense of $1.9 million (1,710.52%) related to the remeasurement of its net deferred tax assets from 34% to 21%, which was substantially offset by a corresponding $1.9 million (1,662.43%) reduction in its deferred tax valuation allowance. The Company does not believe that the 2017 Tax Act will further impact its consolidated financial statements, however, its consolidated financial statements may change due to changes in interpretation of the 2017 Tax Act and additional regulatory guidance that may be issued.

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,
	2017			2016
Deferred tax assets:
Net operating loss (“NOL”) carryfowards	$	3,255		$	5,439
R&D & other credit carryfowards		501			531
Share-based compensation		741			1,137
Intangible amortization		21			68
Allowance for bad debt		2			–
Other		8			43
Total deferred tax assets	$	4,528		$	7,218
Less: valuation allowance		(3,649	)		(5,499	)
Net deferred tax assets	$	879		$	1,719
Deferred tax liabilities:
Depreciation on property and equipment	$	(879	)	$	(1,664	)
Amortization of intangibles		–			(55	)
Total deferred tax liabilities	$	(879	)	$	(1,719	)
Net deferred tax position	$	–		$	–

We have $15,107 of federal and $1,049 state NOL carry forwards and $501 in R&D and other credits available to offset future taxable income. These federal and state 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, 2017. 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, 2011 through December 31, 2016 are open to examination by the IRS.