Note 7 - Income Taxes

12 Months Ended

Dec. 31, 2019

. Income Taxes

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 our deferred tax assets (liabilities) as of

December

31,

2019

and

2018

are as follows (in thousands):

	December 31
	201 9			201 8

Net operating loss carryforwards	$	18,771		$	20,720
Net operating loss carryforwards of foreign subsidiaries		374			374
Depreciation expense		(77	)		4
Stock-based compensation expense		36			28
Other		68			78
Net deferred tax assets		19,172			21,204
Valuation allowance for net deferred tax assets		(19,172	)		(21,204	)
Net deferred tax assets, net of allowance	$	—		$	—

Deferred tax assets are required to be reduced by a valuation allowance if it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized. Realization of the future benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the near to medium term. Management has considered these factors in determining the valuation allowance for

2019

and

2018.

The differences between the provision for income taxes and income taxes computed using the federal statutory rate for the years ended

December

31,

2019

and

2018

are as follows (in thousands):

	201 9			201 8

Reconciliation of income tax benefit to statutory rate:
Income benefit at statutory rate	$	938		$	480
State income taxes (benefit), net of federal income tax benefit		1,066			57
Permanent differences		10			(91	)
Change in valuation allowance		(2,030	)		(450	)
Other		16			4
	$	—		$	—

December

31,

2019,

we had federal net operating loss carryforwards of approximately

$81.7

million for income tax purposes that begin to expire in

2022

and are subject to the ownership change limitations under Internal Revenue Code Section

382.