Entity information:
Income taxes
The Tax Cuts and Jobs Act, or the TCJA, was enacted on December 22, 2017 and became effective January 1, 2018. Among other changes, the TCJA significantly lowers the US corporate income tax rate, implements a territorial tax system and imposes a one-time transition tax on deemed repatriated earnings of foreign subsidiaries.

The TCJA reduces the US corporate income tax rate from 35% to 21%, effective January 1, 2018. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. As a result of the reduction in the US corporate income tax rate, the Company revalued its net deferred tax assets at December 31, 2017. Due to the full valuation allowance on the Company's deferred tax assets, no tax expense or benefit associated with the re-measurement was recognized in the Company's consolidated statement of operations for the year ended December 31, 2017. The change in the US corporate tax rate is also included in the Company’s deferred tax table.

The TCJA provided for a one-time transition tax on the deemed repatriation of post-1986 undistributed foreign subsidiary earnings and profits, or E&P. As the Company's foreign subsidiaries did not have consolidated accumulated E&P, the Company did not record any income tax expense related to the transition tax.

Due to the timing of and the substantial changes made by the TCJA , the Staff of the Securities and Exchange Commission, or the SEC, issued Staff Accounting Bulletin No. 118, or SAB 118, which provides registrants a measurement period to report the impact of the new US tax law. During the measurement period, provisional amounts for the effects of the law are recorded to the extent a reasonable estimate can be made. To the extent that all information necessary is not available, prepared or analyzed, companies may recognize provisional estimated amounts for a period of up to one year following enactment of the TCJA. Accordingly, the Company's preliminary estimate of the impact of the TCJA and the re-measurement of its deferred tax assets and liabilities is subject to finalization of its analysis of certain matters, such as developing interpretations of the TCJA provisions, changes to certain estimates and the filing of its tax returns. US Treasury regulations, administrative interpretations or court decisions interpreting the TCJA may require adjustments to the Company's initial estimates. The final determination of the TCJA provisions and re-measurement of the Company's deferred tax assets and liabilities will be completed as additional information becomes available, but no later than one year from the enactment of the TCJA.

Income taxes have been recorded on the following income (loss) before income tax expense:
 
 
Year ended December 31,
 
 
2017
 
2016
Domestic operations
 
$
(30,463
)
 
$
(4,967
)
Foreign operations
 
(18,439
)
 
27,580

  Income (loss) before provision for income taxes
 
$
(48,902
)
 
$
22,613


A reconciliation of income tax expense (benefit) at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows:
 
 
Year ended December 31,
 
 
2017
 
2016
Income tax expense at statutory rate
 
35.0
 %
 
35.0
 %
  Permanent items
 
0.5

 
—

  Foreign rate differential
 
(4.2
)
 
(12.2
)
  State taxes, net of federal benefit
 
0.8

 
(1.4
)
  Tax rate changes
 
(15.4
)
 
—

  Change in valuation allowance
 
(16.7
)
 
(21.4
)
Effective income tax rate
 
0.0
 %
 
0.0
 %

Tax rate changes includes both the impact of the reduction in the US tax rate under the TCJA and a reduction in the Norway tax rate.

The principal components of the Company’s deferred tax assets and liabilities were as follows:
 
 
Year ended December 31,
 
 
2017
 
2016
Deferred tax assets:
 
 
 
 
  Accrued expenses and other
 
$
972

 
$
539

  Fixed assets
 
55

 
—

  Interest expense
 
783

 
677

  Stock compensation
 
1,701

 
1,092

  Research and development
 
2,485

 
2,183

  Net operating losses
 
29,636

 
22,695

     Total deferred tax assets
 
35,632

 
27,186

Deferred tax liabilities:
 
 
 
 
  Fixed assets
 
—

 
(46
)
     Total deferred tax liabilities:
 
—

 
(46
)
  Less: Valuation allowance
 
(35,632
)
 
(27,140
)
Total net deferred tax assets (liabilities)
 
$
—

 
$
—


The TCJA, in addition to the changes indicated above, contained other provisions that may have a future impact on the Company. The provisions include limitations on the deductibility of interest based on the amount of adjusted taxable income, the deferral of research and development deductions, the acceleration of deductions related to fixed asset additions, changes to the utilization of net operating loss carry forwards and changes in the carry forward period, and global intangible low-taxed income provisions that subject foreign subsidiary income that exceeds an allowable return to current US taxation.
As of December 31, 2017, the Company had foreign net operating loss, or NOL, carry forwards of $96,616 primarily from its operations in Norway. As of December 31, 2017, the Company had federal and state NOL’s of $30,327 and $13,702, respectively. These domestic NOL carry forwards may be subject to an annual limitation in the event of cumulative changes in the ownership interest of significant stockholders over a three‑year period in excess of 50%. This could limit the amount of NOLs that the Company can utilize annually to offset future domestic taxable income or tax liabilities, if any. The amount of the annual limitation, if any, will be determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The federal and state NOL’s will expire beginning in 2030 and through 2037.
ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that all or a portion of the deferred tax assets will not be realized. After consideration of all the evidence, both positive and negative, the Company has recorded a full valuation allowance against its deferred tax assets at December 31, 2017 and 2016, respectively, because the Company’s management has determined that is it more likely than not that these assets will not be fully realized. The Company experienced a net change in valuation allowance of $8,492 during the year ended December 31, 2017.
The Company files income tax returns in Norway, the UK, the US, and various states. The Company is subject to examination by federal, state and foreign jurisdictions. The Company’s tax years in the US are open under statute from inception to present. All open years may be examined to the extent that tax credit or net operating loss carryforwards are used in future periods.

The Company’s policy is to record interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2017, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statement of operations.