The Company accounts for income taxes under the provision of ASC 740, Income Taxes. The Company reported a $825,000 tax provision for the year ended December 31, 2018 related to foreign withholding taxes paid. 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. Significant components of the Company’s deferred tax assets as of December 31, 2018 and 2017 are as follows:

	2018			2017
Deferred tax assets:
Net operating loss carryforwards	$	15,738,000		$	8,424,000
Research and other credits		1,450,000			867,000
Reserves and accruals		1,953,000			595,000
Other		3,000			—
Intangibles		—			4,000
Total gross deferred tax assets		19,144,000			9,890,000
Less valuation allowance		(19,004,000	)		(9,793,000	)
Total deferred tax assets		140,000			97,000
Deferred tax liability:
Depreciation		(140,000	)		(97,000	)
Net deferred tax assets	$	—		$	—

In assessing the potential realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during the periods in which those temporary differences become deductible. As of December 31, 2018 and 2017, management was unable to determine if it is more likely than not that the Company’s deferred tax assets will be realized and has therefore recorded a 100% valuation allowance against deferred tax assets at such dates.

No Federal tax provision has been provided for the years ended December 31, 2018 and 2017, due to the losses incurred during such periods. A reconciliation of the difference between the income tax rate computed by applying the U.S. Federal statutory rate and the effective tax rate for the years ended December 31, 2018 and 2017 is as follows:

	Years Ended December 31,
	2018			2017
U. S. Federal statutory tax rate		(21	)%		(35	)%
State Taxes		(4	)%		0	%
Change in valuation allowance		24	%		16	%
Tax credits		(2	)%		(2	)%
Stock based compensation		3	%		2	%
Tax reform		0	%		18	%
Foreign withholding taxes		2	%		0	%
Other		0	%		1	%
Effective tax rate		(2	)%		0.0	%

The Company has applied the provisions of ASC 740, Income Taxes, which clarifies the accounting for uncertainty in tax positions and requires the recognition of the impact of a tax position in the financial statements if that position is more likely than not of being sustained on a tax return, based on the technical merits of the position, upon examination by the relevant taxing authority. At December 31, 2018 and 2017, the Company had unrecognized tax benefits related to Federal and state research tax credits of approximately $972,000 and $510,000, respectively. The Company is subject to Federal and state income tax examinations by tax authorities for all years since its incorporation in 2014. The Company is currently not under examination by any tax authority.

At December 31, 2018, the Company has available net operating loss carryforwards for Federal and state income tax purposes of approximately $57,532,000 and $57,845,000, respectively, which, if not utilized earlier, will begin to expire in 2035. The Company has Federal research credits of approximately $1,202,000, which, if not utilized earlier, will begin to expire in 2035, and state research credits of approximately $314,000, which, if not utilized earlier, will begin to expire in 2031. At December 31, 2018 the Company recorded $250,000 in research credits as prepaid to be offset against payroll tax liabilities associated with research and development personnel in 2018 in addition to the approximately $140,000 in research and development credits remaining in prepaid from 2017.

On December 22, 2017, the Tax Cuts and Jobs Acts was enacted into law. ASC 740 requires the Company to recognize the effect of the tax law change in the period of enactment. The lower tax rate requires the Company to remeasure its deferred tax assets and liabilities in fourth quarter of 2017. The total amount of the Company’s deferred tax assets before valuation allowance decreased by $4.3 million as a result of the decrease in the federal tax rate.

As permitted by SEC Staff Accounting Bulletin 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, we recorded provisional estimates during the year ended December 31, 2017, and have subsequently finalized our accounting analysis based on the guidance, interpretations, and data available as of December 31, 2018 and no further adjustments were made upon finalization of our accounting analysis.