(decreased) increased $() and in and respectively. On the Tax Cuts and Jobs Act (“Tax Reform”) was signed into law. This comprehensive reform of tax law reduces the federal corporate income tax rate from to and is generally effective beginning US GAAP requires deferred tax assets and liabilities to be measured at the enacted tax rate expected to apply when temporary differences are to be realized or settled. At the date of enactment, the Company’s deferred taxes were remeasured based upon the new tax rate and were reduced by with a corresponding decrease to the valuation allowance. This was offset by current year net operating losses and changes to future tax deductions resulting from derivative valuations, the terms of stock compensation plans, and accrued liabilities.

U.S. federal income tax rate of ) and the actual tax provision:

December 31,

the Company had approximately million of net operating loss (“NOL”) carryforwards for U.S. federal income tax purposes expiring in through As a result of Tax Reform, the Company’s federal net operating losses were re-measured at The reduction in the federal corporate income tax rate does change the gross dollar value of taxable income that be offset by NOLs, however that taxable income will only be taxable at in future periods, thus reducing the value of NOLs utilized after As of the Company had approximately million of NOL carryforwards for California income tax purposes expiring in through respectively. The Company and Liquidmetal Golf, Inc. file on a separate company basis for federal income tax purposes. Accordingly, the federal NOL carryforwards of legal entity are available to offset federal taxable income of the other. Liquidmetal Golf, Inc. had approximately million in federal NOL carryforwards, expiring in through

shareholders’ equity only when realized. Accordingly, deferred tax assets are recognized for NOL carryforwards resulting from excess tax benefits. As of deferred tax assets do include approximately of these tax effected excess tax benefits from employee stock option exercise that are a component of our NOL carryforwards. Accordingly, additional paid-in capital will increase up to an additional if and when such excess tax benefits are realized.

December 31,

the Company had approximately of Research & Development (“R&D”) credit carryforwards for U.S. federal income tax purposes expiring in through In addition, the Company has California R&D credit carryforwards of approximately which do expire under current California law. Tax Reform did impact the valuation of tax credit carryforwards, which directly offset taxes due.

382

IRC”) imposes limitations on the use of NOL’s and credits following changes in ownership as defined in the IRC. The limitation could reduce the amount of benefits that would be available to offset future taxable income each year, starting with the year of an ownership change. As a result of the completion of the complex analysis required by the IRC to determine if an ownership change has occurred, the Company has determined that its annual NOL carryforward limitation under Section of the IRC is per year.

    

’s, is principally dependent upon the Company’s ability to generate future taxable income from operations. The Company has provided a full valuation allowance for its net deferred tax assets due to the Company’s net operating losses.

470

– Income Taxes. At the adoption date and as of the Company had material unrecognized tax benefits and adjustments to liabilities or operations were required. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense which were for the years ended and

December 31,

the tax years through and through are subject to examination by the federal and California taxing authorities, respectively.