The Company had no income tax expense for the years ended December 31, 2018 and 2017. Due to uncertainties surrounding the realization of its deferred income tax assets in future periods, the Company has recorded a 100% valuation allowance against its net deferred income tax assets. If it is determined in the future that it is more likely than not that any deferred income tax assets are realizable, the valuation allowance will be reduced by the estimated net realizable amounts. For the year ended December 31, 2018, the valuation allowance increased by $2.8 million, based on changes in deferred tax assets and liabilities. For the year ended December 31, 2017, the valuation allowance decreased by approximately $14.9 million, due primarily to the effects of reduced corporate income tax rates effected under the Tax Act, which were partially offset by changes in deferred tax assets and liabilities.

The tax effect of temporary differences and net operating losses that give rise to components of deferred income tax assets and liabilities consist of the following:

The Company had a cumulative federal net operating loss of approximately $86 million as of December 31, 2018, which will begin expiring in 2019. Under Sections 382 and 383 of the Internal Revenue Code, if an ownership change occurs with respect to a “loss corporation,” as defined, there are annual limitations on the amount of the net operating loss and other deductions which are available to the Company. The Company has not determined whether such an ownership change has occurred. However, given the equity transactions in which the Company has engaged, the Company believes that the use of the net operating losses shown as deferred tax assets will be significantly limited.

Management has evaluated the effect of guidance provided by GAAP regarding accounting for uncertainty in income taxes and determined the Company has no uncertain tax positions that could have a significant impact on its consolidated financial statements. The Company’s federal income tax return for 2015 and subsequent years remain open for examination.