Note 7 - Income Taxes

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

7

– INCOME TAXES

Deferred taxes are recorded based upon differences between the financial statement and tax bases of assets and liabilities and available carryforwards. Temporary differences and carryforwards which gave rise to a significant portion of deferred tax assets and liabilities as of

December

31,

2016

and

2015

are as follows (dollars in thousands):

	December 31,
	201 6			201 5
Deferred tax assets:
Net operating losses	$	74,195		$	71,215
Fixed asset basis difference		10,662			6,457
Contributions carryover		5			5
Deferred compensation		2,375			2,513
Accrued liabilities		389			315
Total deferred tax assets		87,626			80,505
Valuation allowance for deferred tax assets		(87,626	)		(80,505	)
Net deferred tax asset	$	-		$	-

The valuation allowance increased

$7,121,000

and

$8,566,000

in

2016

and

2015,

respectively. The change in deferred tax assets resulted from current year net operating losses and changes to future tax deductions resulting from terms of stock compensation plans, fixed assets, and accrued liabilities.

As of

December

31,

2016,

the Company had net operating loss (NOL) carryforwards of approximately

$252.1

million for federal income tax purposes and

$140.9

million for California income tax purposes. Such carryforwards expire in varying amounts through the year

2035.

Use of the carryforward amounts is subject to an annual limitation as a result of a previous ownership change.

As of

December

31,

2016,

the Company possessed unrecognized tax benefits totaling approximately

$2.8

million. None of these, if recognized, would affect the Company's effective tax rate because the Company has recorded a full valuation allowance against these assets.

The Company's tax years

2013

through

2016

remain subject to examination by the Internal Revenue Service, and tax years

2012

through

2016

remain subject to examination by the state of California. In addition, the Company's loss carryforward amounts are generally subject to examination and adjustment for a period of

three

years for federal tax purposes and

four

years for California purposes, beginning when such carryovers are utilized to reduce taxes in a future tax year.

A reconciliation of the income tax benefit to the statutory federal income tax rate is as follows (dollars in thousands):

	Year Ended December 31,
	201 6			201 5			201 4
Expected federal income tax benefit at 34%	$	(8,955	)	$	(8,163	)	$	(6,418	)
Loss with no tax benefit provided		6,918			7,389			5,766
State income tax		4			4			4
Non-deductible expenses and other		2,037			774			652
Income tax expense	$	4		$	4		$	4

Because it is more likely than not that the Company will not realize its net deferred tax assets, it has recorded a full valuation allowance against these assets. Accordingly, no deferred tax asset has been recorded in the accompanying consolidated balance sheets.