Income Taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 8 – INCOME TAXES

The components of the provision (benefit) for income taxes, in the consolidated statements of operations are as follows (in thousands):

	Year Ended December 31,
	2016			2015			2014
Current
Federal	$	-		$	-		$	-
State		-			-			-
		-			-			-
Deferred
Federal		(936	)		(1,403	)		(2,471	)
State		(66	)		(73	)		(74	)
		(1,002	)		(1,476	)		(2,545	)
Total	$	(1,002	)	$	(1,476	)	$	(2,545	)
Income taxes from continuing operations before valuation allowance	$	(1,002	)	$	(1,476	)	$	(2,545	)
Change in valuation allowance		1,002			1,476			2,545
Income tax (benefit)		-			-			-
Total	$	-		$	-		$	-

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

	Year Ended December 31,
	2016			2015			2014
Statutory rate - federal	$	(975	)	$	(1,224	)	$	(2,662	)
State taxes, net of federal benefit		(41	)		(305	)		(51	)
Permanent differences and other		14			53			168
Income tax from continuing operation before valuation allowance		(1,002	)		(1,476	)		(2,545	)
Change in valuation allowance		1,002			1,476			2,545
Income tax (benefit)		-			-			-
Total	$	-		$	-		$	-

The components of permanent and other differences are as follows (in thousands):

	Year Ended December 31,
	2016		2015		2014
Permanent items:
Meals and Entertainment	$	14	$	7	$	7
Return to provision adjustment		-		-		-
Charitable contributions		-		-		1
Share-based compensation expense for stock options granted		-		46		160
	$	14	$	53	$	168

The tax effects of the primary “temporary differences” between values recorded for assets and liabilities for financial reporting purposes and values utilized for measurement in accordance with tax laws giving rise to our deferred tax assets are as follows (in thousands):

	Year Ended December 31,
	2016			2015			2014
Net operating loss and capital loss carryforward	$	18,019		$	16,921		$	14,983
Consulting-royalty costs		-			(8	)		39
Trademark		576			671			752
Investment in Phusion		938			1,103			(483	)
Depreciation		(304	)		(103	)		(45	)
Other		1,159			802			2,508
Valuation allowance		(20,388	)		(19,386	)		(17,754	)
Total	$	-		$	-		$	-

A valuation allowance for all of our net deferred tax assets has been provided as we are unable to determine, at this time, that the generation of future taxable income against which the net operating loss (“NOL”) carryforwards could be used can be predicted to be more likely than not. The net change in the valuation allowance for Fiscal 2016, 2015 and 2014 was $1.0 million, $1.6 million and $2.7 million, respectively. Certain exercises of options and warrants, and restricted stock issued for services that became unrestricted resulted in reductions to taxes currently payable and a corresponding increase to additional-paid-in-capital for prior years. In addition, certain tax benefits for option and warrant exercises totaling $6.5 million are deferred and will be credited to additional-paid-in-capital, and not income tax expense, if the NOL’s attributable to these exercises are utilized. The net operating loss carry-forwards currently approximate $47.1 million for federal purposes will expire beginning in Fiscal 2020 through 2036. Additionally, there are net operating loss carry-forwards of $22.1 million for state purposes that will expire beginning in Fiscal 2020 through 2036.