Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of Income before Income Tax, Domestic and Foreign

The consolidated income (loss) before income taxes, by domestic and foreign sources, is as follows:

(in thousands)	Years ended December 31,
	2016				2015
Domestic		$	2,873			$	(4,260	)
Foreign			(1,101	)			26
Total		$	1,772			$	(4,234	)

Schedule of Components of Income Tax Expense (Benefit)

The provision for income taxes is as follows:

(in thousands)	Years ended December 31,
	2016			2015
Current:
Federal	$	-		$	-
State		6			12
Foreign		221			288
Subtotal		227			300

Deferred:
Federal		127			127
State		19			19
Foreign		(23	)		25
Subtotal		123			171
Total	$	350		$	471

Schedule of Effective Income Tax Rate Reconciliation

The effective income tax rate for the years ended December 31, 2016 and 2015 differed from the statutory federal income tax rate as presented below:

	Effective Tax Rate Percentage (%)
	Years ended December 31,
	2016	2015
Statutory federal income tax rate	34.0%	34.0%
State income taxes, net of federal tax benefit	1.3%	(0.2)%
Effect of foreign operations	8.6%	(3.0)%
Change in valuation allowance	(46.9)%	(33.8)%
Meals and entertainment	7.7%	(3.3)%
Permanent differences	4.5%	(3.6)%
Uncertain tax positions	11.8%	(4.0)%
Other	(1.2)%	2.8%
Effective tax rate	19.8%	(11.1)%

Schedule of Deferred Tax Assets and Liabilities

Deferred income taxes arise from temporary differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. A summary of the tax effect of the significant components of the deferred income tax liabilities is as follows:

(in thousands)	As of December 31,
	2016			2015
Deferred tax assets:
Net operating loss carryforwards	$	7,868		$	8,732
Capital loss carryforwards		549			549
Accruals		183			662
Reserves		514			719
Alternative minimum tax credit carryforwards		203			166
Stock-based compensation expense		1,224			1,492
Intangibles		391			397
Undistributed earnings of foreign subsidiary		37			-
Other		71			32
Total deferred tax asset		11,040			12,749
Valuation allowance		(10,477	)		(12,082	)
Total deferred tax asset less valuation allowance		563			667

Deferred tax liabilities:
Undistributed earnings of foreign subsidiary		-			(17	)
Software development costs		(382	)		(446	)
Fixed Assets		(161	)		(213	)
Indefinite-lived intangibles		(316	)		(170	)
Other		(27	)		(22	)
Total deferred tax liability		(886	)		(868	)

Net deferred tax liability	$	(323	)	$	(201	)

Summary of Income Tax Contingencies

The following table outlines the Company's foreign uncertain tax liabilities, including accrued interest and penalties for each jurisdiction:

	China					Ukraine					South Korea
(in thousands)	Tax			Interest and Penalties		Tax			Interest and Penalties		Tax		Interest and Penalties		Total

Balance, January 1, 2015	$	222,000		$	-	$	61,000		$	-	$	-	$	-	$	283,000
Increases		3,000			152,000		-			15,000		-		-		170,000
Decreases		-			-		(40,000	)		-		-		-		(40,000	)
Balance, December 31, 2015	$	225,000		$	152,000	$	21,000		$	15,000	$	-	$	-	$	413,000
Increases		-			57,000		68,000			13,000		129,000		8,000		275,000
Decreases		(23,000	)		-		-			-		-		-		(23,000	)
Balance, December 31, 2016	$	202,000		$	209,000	$	89,000		$	28,000	$	129,000	$	8,000	$	665,000