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Note 11 - Income Taxes | 12 Months Ended
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Dec. 31, 2019
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | 11. Income taxes The Company is subject to federal and state income taxes in the United States. For the years ended December 31, 2019 and 2018 , the expense for income taxes on loss (income) from continuing operations consisted of the following:
|  | Year Ended December 31 |
(In thousands) |  | 2019 |  |  | 2018 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |
State |  |  | — |  |  |  | — |
Foreign |  |  | 39 |  |  |  | — |
Total current |  |  | 39 |  |  |  | — |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | 439 |  |  |  | 3,726 |
State |  |  | (20 | ) |  |  | 81 |
Foreign |  |  | (18 | ) |  |  |  |
Less: valuation allowance |  |  | (366 | ) |  |  | (3,761 | )
Total deferred |  |  | 35 |  |  |  | 46 |
Income tax expense |  | $ | 74 |  |  | $ | 46 |
For the years ended December 31, 2019 and 2018 , reconciliation of the Company's effective income tax rate to the U.S. corporate statutory income tax rate is as follows:
|  | Year Ended December 31, |
(In thousands) |  | 2019 |  |  | 2018 |
Income tax expense at federal statutory rate |  | $ | (351 | ) |  |  | 21.0 | % |  | $ | 680 |  |  |  | 21.0 | %
Share-based compensation shortfall (windfall) |  |  | (425 | ) |  |  | 25.4 |  |  |  | 7,080 |  |  |  | 218.7 |
Effect of state taxes, net of federal tax benefit |  |  | (16 | ) |  |  | 1.0 |  |  |  | 64 |  |  |  | 2.0 |
Non-deductible items |  |  | 934 |  |  |  | (55.8 | ) |  |  | 585 |  |  |  | 18.1 |
Return to provision adjustment |  |  | 224 |  |  |  | (13.4 | ) |  |  | (4 | ) |  |  | (0.1 | )
Foreign rate difference |  |  | 3 |  |  |  | — |  |  |  | — |  |  |  | — |
Other |  |  | 71 |  |  |  | (4.2 | ) |  |  | 27 |  |  |  | 0.8 |
Change in valuation allowance |  |  | (366 | ) |  |  | 21.9 |  |  |  | (8,386 | ) |  |  | (259.0 | )
Income tax expense |  | $ | 74 |  |  |  | (4.4 | )% |  | $ | 46 |  |  |  | 1.4 | %
As of December 31, 2019 and 2018 , the components of deferred tax assets and liabilities consist of the following:
(In thousands) |  | December 31, 2019 |  |  | December 31, 2018 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 5,073 |  |  | $ | 8,908 |
Share-based compensation |  |  | 6,322 |  |  |  | 5,753 |
Interest expense limitation |  |  | 1,951 |  |  |  | 2,171 |
Accounts receivable, net |  |  | 504 |  |  |  | 451 |
Accrued expenses and other current liabilities |  |  | — |  |  |  | 74 |
Property and equipment, net |  |  | — |  |  |  | 73 |
Acquisition costs |  |  | 229 |  |  |  | — |
Operating lease liability |  |  | 2,910 |  |  |  |  |
Other |  |  | 216 |  |  |  | 145 |
|  |  | 17,205 |  |  |  | 17,575 |
Valuation allowance |  |  | (4,872 | ) |  |  | (5,238 | )
|  |  | 12,333 |  |  |  | 12,337 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Intangible assets |  |  | (9,767 | ) |  |  | (12,383 | )
Operating lease right-of-use asset |  |  | (2,532 | ) |  |  |  |
Deferred revenue |  |  | (4 | ) |  |  | — |
Property and equipment, net |  |  | (111 | ) |  |  | — |
|  |  | (12,414 | ) |  |  | (12,383 | )
Net deferred tax liability |  | $ | (81 | ) |  | $ | (46 | )
As of December 31, 2019 , the Company has federal net operating losses of $21,661 , of which $12,054 begin to expire in 2035 , and $9,607 which can be carried forward indefinitely. As of December 31, 2019 , the Company has state net operating loss carryforwards of $31,170 , which begin to expire in 2035 . Certain net operating losses generated by the Company in 2014 and 2015 are subject to annual limitation under IRC Section 382 due to ownership changes. For the year ended December 31, 2018, the Spin-off of Red Violet contributed to a $ 1,500 decrease to the net deferred tax assets of the Company, which was fully offset by a corresponding reduction to the valuation allowance. The aforementioned decrease represents the net deferred tax assets attributable to Red Violet on the date of the Spin-off. As of December 31, 2019 and 2018 , the Company recorded a full valuation allowance against its net deferred tax assets of $4,872 and $5,238 , respectively. For the year ended December 31, 2019 , the decrease in the valuation allowance is primarily a result of the movement in the net deferred tax asset in the current year. The Company intends to continue maintaining a full valuation allowance on these net deferred tax assets until there is sufficient evidence to support the release of all or some portion of these allowances. Release of some or all of the valuation allowance would result in the recognition of certain deferred tax assets and an increase in deferred tax benefit for any period in which such a release may be recorded, however, the exact timing and amount of any valuation allowance release are subject to change, depending upon the level of profitability that the Company is able to achieve and the net deferred tax assets available. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. The Company files tax returns in federal and certain state and local jurisdictions. The 2015 tax year is the earliest tax year that remains subject to examination by the following taxing authorities in major jurisdictions: Federal, California, New York and New York City. Since inception, the Company has generated net operating losses, and thus the 2014 tax year remains open to examination by taxing authorities to the extent the net operating losses generated in such year are utilized in subsequent periods with open statutes. For the years ended December 31, 2019 and 2018 , reconciliation of the gross amounts of unrecognized tax benefits, excluding accrued interest and penalties, consists of the following:
|  | Year Ended December 31, |
(In thousands) |  | 2019 |  |  | 2018 |
Unrecognized tax benefits, opening balance |  | $ | 1,480 |  |  | $ | 1,134 |
Increase in unrecognized tax benefits |  |  | — |  |  |  | 346 |
Unrecognized tax benefits, ending balance |  | $ | 1,480 |  |  | $ | 1,480 |
The unrecognized tax benefits, if recognized, would result in an increase to net operating losses that would be subject to a valuation allowance and, accordingly, result in no impact to the Company’s annual effective tax rate. As of December 31, 2019 , the Company has not accrued any interest or penalties with respect to its uncertain tax positions. The Company does not anticipate a significant increase or reduction in unrecognized tax benefits within the next twelve months.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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