NOTE

three

December

  and respectively. The provision for income taxes in the statement of operations is comprised of minimum state taxes.

’s provision for income tax are as follows (in thousands):

December 22, 2017,

Act”) was signed into law. Among other changes is a permanent reduction in the federal corporate income tax rate from to effective As a result of the reduction in the corporate income tax rate, the Company revalued its net deferred tax asset at This results in a reduction in the value of the Company’s net deferred tax asset of approximately million, which was fully offset by the change in valuation allowance.

December 22, 2017,

No.

118

118

o the income tax effects of the Act. The Company has considered tax law changes effective The Company is reporting the estimates as a provisional amount in its financial statements for which the accounting under ASC  is completed. Primarily due to the lack state issued guidance, the Company will finalize the calculation in The Company does expect tax reform legislation to have a significant impact on the results of operations.

nt of the Company’s deferred tax assets as a result of uncertainties regarding the realization of the deferred tax assets. The change in the valuation allowance totaled million, million and  million for the years ended and respectively, principally due to increases in the valuation allowance associated with increased net operating losses. The change is primarily due to the change in the valuation allowance caused by tax effects of the current year net operating loss (“NOL”), million, which is offset by the  million tax charge related to remeasurement of the deferred tax assets.

December

  the Company had NOL carryforwards for federal, state and Australian income tax reporting purposes of approximately  million,

  million, and million, respectively. As of the Company also had Federal and California research and development tax credit carryforwards of approximately  million and million, respectively. The Federal NOL and tax credit carryforwards will expire at various dates beginning in through The California NOL carryforwards will expire at various dates beginning in  through The California research and development tax credit carryforwards are carried forward indefinitely. Subject to continuity of ownership requirements, Australian NOL are carried forward indefinitely.

382

383,

’s NOL and tax credit carryforwards be limited in the event a cumulative change in ownership of more than occurs within a -year period. The Company has completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company’s formation, primarily due to the complexity and cost associated with such a study; and the possibility that there be additional ownership changes in the future. If the Company has experienced an ownership change, the utilization of the NOL or tax credit carryforwards to offset future taxable income and taxes, respectively, would be subject to an annual limitation. Any limitation effectively eliminate of all or a portion of the NOL or tax credit carryforwards before utilization.

s historical losses and uncertainties surrounding its ability to generate future taxable income to realize these assets. Due to the existence of the valuation allowance, future changes in any unrecognized tax benefits and recognizable deferred tax benefits after the completion of an ownership change analysis is expected to impact its effective tax rate.

January

  (in thousands):

’s major tax jurisdictions are the United States, California, and Australia. All the Company’s tax years from through will remain open for examination by the federal, state and foreign tax authorities for and years, respectively, from the date of utilization of any net operating loss or tax credits. The Company is currently subject to income tax examinations by any authority.