The imposition of the Transition Tax may reduce or eliminate U.S. federal deferred taxes on the unremitted earnings of the Company’s foreign subsidiaries. However, the Company may still be liable for withholding taxes, state taxes, or other income taxes that might be incurred upon the repatriation of foreign earnings. The Company has not made any provision for additional income taxes on undistributed earnings of its foreign subsidiaries.

In December 2017, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provided a measurement period of up to one year from the enactment date of the Tax Act for companies to complete the accounting for the Tax Act and its related impacts. The income tax effects of the Tax Act for which the accounting is incomplete include: the impact of the Transition Tax, the revaluation of deferred tax assets and liabilities to reflect the 21% corporate tax rate, whether to elect to expense or depreciate new capital equipment, the impact to the aforementioned items on state income taxes, and potential unrecognized tax benefits relating to the aforementioned items. The Company has made reasonable estimates for each of these items; however, such estimates may subsequently be revised based on evolving analyses and interpretation of the Tax Act and related accounting guidance. 

 

		2017			2016			2015
Domestic		$	(56,268)		$	(14,644)		$	(46,683)
International			4,290			3,239			2,865
		$	(51,978)		$	(11,405)		$	(43,818)

		2017			2016			2015
Income tax benefit at statutory U.S. federal rate		$	17,673		$	3,877		$	14,898
Income tax benefit attributable to U.S. states, net			1,469			380			1,502
Permanent differences:
Non-deductible expenses			(284)			(301)			(225)
Stock-based compensation			(862)			(299)			(284)
Other			(215)			(256)			(110)
Change in statutory federal tax rate			(31,826)			-			-
Transition tax			(1,503)			-			-
Foreign rate differential and foreign tax credits			522			(211)			(328)
Reclassification of warrant to equity and other			(8,828)			1,421			(1,446)
Decrease (increase) in valuation allowance			22,535			(6,143)			(15,458)
Total income tax expense		$	(1,319)		$	(1,532)		$	(1,451)

		2017			2016			2015
Current income tax expense:
Federal		$	-		$	-		$	-
State			(140)			(98)			(62)
Foreign			(1,303)			(1,954)			(1,444)
Total current income tax expense			(1,443)			(2,052)			(1,506)
Deferred income tax benefit:
Federal			-			-			-
State			-			-			-
Foreign			124			520			55
Total deferred income tax benefit			124			520			55
Total income tax expense		$	(1,319)		$	(1,532)		$	(1,451)

		2017			2016
Deferred income tax assets:
Net operating loss carryforwards		$	45,032		$	73,027
Deferred revenue			7,907			6,030
Accounts payable and accrued expenses			6,355			6,776
Debt financing interest and fees			4,712			-
Stock-based compensation			1,286			1,793
Capital loss carryforwards			1,439			2,051
Tax credit carryforwards			571			418
Deferred rent and other			401			667
Redeemable warrant liability			-			2,752
Embedded derivative liability			425			2,044
Foreign deferred assets			1,263			1,706
Gross deferred income tax assets			69,391			97,264
Valuation allowance for deferred income tax assets			(68,367)			(90,902)
Net deferred income tax assets			1,024			6,362
Deferred income tax liabilities:
Debt financing interest and fees			-			(5,759)
Other			(305)			(8)
Net deferred tax assets		$	719		$	595

Net deferred tax assets consist solely of foreign net deferred tax assets which are expected to be realized in the future, and that are included in long-term assets in the accompanying consolidated balance sheets. For the year ended December 31, 2017 the valuation allowance decreased by $22.5 million, primarily as a result of the impact of the Tax Act discussed above. For the years ended December 31, 2016 and 2015 the net increase in the valuation allowance amounted to $6.1 million and $15.5 million, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Because of the Company’s lack of domestic earnings history, the domestic net deferred tax assets have been fully offset by a valuation allowance.