

	Years ended December 31,
(in thousands)	2019			2018			2017
United States	$	(19,022	)	$	(10,852	)	$	(10,930	)
International	1,062			827			792
Total loss before income taxes	$	(17,960	)	$	(10,025	)	$	(10,138	)



	Years ended December 31,
(in thousands)	2019			2018			2017
Current
Federal	$	—		$	—		$	(10	)
State	(25		)	53			54
Foreign	240			368			324
	215			421			368
Deferred
Federal	(43		)	(822		)	311
State	7			99			119
Foreign	(159		)	(49		)	(39		)
	(195		)	(772		)	391
Total income tax provision (benefit)	$	20		$	(351	)	$	759



	Years ended December 31,
(in thousands)	2019			2018			2017
U.S. federal (tax benefit) provision at statutory rate	$	(3,772	)	$	(2,105	)	$	(4,576	)
State (tax benefit) income taxes, net of federal benefit	(646		)	(373		)	(437		)
Foreign income taxes at rates other than the US rate	(145		)	92			(21		)
Stock-based compensation	(2,119		)	(3,503		)	(8,373		)
Change in valuation allowance	5,136			4,710			(6,023		)
Non-deductible executive compensation	2,383			2,418			1,624
Rate differential impact on Tax Cuts and Jobs Act	—			—			18,975
Research and development credits	(1,209		)	(994		)	(602		)
Indefinite net operating losses carryforward	(33		)	(1,470		)	—
Other	425			874			192
Total	$	20		$	(351	)	$	759

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table presents the significant components of the Company’s deferred tax assets and liabilities for the periods presented:



	December 31,
(in thousands)	2019			2018
Deferred tax assets
Net operating loss carryforward	$	32,723		$	29,798
Research and development credits	8,449			6,840
Depreciation and amortization	2,402			3,007
Reserves and accruals	9,349			9,661
Total deferred tax assets	52,923			49,306
Valuation allowance	(40,436		)	(40,070		)
Net deferred tax assets	12,487			9,236
Deferred tax liabilities - convertible senior notes	(5,848		)	(7,503		)
Deferred tax liabilities - other	(7,097		)	(2,208		)
Net deferred tax liabilities	$	(458	)	$	(475	)

The Company's deferred tax liabilities are primarily related to tax deductible goodwill. The Company determines its valuation allowance on deferred tax assets by considering both positive and negative evidence in order to ascertain whether it is more likely than not that deferred tax assets will be realized. Realization of deferred tax assets is dependent upon the generation of future taxable income, if any, the timing and amount of which are uncertain. Due to the history of losses the Company has generated in the past, the Company believes that it is not more likely than not that all of the deferred tax assets in the U.S. and Canada can be realized as of December 31, 2019; accordingly, the Company has recorded a full valuation allowance on its deferred tax assets.

The Company’s valuation allowance increased by $0.4 million and $5.2 million for the years ended December 31, 2019 and 2018, respectively. The change in the 2019 valuation allowance was primarily due to the addition of current year loss carryforwards and federal rate reduction. The change in the 2018 valuation allowance was primarily due to the addition of current year loss carryforwards.

At December 31, 2019, the Company had $137 million and $69 million, respectively, of federal and state net operating loss carryforwards. The federal net operating loss carryforward generated in the years ended December 31, 2002 through 2017 begin expiring in 2022.

Net operating losses originating before January 1, 2018 are eligible to offset taxable income, if not otherwise limited under IRS Section 382. Net operating losses generated after December 31, 2017 have an infinite carryforward period and subject to 80% deduction limitation based upon pre-net operating deduction taxable income.

In addition, the Company has federal research and development tax credits carryforwards of approximately $5.3 million and state research and development tax credit carryforwards of approximately $5.9 million. The federal credit carryforwards begin expiring 2026 and the state credits carry forward indefinitely. The Internal Revenue Code (IRC) contains provisions which limit the amount of net operating loss (NOL) and research credit carryforwards that can be used in any given year if a significant change in ownership has occurred. As of December 31, 2019, $11.5 million of the Company's NOL carryovers and $0.5 million of credit carryovers are subject to an annual $0.6 million limitation, of which $5.3 million NOLs would be available to offset future taxable income in the twenty-year carryforward period.



	Years Ended December 31,
(in thousands)	2019			2018			2017
Balance at the beginning of the period	$	40,070		$	45,255		$	42,339
Net operating loss carryforwards generated	2,925			2,509			3,050
R&D tax credit increase	1,609			1,014			1,121
Depreciation and amortization increase	(605		)	925			237
Reserves and accruals decrease	(312		)	(581		)	(1,479		)
Deferred tax assets increase	(3,251		)	(9,052		)	(13		)
Balance at the end of the period	$	40,436		$	40,070		$	45,255



	Years ended December 31,
(in thousands)	2019			2018
Gross amount of unrecognized tax benefits as of the beginning of the period	$	1,931		$	1,673
Increases related to prior year tax provisions	—			7
Decreases related to prior year tax provisions	(78		)	—
Increases related to current year tax provisions	398			251
Gross amount of unrecognized tax benefits as of the end of the period	$	2,251		$	1,931

As a result of the Company’s historical losses and related valuation allowances, the Company has recorded substantially all of the uncertain tax amounts above as reductions to deferred tax assets which are subject to a full valuation allowance in its consolidated balance sheet with an insignificant portion recorded in other long-term liabilities. The Company recognizes interest and penalties relating to uncertain tax positions in income tax expense. As the Company is not currently under examination, it is reasonable to assume that the balance of gross unrecognized tax benefits will likely not change in the next twelve months.

The Company files income tax returns in the United States on a federal basis and in various states. The Company is not currently under any international or any United States federal, state and local income tax examinations for any taxable years. All of the Company’s net operating losses and research credit carryforwards prior to 2019 are subject to tax authority adjustment and all years after 2012 are still subject to the tax authority examinations.

The 2017 tax reform legislation provides for a one-time “deemed repatriation” of accumulated foreign earnings for the year ended December 31, 2017. The Company does not expect to pay U.S. federal cash taxes on the deemed repatriation due to its historical net operating loss for tax purposes. The Company does not expect that the future foreign earnings will be subject to U.S. federal income tax since the Company intends to continue reinvesting such earnings outside the U.S. indefinitely. On December 22, 2017, the SEC issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for tax effects of the Tax Act. SAB 118’s measurement period closed on December 22, 2018, one year from the Tax Act enactment. The Company completed its accounting for the impact of the Tax Act and there were no subsequent revisions from the provisional amounts recorded in the prior year financial statements.