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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | 7. Income Taxes Income (loss) before provision for income taxes was generated from the following sources (in thousands):
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Domestic |  | $ | (7,132 | ) |  | $ | (15,145 | ) |  | $ | (2,651 | )
Foreign |  |  | (75 | ) |  |  | (427 | ) |  |  | 117 |
Total loss before provision for income taxes |  | $ | (7,207 | ) |  | $ | (15,572 | ) |  | $ | (2,534 | )
A summary of the income tax expense (benefit) is as follows (in thousands):
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |  |  | $ | — |
State |  |  | (1 | ) |  |  | (153 | ) |  |  | 5 |
Foreign |  |  | 40 |  |  |  | 61 |  |  |  | 63 |
Total current |  |  | 39 |  |  |  | (92 | ) |  |  | 68 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (530 | ) |  |  | — |  |  |  | — |
State |  |  | — |  |  |  | — |  |  |  | — |
Foreign |  |  | (55 | ) |  |  | (137 | ) |  |  | — |
Total deferred |  |  | (585 | ) |  |  | (137 | ) |  |  | — |
Total provision |  | $ | (546 | ) |  | $ | (229 | ) |  | $ | 68 |
A reconciliation of the provision for income taxes to the amount of income tax expense (benefit) that would result from applying the federal statutory rate to the loss before income taxes is as follows:
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Federal statutory rate |  |  | 35.0 |  | % |  | 35.0 |  | % |  | 35.0 |
State tax, net of federal benefit |  |  | 3.9 |  |  |  | 4.6 |  |  |  | (20.4 | )
Equity compensation |  |  | (4.5 | ) |  |  | (0.3 | ) |  |  | (13.7 | )
International tax items |  |  | (0.8 | ) |  |  | (1.0 | ) |  |  | (4.6 | )
Foreign taxes |  |  | 0.2 |  |  |  | 0.5 |  |  |  | (2.5 | )
Uncertain tax positions |  |  | 0.0 |  |  |  | 1.1 |  |  |  | 0.0 |
Other |  |  | 0.0 |  |  |  | (0.2 | ) |  |  | (10.6 | )
Miscellaneous |  |  | (0.2 | ) |  |  | (0.5 | ) |  |  | (1.1 | )
Effect of change in rate |  |  | (372.4 | ) |  |  | 0.0 |  |  |  | 0.0 |
Change in valuation allowance |  |  | 346.4 |  |  |  | (37.7 | ) |  |  | 15.2 |
|  |  | 7.6 |  | % |  | 1.5 |  | % |  | (2.7 | )
The major components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |
Deferred income tax assets |  |  |  |  |  |  |  |
Net operating loss carry forwards |  | $ | 40,042 |  |  | $ | 54,165 |
Credit carry forwards |  |  | 3,557 |  |  |  | 3,464 |
Fixed assets |  |  | 531 |  |  |  | 985 |
Intangibles |  |  | 8,446 |  |  |  | 15,894 |
Equity-based compensation |  |  | 399 |  |  |  | 688 |
Nondeductible accruals |  |  | 465 |  |  |  | 1,346 |
Various reserves |  |  | 81 |  |  |  | 132 |
Other |  |  | 2 |  |  |  | 22 |
Valuation allowance |  |  | (52,948 | ) |  |  | (76,648 | )
Total deferred income taxes - net |  |  | 575 |  |  |  | 48 |
Deferred income tax liabilities |  |  |  |  |  |  |  |
Foreign intangibles |  |  | (126 | ) |  |  | (181 | )
Unrealized translation gain/loss |  |  | (23 | ) |  |  | 9 |
Prepaid expenses |  |  | (22 | ) |  |  | (57 | )
Total deferred income liabilities |  |  | (171 | ) |  |  | (229 | )
Net deferred income tax assets (liabilities) |  | $ | 404 |  |  | $ | (181 | )
The Company has federal and state net operating loss (“NOL”) carryforwards of approximately $151.0 million and $147.8 million, respectively, at December 31, 2017, to reduce future cash payments for income taxes. These federal NOL carryforwards will expire from 2024 through 2037 and state NOL carryforwards will expire 2017 through 2037. The Company also had $0.5 million of Alternative minimum tax credit carryforwards with an indefinite life, available to offset regular federal income tax requirements. The Company has federal and state tax credit carryforwards of approximately $2.5 million and $0.7 million, respectively, at December 31, 2017. These tax credits will begin to expire in 2027. To the extent that an ownership change has occurred under Internal Revenue Code Sections 382 and 383, the Company’s use of its loss carryforwards and credit carryforwards to offset future taxable income may be limited. At December 31, 2017 and 2016, the Company had unrecognized tax benefits, including interest and penalties, of approximately $0.4 million. The Company’s gross unrecognized tax benefits as of December 31, 2017 and 2016 and the changes in those balances are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |
Beginning balance |  | $ | 428 |  |  | $ | 592 |
