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NOTE 12 - INCOME TAXES

12 Months Ended

Dec. 31, 2015

NOTE 12 - INCOME TAXES

The components of pre-tax loss for the years ended December 31, 2015 and 2014 are as follows:

	2015			2014
Domestic	$	(1,404	)	$	(99	)
Foreign		(134	)		(46	)
Total	$	(1,538	)		(145	)

The components of the provision for income taxes attributable to continuing operations for the years ended December 31, 2015 and 2014 are as follows:

	2015		2014
Current:
Federal	$	-	$	-
State		25		2
Foreign		6		(26	)
Total current		31		(24	)

Deferred:
Federal		165		130
State		23		11
Foreign		-		-
Total deferred		188		141

	$	219		117

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 taxes at December 31, 2015 and 2014 are as follows:

	2015			2014
DEFERRED TAX ASSETS:
Current deferred tax assets
Deferred revenue	$	382		$	745
Accrued expenses		85			107
Other		51			41
		518			893
Valuation allowance		(493	)		(847	)
Net current deferred tax assets		25			46

Noncurrent deferred tax assets
Net operating losses		40,389			40,196
Research and development credit carryforwards		4,490			4,486
Minimum tax credit carryforwards		161			161
Acquired intangibles		183			-
Fixed assets		-			-
Share based compensation		11			11
Other		22			4
		45,256			44,858
Valuation allowance		(44,521	)		(43,960	)
Net noncurrent deferred tax assets		735			898

Noncurrent deferred tax liabilities
Acquired intangibles		-			(587	)
Fixed assets		(764	)		(361	)
Goodwill		(640	)		(452	)
Total noncurrent deferred tax liabilities		(1,404	)		(1,400	)

Net current deferred tax asset (liability)		25			46
Net noncurrent deferred tax liability	$	(669	)	$	(502	)

At December 31, 2015, we had federal net operating loss carryforwards of approximately $117,748, research and development credit carryforwards of approximately $5,068 and alternative minimum tax credit carryforwards of approximately $161. The net operating loss and research and development credit carryforwards will expire in varying amounts from 2018 through 2035, if not utilized. Minimum tax credit carryforwards carry forward indefinitely.

As a result of various acquisitions by us in prior years, we may be subject to a substantial annual limitation in the utilization of the net operating losses and credit carryforwards due to the “change in ownership” provisions of the Internal Revenue Code of 1986. The annual limitation may result in the expiration of net operating losses before utilization.

Due to the uncertainty surrounding the timing of realizing the benefits of its favorable tax attributes in future tax returns, we have placed a valuation allowance against our net deferred tax assets, exclusive of goodwill. During 2015, the valuation allowance increased by approximately $207 due primarily to operations. Approximately $8,251 of the valuation allowance relates to tax benefits for stock option deductions included in our net operating loss carryforward which we will allocate, if and when realized, directly to contributed capital to the extent the benefits exceed amounts attributable to book deferred compensation expense.

We consider undistributed earnings of our foreign subsidiaries as permanently reinvested and, accordingly, we have made no provision for U.S. federal or state income taxes thereon.

Our provision for income taxes attributable to continuing operations differs from the expected tax expense (benefit) amount computed by applying the statutory federal income tax rate of 34% to income before income taxes as a result of the following:

	For 2015			For 2014

Computed at statutory rate	$	(521	)	$	(49	)
State taxes, net of federal benefit		109			66
Permanent items and other		188			(80	)
Credit carryforwards		(1	)		(90	)
Foreign income taxed at different rates		118			(11	)
Tax carryforwards not benefitted		326			281
	$	219		$	117

The total amount of unrecognized tax benefits as of January 1, 2015 was approximately $1,288. The reconciliation of our unrecognized tax benefits at the beginning and end of the year is as follows:

Balance at January 1, 2015	$	1,288
Additions based on tax positions related to the current year		28
Additions for tax positions of prior years		(26	)
Balance at December 31, 2015	$	1,290

As of December 31, 2015, we had $1,290 of unrecognized tax benefits, which would affect the effective tax rate if recognized. The Company’s assessment of its unrecognized tax benefits is subject to change as a function of the Company’s financial statement audit.

Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. During 2015, we recognized $2 of interest and penalties in our income tax expense.

Asure files tax returns in the U.S. federal jurisdiction and in several state and foreign jurisdictions. We are no longer subject to U.S. federal income tax examinations for years ending before December 31, 2012 and are no longer subject to state and local or foreign income tax examinations by tax authorities for years ending before December 31, 2011. Asure is not currently under audit for federal, state or any foreign jurisdictions.