v3.3.1.900

Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Taxes |
Income Taxes | 7. Income Taxes The components of loss before income taxes for the years ended December 31 were as follows:
|  | 2015 |  | 2014 |  | 2013 |
|  | (in thousands) |
Domestic |  | $ | (26,733 | ) | $ | (28,999 | ) | $ | (27,953 | )
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Total loss before income taxes |  | $ | (26,733 | ) | $ | (28,999 | ) | $ | (27,953 | )
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A reconciliation between the Company's statutory federal income tax rate and the effective tax rate for the years ended December 31, is as follows:
|  | 2015 |  | 2014 |  | 2013 |
U.S. statutory federal income tax rate |  |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Increase (decrease) resulting from: |  |  |  |  |  |  |  |  |  |
U.S. state income taxes, net of federal benefits |  |  | 7.7 |  |  | 5.8 |  |  | 7.3 |
Non-deductible expenses |  |  | (2.0 | ) |  | (2.8 | ) |  | (2.1 | )
Change in valuation allowance |  |  | (39.1 | ) |  | (32.4 | ) |  | (39.9 | )
Other |  |  | (1.6 | ) |  | (5.6 | ) |  | (0.3 | )
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Effective tax rate |  |  | 0.0 | % |  | 0.0 | % |  | 0.0 | %
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The significant components of the Company's deferred tax assets and liabilities as of December 31 are as follows:
|  | 2015 |  | 2014 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |
Accrued expenses and other |  | $ | 1,899 |  | $ | 1,054 |
Accrued compensation and related benefits |  |  | 3,306 |  |  | 2,502 |
Rebate reserve |  |  | 167 |  |  | 264 |
Deferred rent |  |  | 282 |  |  | 212 |
Stock-based compensation |  |  | 4,971 |  |  | 2,782 |
Net operating loss carryforwards |  |  | 54,967 |  |  | 46,264 |
Valuation allowance |  |  | (54,739 | ) |  | (44,309 | )
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Total deferred tax assets |  | $ | 10,853 |  | $ | 8,769 |
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Deferred tax liabilities: |  |  |  |  |  |  |
Other expenses |  | $ | (875 | ) | $ | (1,344 | )
Capitalized content development costs |  |  | (7,583 | ) |  | (5,439 | )
Capitalized software development costs |  |  | (1,886 | ) |  | (1,346 | )
Property and equipment |  |  | (509 | ) |  | (640 | )
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Total deferred tax liabilities |  | $ | (10,853 | ) | $ | (8,769 | )
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Net deferred tax assets/liabilities |  | $ | — |  | $ | — |
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Deferred tax valuation allowances and changes in deferred tax valuation allowances are as follows:
|  | Balance at Beginning of Period |  | Additions Charged to Expense/Against Revenue |  | Deductions |  | Balance at End of Period |
|  | (in thousands) |
Income tax valuation allowance: |  |  |  |  |  |  |  |  |  |  |  |  |
Year ended December 31, 2015 |  | $ | 44,309 |  | $ | 10,430 |  | $ | — |  | $ | 54,739 |
Year ended December 31, 2014 |  |  | 34,921 |  |  | 9,388 |  |  | — |  |  | 44,309 |
Year ended December 31, 2013 |  |  | 23,864 |  |  | 11,057 |  |  | — |  |  | 34,921 |
Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that are included in the financial statements. Deferred tax assets are subject to periodic recoverability assessments. Recognition of deferred tax assets is appropriate only if the likelihood of realization of such assets is more likely than not to occur. At December 31, 2015, the Company had a federal net operating loss ("NOL") carryforward of approximately $161.7 million, which expires between 2029 and 2035. The gross amount of the state NOL carryforwards is equal to or less than the federal NOL carryforwards and expires over various periods based on individual state tax laws. A full valuation allowance has been established to offset the net deferred tax assets. The total increase in the valuation allowance was $10.4 million for the year ended December 31, 2015, as the Company has not generated taxable income since inception and does not have sufficient deferred tax liabilities to recover the deferred tax assets. The utilization of the NOL carryforwards to reduce future income taxes will depend on the Company's ability to generate sufficient taxable income prior to the expiration of the NOL carryforwards. In addition, a certain portion of the above NOL carryforwards may be subject to Internal Revenue Code section 382 limitations, which may limit their future use. The Company completed an analysis of the stock ownership changes through September 30, 2015, and determined that there has not been an ownership change prior to that date. However, the Company has not completed an analysis to determine what, if any, impact any ownership change after September 30, 2015 has had on the ability to utilize NOL carryforwards. The Company has experienced a number of transactions subsequent to September 30, 2015, which could lead to a limitation of its NOL carryforwards under section 382 of the Internal Revenue Code. The Company intends to complete a study through December 31, 2015, regarding this limitation in the next twelve months. It is reasonably possible that the results of the study will reduce the reported NOL carryforwards and other deferred tax assets. The Company applies the provisions of ASC 740-10 to uncertain tax positions. ASC 740-10 clarifies accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. If the probability for sustaining a tax position is greater than 50%, then the tax position is warranted and recognition should be at the highest amount which would be expected to be realized upon settlement. The Company did not identify any tax positions that would be required for inclusion in the financial statements. As of December 31, 2015, the Company had not made any changes to its tax positions since December 31, 2014. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2015 and 2014, the Company had no accrued interest or penalties related to uncertain tax positions. The Company has analyzed its filing positions in all significant federal, state and foreign jurisdictions where it is required to file income tax returns, as well as open tax years in these jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local tax examinations by tax authorities for the years prior to 2012, though the NOL carryforwards can be adjusted upon audit and could impact taxes owed in open tax years. No income tax returns are currently under examination by the taxing authorities.

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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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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