7. INCOME TAXES

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 7: INCOME TAXES

Income tax expense is comprised of the following:  

	Year Ended December 31,
	2018			2017
Federal:
Current	$	–		$	–
Deferred		2			1
Total	$	2		$	1
State:
Current	$	8		$	5
Deferred		(2	)		(1	)
Total	$	6		$	4
Total income tax expense (benefit)	$	8		$	5

Income taxes expense differs from the amount computed by applying the U.S. statutory income tax rate to loss before income taxes for the reasons set forth below.

	Year Ended December 31,
	2018			2017
Income tax expense at federal statutory rate		21.00	%		34.00	%
State taxes, net of federal benefit		(0.10	) %		2.52	%
Valuation allowance		(25.08	) %		1,662.43	%
Remeasurement of deferred taxes from 34% to 21%		0.00	%		(1,710.52	) %
Research and development credits		3.87	%		2.21	%
Other permanent differences		(0.31	) %		(15.63	)  %
Other, net		0.42	%		20.84	%
Total effective rate		(0.20	) %		(4.15	) %

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 $1,900 (1,710.52%) related to the remeasurement of its net deferred tax assets from 34% to 21%, which was substantially offset by a corresponding $1,900 (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,
		2018		2017
Deferred tax assets:
Net operating loss carryforwards	$	4,245		$	3,255
R&D & other credit carryforwards		685			501
Share-based compensation		730			741
Intangible amortization		16			21
Allowance for bad debt		2			2
Other		16			8
Total deferred tax assets	$	5,694		$	4,528
Less: valuation allowance		(4,837	)		(3,649	)
Net deferred tax assets	$	857		$	879
Deferred tax liabilities:
Depreciation on property and equipment	$	(857	)	$	(879	)
Amortization of intangibles		–			–
Total deferred tax liabilities	$	(857	)	$	(879	)
Net deferred tax position	$	–		$	–

We have $19,809 of federal and $1,096 of state net operating loss (“NOL”) carryforwards and $685 in research and development and other credits available to offset future taxable income. These federal and state NOL’s will expire at various dates through 2036. 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, 2018. 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, 2012 through December 31, 2017 are open to examination by the IRS.