INCOME TAXES - Note 14

12 Months Ended

Dec. 31, 2020

Notes To Financial Statements Abstract

Income taxes - Note 14

14. INCOME TAXES

A provision for income taxes has not been recorded for 2020 and 2019 due to the valuation allowances placed against the net operating losses and deferred tax assets arising during such periods. A valuation allowance has been recorded for all deferred tax assets. Based on our history of losses since inception, the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred tax assets.

The effective tax rate of our provision (benefit) for income taxes differs from the Federal statutory rate as follows:

	Year Ended December 31,
	2020	2019
Statutory rate	21.0%	21.0%
Net operating loss expiration	(47.5)%	(14.7)%
Tax credits	2.2%	2.8%
Change in valuation allowance	24.3%	(9.1)%
Total	0.0%	0.0%

Deferred tax assets are summarized as follows (in thousands):

		December 31,
		2020		2019
Deferred tax assets
Reserves	$	647	$	610
Net operating loss carryforwards		83,289		85,282
R&D credit carryforwards		8,836		9,047
Depreciation/amortization deferred		15,862		16,978
Other		5,773		5,808
Net deferred taxes before valuation allowance		114,407		117,725
Less: Valuation allowance		(114,407)		(117,725)
Deferred tax assets	$	-	$	-

At December 31, 2020, we have net operating loss carryforwards of approximately $396.6 million for federal income tax reporting purposes. In addition, we have research and development tax credits of $8.8 million. During 2020, $28.4 million federal net operating losses and $512,000 general business credits expired unused. A majority of the net operating loss carryforwards and research and development credits available to offset future taxable income, if any, will expire in varying amounts from 2021 to 2040, if not previously used.

Certain net operating losses arise from the deductibility for tax purposes of compensation under nonqualified stock options equal to the difference between the fair value of the stock on the date of exercise and the exercise price of the options. For financial reporting purposes, the tax effect of this deduction, when recognized, is accounted for as an income tax benefit.

In certain circumstances, as specified in the Internal Revenue Code, a 50% or more ownership change by certain combinations of our shareholders during any three year period would result in limitations on our ability to use a portion of our net operating loss carryforwards.

We did not have any unrecognized tax benefits at December 31, 2020 or 2019.

We recognize interest accrued and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2020 and 2019 we did not recognize any interest or penalties.

We file income tax returns in the U.S. federal jurisdiction and Oregon. Due to our operating loss and credit carryforwards, the U.S. federal statute of limitations remains open for 1998 and onward.