Income Taxes

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

(8) Income Taxes

Our net income tax provision, including both current and deferred, related to U.S. federal and state income taxes, is none.

A reconciliation of income tax expense to the amount computed by applying the Federal income tax rate to loss before provision for income taxes as of December 31, 2017 and 2016 is as follows:

	2017			2016
Income tax credit at statutory rates	$	(268	)	$	(436	)
Nondeductible expenses		2			2
State income tax, net of federal benefits		(45	)		(66	)
Effect of US tax rate change		9,284			0
Expiration of stock options		188			149
Other		0			(5	)
Change in valuation allowance		(9,161	)		356
	$	—		$	—

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 income taxes consist of the following:

	As of December 31,
	2017			2016
Deferred tax assets:
Net operating loss carryforwards	$	23,520		$	31,935
Inventory and other allowances		12			16
Charitable contribution carryforwards		2			5
Excess (tax) book depreciation		577			805
Excess (tax) book amortization		53			69
Share-based compensation		885			1,328
Other accrued costs		167			219
Total deferred tax assets		25,216			34,377
Less: Valuation allowance		(25,216	)		(34,377	)
Deferred income taxes	$	—		$	—

The valuation allowance decreased approximately $9.2 million and increased $0.4 million for the years ended December 31, 2017 and 2016, respectively (with no expiring net operating loss carryforwards and credits for either period; a portion of the charitable contribution carryforward expired during 2017 and 2016) due principally to the change in the Federal tax rate, the change in State tax rate, the change in the net operating loss carryforward and uncertainty as to whether future taxable income will be generated prior to the expiration of the carryforward period. Under the Internal Revenue Code, certain ownership changes, including the prior issuance of preferred stock and our public offering of common stock, may subject us to annual limitations on the utilization of our net operating loss carryforward. As of December 31, 2017, the amounts subject to limitations have not yet been determined.

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act tax reform legislation. This legislation makes significant changes in U.S. tax law, including a reduction in the corporate tax rates, changes in net operating loss carryforwards and carrybacks and a repeal of the corporate alternative minimum tax. The legislation reduced the U.S. corporate tax rate from the current rate of 34% to 21%. As a result of the enacted law, the Company was required to revalue deferred tax assets and liabilities at the enacted rate. This revaluation resulted in a reduction in the deferred tax asset and valuation allowance of $9.3 million. The other provisions of the Tax Cuts and Jobs Act did not have a material impact on the financial statements as of December 31, 2017 and for the year then ended. With the new legislation, the Securities and Exchange Commission issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) directing taxpayers to consider the impact of the U.S. legislation as “provisional” when it does not have the necessary information prepared or analyzed in reasonable detail to complete its accounting for the change in tax law. There is no impact on the current year income tax expense for the federal corporate tax rate change due to our current year taxable loss and the calculation related to the change is complete.

We had net operating loss carryforwards for tax purposes of approximately $83 million on December 31, 2017, which expire between 2018 and 2037.