Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income (Loss) before income tax for the years ended December 31, 2017, 2016 and 2015 consisted of the following (in thousands):



	2017			2016			2015
	(in thousands)
U.S. operations	$	(21,938	)	$	(9,514	)	$	6,911
Foreign operations	6,662			(2,184		)	(208		)

Global Total	$	(15,276	)	$	(11,698	)	$	6,703

Components of Income Tax Expense (Benefit)

The (credit) provision for income taxes attributable to continuing operations before income taxes for the years ended December 31, 2017, 2016 and 2015 is as follows (in thousands):



	2017			2016			2015

Current tax expense (benefit):
Federal	$	(86	)	$	26		$	—
State and local	20			35			19
Foreign	42			272			28
Total current tax expense	(24		)	333			47
Deferred tax expense:
Federal	—			—			—
State and local	—			—			—
Foreign	(61		)	(46		)	(12		)
Total deferred tax expense	(61		)	(46		)	(12		)

Total income tax (benefit)/expense	$	(85	)	$	287		$	35

Effective Income Tax Rate Reconciliation

The (benefit from) provision for income taxes differed from the amount of income taxes determined by applying the applicable federal tax rate (34%) to pretax income (loss) from continuing operations as a result of the following (in thousands):



	2017			2016			2015

Expected Statutory expense (benefit)	$	(5,195	)	$	(3,977	)	$	2,244
U.S. TCJA recovery of alternative minimum tax credits	(73		)	—			—
Change in the fair values of derivative and amortization of debt discount	2,939			2,584			(5,597		)
Other non-deductible expenses	24			63			7
Change in valuation allowance including U.S. TCJA rate reduction	(2,012		)	590			3,254
Reduction in deferred tax assets related to U.S. TCJA rate reduction	7,504			—			—
Shortfalls related to stock compensation expense	129			154			—
Tax rate differential - foreign vs. U.S.	(2,276		)	822			114
State income taxes, net of federal benefit	13			23			13
Shortfalls related to stock compensation expense	129			154			—
Prior year true-up	(13		)	—			—
Exchange gain	(13		)	28			—
	$	(85	)	$	287		$	35

Deferred Tax Assets

Deferred tax balances included in the Consolidated Balance Sheets as of December 31, 2017 and 2016 consisted of the following:



	2017			2016
	(in thousands)
Deferred Tax Assets:
Allowance for doubtful accounts	$	506		$	118
Inventory reserve	619			467
Accrued expenses	664			831
Property, plant and equipment	214			317
Tax operating loss carryforwards	9,327			10,962
Tax credit carryforwards	168			254
Stock compensation	1,817			2,301
Total deferred tax assets	13,315			15,250
Less valuation allowance	(13,309		)	(15,250		)
Net deferred tax assets	6			—
Deferred Tax Liabilities:
Intangible assets	(165		)	(205		)
Total deferred tax liabilities	(165		)	(205		)
Net deferred tax liability	$	(159	)	$	(205	)

Valuation Allowance

The change in the valuation allowance during the year 2017 was $1.9 million, as follows:



Valuation allowance at beginning of year	$	15,250
Change in accounting for stock compensation windfalls	1,112
Current year operating loss	3,048
Change in tax rate to 21%	(7,504		)
Other	1,403
Valuation allowance at end of year	$	13,309

Operating Loss and Tax Credit Carryforward

Operating loss and tax credit carry forwards as of December 31, 2017 were as follows:



	2017		2016
	(in thousands)
Federal:
Net operating losses (expiring through 2037)	$	41,688	$	31,336
Research tax credits (expiring through 2025)	168		168
Alternative minimum tax credits (available without expiration)	—		86
State:
Net Operating Losses:
Tennessee (expiring in 2032)	659		529
New Jersey (expiring in 2037)	4,320		1,764
Illinois (expiring in 2037)	389		222
Alabama (expiring in 2032)	24		—
Foreign
Net operating losses (no expiration)	$	255	$	232

Operating Loss Carryforwards Expiration

At December 31, 2017, the Company’s U.S. federal net operating loss carryforwards will expire as follows:



Year	Net Operating Loss (in thousands)
2020 - 2023	$	8,228
2024 - 2029	9,063
2030 - 2031	6,205
2032 - 2036	10,016
2037	8,176
Total	$	41,688