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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | During the fourth quarter ended December 31, 2018, the Company recorded an adjustment of $1.2 million to deferred tax liabilities related to amortization of goodwill that erroneously had not been established in prior periods. This adjustment was a non-cash expense and increased tax expense and net loss by $1.2 million for the fourth quarter and year ended December 31, 2018. The Company determined that the adjustment was not material to the consolidated financial statements for any previously reported annual or interim periods. Income tax provision (benefit) is as follows for the years ended:
|  | DECEMBER 31, |
|  | 2018 |  |  | 2017 |
Current provision |  |  |  |  |  |
State |  | $ | 10,000 |  |  | $ | 10,000 |
Foreign |  |  | 55,113 |  |  |  | 29,586 |
Total |  |  | 65,113 |  |  |  | 39,586 |
Deferred provision (benefit) |  |  |  |  |  |  |  |
Federal |  |  | 633,073 |  |  |  |  |
State |  |  | 514,220 |  |  |  | - |
Foreign |  |  | (19,080 | ) |  |  | (1,619 | )
Total |  |  | 1,128,213 |  |  |  | (1,619 | )
Income tax provision |  | $ | 1,193,326 |  |  | $ | 37,967 |
Income tax provision (benefit) effective rates, which differs from the federal and state statutory rate as follows for the years ended:
|  | DECEMBER 31, |
|  | 2018 |  |  | 2017 |
Statutory federal income tax rate |  |  | 21.0 | % |  |  | 34.0 | %
State, net of federal benefit |  |  | -2.1 | % |  |  | -0.3 | %
Non-deductible expenses |  |  | 5.4 | % |  |  | -5.4 | %
Change in valuation allowance |  |  | -200.1 | % |  |  | 6.9 | %
Foreign rate differential |  |  | 3.1 | % |  |  | 0.9 | %
Return to accrual difference true-ups |  |  | 0.6 | % |  |  | -0.6 | %
Other |  |  | 6.9 | % |  |  | 3.8 | %
Deferred tax adjustment and true-up |  |  | -84.1 | % |  |  | 69.2 | %
Change in federal statutory rate |  |  | 0.0 | % |  |  | -109.5 | %
Combined effective tax rate |  |  | -249.4 | % |  |  | -1.0 | %
The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets (liabilities) consisted of the following:
|  | DECEMBER 31, |
|  | 2018 |  |  | 2017 |
Deferred tax assets: |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 10,513,224 |  |  | $ | 10,526,231 |
Alternative minimum tax credit |  |  | 45,650 |  |  |  | 45,650 |
Share-based compensation |  |  | 536,223 |  |  |  | 358,360 |
Intangible amortization |  |  | 565,013 |  |  |  | 740,685 |
Other assets |  |  | 423,394 |  |  |  | 233,447 |
Total deferred tax assets |  |  | 12,083,504 |  |  |  | 11,904,373 |
Less: valuation allowance |  |  | (10,507,891 | ) |  |  | (9,550,279 | )
Total deferred tax assets, net |  |  | 1,575,613 |  |  |  | 2,354,094 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Goodwill amortization |  |  | 2,293,533 |  |  |  | 2,203,154 |
Depreciation |  |  | 345,136 |  |  |  | 86,506 |
Foreign intangible amortization |  |  | 447,811 |  |  |  | 447,811 |
Other liabilities |  |  | 12,643 |  |  |  | 8,852 |
Total deferred tax liabilities |  |  | 3,099,123 |  |  |  | 2,746,323 |
Net deferred tax liability |  | $ | (1,523,510 | ) |  | $ | (392,229 | )
As of December 31, 2018, the Company had approximately $38.5 million in net operating loss (NOL) carry forwards available to offset future taxable income for federal income tax purposes, net of the potential Section 382 limitations. These federal NOL carry forwards expire between 2020 and 2036. Included in the recorded deferred tax asset, the Company had a benefit of approximately $39.8 million available to offset future taxable income for state income tax purposes. These state NOL carry forwards expire between 2024 and 2036. Because of the change of ownership provisions of the Tax Reform Act of 1986, use of a portion of our domestic NOL may be limited in future periods. Further, a portion of the carryforwards may expire before being applied to reduce future income tax liabilities. Changes in the valuation allowance for the years ended were as follows:
|  | DECEMBER 31, |
|  | 2018 |  |  | 2017 |
Beginning balance |  | $ | (9,550,279 | ) |  | $ | (9,791,680 | )
(Increases) decreases |  |  | (957,612 | ) |  |  | 241,401 |
Ending balance |  | $ | (10,507,891 | ) |  | $ | (9,550,279 | )
The Company’s valuation allowance predominantly consisted of domestic net operating loss carryforwards and certain state net operating loss carryforwards. A significant piece of objective negative evidence considered in management’s evaluation of the realizability of its deferred tax assets was the existence of cumulative losses over the latest three-year period. Management forecast future taxable income, but concluded that there may not be enough of a recovery before the end of the fiscal year to overcome the negative objective evidence of three years of cumulative losses. On the basis of this evaluation, management recorded a valuation allowance against all deferred tax assets. If management’s assumptions change and we determine we will be able to realize these deferred tax assets, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets will be accounted for as a reduction of income tax expense. The Company files U.S. federal income tax returns with the Internal Revenue Service (“IRS”) as well as income tax returns in various states and certain foreign countries. The Company may be subject to examination by the IRS for tax years 2003 and forward. The Company may be subject to examinations by various state taxing jurisdictions for tax years 2003 and forward. The Company may be subject to examination by various foreign countries for tax years 2014 forward. As of December 31, 2018, the Company is currently not under examination by the IRS, any state or foreign tax jurisdiction. The Company did not have any unrecognized tax benefits at either December 31, 2018 or 2017. In the future, any interest and penalties related to uncertain tax positions will be recognized in income tax expense.

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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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