INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2017

INCOME TAXES [Abstract]

Geographical Breakdown of Income before Provision for Income Taxes

The following is a geographical breakdown of (loss) income before the provision for income taxes:

	(in thousands)
	Year ended December 31,
	2017			2016
Domestic	$	(4,161	)	$	1,121
Foreign		(244	)		(20	)
(Loss) income before provision for income taxes	$	(4,405	)	$	1,101

Provision for Income Taxes

The provision for income taxes consisted of the following:

	(in thousands)
	Year ended December 31,
	2017			2016
Current (benefit) provision
Federal	$	(154	)	$	8
State		59			47
Foreign		13			-
Total current (benefit) provision		(82	)		55
Deferred provision
Federal		168			169
State		48			57
Foreign		-			-
Total deferred provision		216			226
Total provision for income taxes	$	134		$	281
Effective income tax rate		-3.04	%		25.52	%

Reconciliation of Effective Income Tax Rate to Federal Statutory Rate

The following is a reconciliation of the effective income tax rate to the federal statutory rate:

	For the year ended
	December 31, 2017			December 31, 2016
	%			%
Federal statutory rate		34.00			34.00
State income taxes		(1.34	)		4.94
Change in valuation allowance relating to operations		42.38			(22.34	)
Impact of federal statutory rate change		(6.44	)		-
Impact of federal statutory rate change on valuation allowance		13.74			-
Foreign tax rate differential		(2.20	)		-
Nondeductible expenses		(1.93	)		8.92
Minimum tax credit refundable		3.51			-
		(3.04	)		25.52

Deferred Tax Assets and Liabilities

The components of our deferred tax assets and liabilities are summarized as follows:

	(in thousands)
	December 31, 2017			December 31, 2016
Deferred Tax Assets:
Net operating loss carryforwards	$	10,623		$	14,106
Amortization		262			282
Stock-based compensation		49			73
Allowance for doubtful accounts		36			76
Reserve for obsolete inventory		235			351
Tax credits		438			557
Expense accruals		579			392
Deferred revenue		893			1,523
Total gross deferred taxes		13,115			17,360
Valuation allowance		(11,758	)		(15,695	)
Net deferred tax assets		1,357			1,665
Deferred Tax Liabilities:
Deferred commissions		(224	)		(337	)
Goodwill		(668	)		(607	)
Differences in timing of revenue recognition		(112	)		(112	)
Depreciation		(573	)		(613	)
Total deferred tax liabilities		(1,577	)		(1,669	)
Total deferred tax assets (liabilities)		(220	)		(4	)
Recorded as:
Non-current deferred tax assets (in other assets)		-			108
Non-current deferred tax liabilities		(220	)		(112	)
Total deferred tax assets (liabilities)	$	(220	)	$	(4	)

Valuation Allowance Activity

The activity in the valuation allowance is set forth below:

	(in thousands)
	2017			2016
Valuation allowance, January 1,	$	15,695		$	16,170
Partial release of allowance		-			-
Change in valuation allowance		(3,937	)		(475	)
Valuation allowance, December 31,	$	11,758		$	15,695