Note 9 - Income Taxes

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

9.

INCOME TAXES

A reconciliation of the Company’s statutory tax rate to the effective rate for the years ended

December

31,

2016

and

2015

is as follows: 

	2016			2015
Federal statutory rate		34.0	%		34.0	%
State taxes, net of federal tax benefit		5.5			5.5
Recapture of alternative minimum tax		–			–
Valuation allowance		(39.5	)		(39.5	)
Effective tax rate		–	%		–	%

The components of the Company’s deferred tax asset as of

December

31,

2016

and

2015

are as follows:

	December 31,
In thousands	2016			2015
Net operating loss carry forwards	$	80,920		$	71,557
Deferred tax assets, net		2,489			4,953
Subtotal		83,409			76,510
Valuation allowance		(83,409	)		(76,510	)
Total deferred tax asset	$	-		$	-

The evaluation of the realizability of such deferred tax assets in future periods is made based upon a variety of factors that affect the Company’s ability to generate future taxable income, such as intent and ability to sell assets and historical and projected operating performance. At this time, the Company has established a valuation reserve for all of its deferred tax assets. Such tax assets are available to be recognized and benefit future periods.

Following is a schedule of net operating loss carry forwards and their year of expiration:

Approximate Amount of Unused  Operating Loss Carry Forwards (in $000s)		Expiration During Year Ended
$	7,136		2023
	15,647		2024
	8,168		2025
	7,361		2026
	11,905		2028
	18,547		2029
	18,145		2030
	21,386		2031
	20,558		2032
	10,321		2033
	22,906		2034
	21,338		2035
	21,444		2036
$	204,862

During

2016,

2015

and in prior years, the Company performed analyses to determine if there were changes in ownership, as defined by Section

382

of the Internal Revenue Code that would limit its ability to utilize certain net operating loss and tax credit carry forwards. The Company determined that it experienced an ownership change, as defined by Section

382,

in connection with certain common stock offerings on

July

25,

2011,

February

5,

2013,

June

3,

2013

and on

June

1,

2015.

As a result, the utilization of the Company's federal tax net operating loss carry forwards generated prior to the ownership changes are limited. As of

December

31,

2016,

the Company has net operating loss carry forwards for U.S. federal and state tax purposes of approximately

$85.6

million, before excluding net operating losses that have been limited as a result of Section

382

limitations. The annual limitation due to Section

382

for net operating loss carry forward utilization is approximately

$4.9

million per year for approximately

$90

million in net operating loss carry forwards existing at the ownership change occurring on

July

25,

2011,

approximately

$1.4

million per year for approximately

$34

million of additional net operating losses occurring from

July

2011

to the ownership change that occurred on

February

5,

2013,

and approximately

$1.5

million per year for approximately

$34

million of additional net operating losses occurring from

February

5,

2013

to the ownership change that occurred on

June

3,

2013

and approximately

$1.6

million per year for approximately

$31

million of additional net operating losses occurring from

June

3,

2013

to the ownership change that occurred on

June

1,

2015.

The utilization of these net operating loss carry forwards

may

be further limited if the Company experiences future ownership changes as defined in Section

382

of the Internal Revenue Code.