Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income taxes

9. Income taxes:

At December 31, 2018, the Company had net operating loss carryforwards of $67,374 for federal income tax purposes which will begin to expire in 2019 if unused. The Company had net operating loss carryforwards for state income tax purposes of approximately $36,127. These state net operating losses carryforwards will begin to expire in the year 2018 if unused.

Deferred tax assets and liabilities at December 31 consist of the following:

	2018			2017
Deferred tax assets:
Net operating loss carry-forwards	$	16,672		$	17,359
Accruals and reserves		263			51
Deferred revenue		84			143
Intangibles		486			490
Other, net		42			39
Fixed assets		─			13
Gross tax assets		17,547			18,095
Valuation allowance		(17,547	)		(18,095	)
Net deferred tax assets	$	─		$	─

The Company’s provision for income taxes differs from the amount computed by applying the statutory U.S. federal income tax rate to loss before taxes as follows for the years ended December 31, 2018 and December 31, 2017:

	2018			2017
Income tax benefit at the federal statutory rate	$	(209	)	$	(661	)
State income tax benefit		(69	)		(135	)
NOL expiration		938			118
Prior year true-ups		(195	)		15
Permanent items and other		81			354
Tax cuts and Jobs Act Rate Changes		─			9,090
Change in valuation allowance		(548	)		(8,781	)
Income tax expense	$	(2	)		$ ─

A full valuation allowance has been established for the Company’s net deferred tax assets since the realization of such assets through the generation of future taxable income is uncertain.

Current tax laws impose substantial restrictions on the utilization of net operating losses and credit carryforwards in the event of an “ownership change”, as defined by the Internal Revenue Code (IRC). If there should be an ownership change, the Company’s ability to utilize its carryforwards could be limited.

In December 2017, the Tax Cuts and Jobs Act (the “2017 Tax Act”) was enacted. The 2017 Tax Act includes a number of changes to existing U.S. tax laws that impact the company, most notably a reduction of the U.S. corporate income tax rate from 34 percent to 21 percent for tax years beginning after December 31, 2017. The company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. Accordingly, the company’s deferred tax assets and liabilities were remeasured to reflect the reduction in the U.S. corporate income tax rate from 34 percent to 21 percent, resulting in a $9.1 million decrease in net deferred tax assets for the year ended December 31, 2017 and a corresponding $9.1 million decrease in valuation allowance as of December 31, 2017.

In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income ("GILTI") provisions of the Tax Cuts and Jobs Act (the "Act"). The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or to treat any taxes on GILTI inclusions as period cost are both acceptable methods subject to an accounting policy election. Effective the first quarter of 2018, the Company elected to treat any potential GILTI inclusions as a period cost as we are not projecting any material impact from GILTI inclusions and any deferred taxes related to any inclusion would be immaterial