Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes [Abstract]

Income Before Income Taxes by Domestic and Foreign Sources

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

(in thousands)	Years ended December 31,
	2019			2018
Domestic	$	(6,671	)	$	2,512
Foreign		319			(1,735	)
Total	$	(6,352	)	$	777

Provision for Income Taxes

The provision for income taxes is as follows:

(in thousands)	Years ended December 31,
	2019			2018
Current:
Federal	$	(30	)	$	(6	)
State		60			259
Foreign		354			234
Subtotal		384			487
Deferred:
Federal		4,686			600
State		663			67
Foreign		-			(23	)
Subtotal		5,349			644
Total	$	5,733		$	1,131

Effective Income Tax Rate Reconciliation

The effective income tax rate for the years ended December 31, 2019 and 2018 differed from the statutory federal income tax rate as presented below:

	Effective Tax Rate percentage (%)
	Years ended December 31,
	2019			2018
Statutory federal income tax rate		21.0	%		21.0	%
State income taxes, net of federal tax benefit		(12.1	)%		30.1	%
Effect of foreign operations		(0.3	)%		(2.1	)%
Change in valuation allowance		(93.1	)%		(43.6	)%
Meals and Entertainment		(1.4	)%		10.0	%
Stock based compensation		(1.4	)%		(6.9	)%
Other permanent differences		(0.6	)%		0.4	%
Uncertain Tax Positions		0.9	%		46.3	%
Change in tax rate		0.0	%		(2.8	)%
Expired stock options		0.0	%		50.7	%
Change in APB 23		0.0	%		(4.4	)%
Prior year reconciling items		(3.3	)%		(2.4	)%
Expiration of capital Loss		0.0	%		49.3	%
Effective tax rate		(90.3	)%		145.6	%

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 assets and liabilities is as follows:

(in thousands)	As of December 31,
	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	4,396		$	4,074
Accruals		247			760
Reserves		408			479
Alternative minimum tax credit carryforwards		126			213
Stock-based compensation expense		539			563
Intangible assets		1,021			674
Goodwill		1,037			-
Operating lease liabilities		998			-
Other		464			324
Total deferred tax assets		9,236			7,087
Valuation allowance		(7,576	)		(756	)
Total deferred tax assets less valuation allowance		1,660			6,331
Deferred tax liabilities:
Undistributed earnings of foreign subsidiary		-			(103	)
Software development costs		(161	)		(163	)
Fixed assets		(7	)		(44	)
Intangible assets		(22	)		-
Indefinite-lived intangibles		(728	)		(525	)
Operating lease - right of use assets		(510	)		-
Other		(175	)		(138	)
Total deferred tax liabilities		(1,603	)		(973	)
Net deferred tax assets	$	57		$	5,358

Uncertain Tax Liabilities

Uncertain Tax Positions

During 2019 and 2018, the Company recorded tax liabilities for certain foreign tax contingencies. The Company recorded these uncertain tax positions in other current liabilities on the consolidated balance sheets.

During 2018, the Company recorded a tax liability for an uncertain tax position related to revenue recognition in the US. The uncertain tax position is recorded as a component of current and deferred liability. An accounting method change was filed with the 2018 tax return, accordingly, the uncertain tax position related to revenue recognition has been reversed in 2019.

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

	China				Ukraine				South Korea						U.S.
(in thousands)	Tax		Interest and Penalties		Tax		Interest and Penalties		Tax		Interest and Penalties		Tax		Interest and Penalties		Total
Balance, January 1, 2018	$	216	$	262	$	100	$	28	$	341	$	45	$	833		-	$	1,825
Increases		-		23		-		44		120		66		163		4		420
Decreases		12		-		18		-		-		-		-		-		30
Balance, December 31, 2018	$	204	$	285	$	82	$	72	$	461	$	111	$	996	$	4	$	2,215
Increases		-		33		-		-		93		67		-		2		195
Decreases		3		-		4		12		-		-		203		-		222
Balance, December 31, 2019	$	201	$	318	$	78	$	60	$	554	$	178	$	793	$	6	$	2,188