Enom 2015 Annual Report Download - page 88

F-24
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred
tax liabilities are presented below (in thousands):
December 31,
December 31,
2015
2014
Deferred tax assets:
Accrued liabilities not currently deductible ............................
$
3,454
$
2,305
Intangible assets—excess of tax basis over financial statement basis .......
45,138
54,647
Federal impact of deferred state taxes ................................
(4,518)
(3,198)
Deferred revenue .................................................
—
165
Net operating losses ..............................................
50,038
35,814
Stock-based compensation .........................................
2,565
5,783
Other ...........................................................
203
(56)
96,880
95,460
Deferred tax liabilities:
Intangible assets—excess of financial statement basis over tax basis .......
(1,751)
(1,245)
Property and equipment ...........................................
(2,251)
(5,739)
(4,002)
(6,984)
Valuation allowance ..............................................
(92,878)
(88,476)
Net deferred tax liabilities ..........................................
$
—
$
—
Current .........................................................
$
551
$
334
Non-current .....................................................
(551)
(334)
$
—
$
—
We had federal net operating loss (“NOL”) carryforwards of approximately $143.4 million and $110.7 million as
of December 31, 2015 and 2014, respectively, which expire between 2021 and 2035. In addition, as of December 31,
2015 and 2014 we had state NOL carryforwards of approximately $73.0 million and $44.5 million, which expire
between 2016 and 2035.
Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, provide for annual limitations on the
utilization of net operating loss and credit carryforwards if we were to undergo an ownership change, as defined in
Section 382. Changes in our equity structure and the acquisitions made by us in prior years, including Trails.com, Maps
a La Carte, Pagewise, Indieclick and Saatchi Art, resulted in such an ownership change. Currently, we do not expect the
utilization of our net operating loss and tax credit carryforwards in the near term to be materially affected as no
significant limitations are expected to be placed on these carryforwards as a result of our previous ownership changes.
We reduce the deferred tax asset resulting from future tax benefits by a valuation allowance if, based on the weight
of the available evidence, it is more likely than not that some portion or all of these deferred taxes will not be realized.
We have determined it is more likely than not that we will not realize the benefit of all our deferred tax assets and
accordingly a valuation allowance of $92.9 million and $88.5 million against our deferred taxes was required at
December 31, 2015 and 2014, respectively. The change in the valuation allowance for the year ended December 31,
2015 was an increase of $4.4 million, all of which was recorded in income tax benefit (expense) from continuing
operations. As we have no sustained history of generating book income, the ultimate future realization of these excess
deferred tax assets is not more likely than not and thus subject to a valuation allowance.
Accounting standards related to stock-based compensation prohibit the tax attributes related to the exercise of
employee stock options from being realized in the financial statements until they result in a decrease to taxes payable.
Therefore, we have not included unrealized stock option tax attributes in our deferred tax assets. Cumulative tax
attributes excluded through 2015 were $18.2 million. The benefit of these deferred tax assets will be recorded to equity
when they reduce taxes payable.