Increases (decreases) in tax positions for the current year |  |  | — |  |  |  | (164 | )
Increases (decreases) in tax positions for the prior year |  |  | — |  |  |  | — |
Gross unrecognized tax benefits, ending balance |  | $ | 428 |  |  | $ | 428 |
We account for income taxes as required by FASB ASC Topic No. 740, Income Taxes. This Topic clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Topic requires an entity to recognize the financial statement impact of a tax position when it is more likely than not that the position will be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. In addition, the Topic permits an entity to recognize interest and penalties related to tax uncertainties either as income tax expense or operating expenses. The Company has chosen to recognize interest and penalties related to tax uncertainties as income tax expense. The Company assesses whether a valuation allowance should be recorded against its deferred tax assets based on the consideration of all available evidence, using a “more likely than not” realization standard. The four sources of taxable income that must be considered in determining whether deferred tax assets will be realized are: (1) future reversals of existing taxable temporary differences (i.e., offset of gross deferred tax liabilities against gross deferred tax assets); (2) taxable income in prior carryback years, if carryback is permitted under the applicable tax law; (3) tax planning strategies; and (4) future taxable income exclusive of reversing temporary differences and carryforwards. After a review of the four sources of taxable income as of December 31, 2017 (as described above), and after consideration of the Company’s continuing cumulative loss position as of December 31, 2017, the Company recorded a valuation allowance related to its U.S.-based deferred tax assets of $52.9 million at December 31, 2017. During 2017, the valuation allowance on deferred tax assets decreased by $23.7 million, increased $1.7 million in 2016, and decreased $0.8 million in 2015. We recognized interest and penalties accrued related to unrecognized tax benefits in income tax expense. During 2017 and 2016, we recognized $0 and of interest and penalties. The cumulative interest and penalties at December 31, 2017 and 2016 were $0. Unrecognized tax benefits of $164.0 million were released in October of 2016, which impacted the effective tax rate due to the expiration of the statute of limitations. We do not anticipate any material changes to unrecognized tax benefits within the next twelve months that will affect the effective tax rate. The Company is subject to U.S. federal income tax, as well as to income tax of multiple state jurisdictions. Federal income tax returns of the Company are subject to IRS examination for the 2013 – 2016 tax years. State income tax returns are subject to examination for a period of three to four years after filing. As of December 31, 2017, the Company had no outstanding tax audits. The outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs. On December 22, 2017, the President signed the Tax Cuts and Jobs Act (“the 2017 Act”) into law. The 2017 Act will have pervasive financial reporting implications for all companies with U.S. operations. We reviewed and incorporated the new tax bill implications in the 2017 financial statements. The main change is the remeasurement of deferred taxes at the new corporate tax rate of 21%, which reduced the net deferred tax assets, before valuation allowance, by $26.9 million. Due to full valuation allowance, the change in deferred taxes was fully offset by the change in valuation allowance. The 2017 Act has no significant impact on the 2017 financial statements. For financial reporting purposes, income (loss) before provision for income taxes for our foreign subsidiaries was $(0.1) million, $(0.4) million, and $0.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. At December 31, 2017, unremitted earnings of foreign subsidiaries were approximately $0.3 million and have been included in our computation of the transition tax associated with the enactment of the Act discussed above. We do not provide for U.S. taxes on our unremitted earnings of foreign subsidiaries that have not been previously taxed since we intend to invest such undistributed earnings indefinitely outside of the U.S.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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