Enom 2013 Annual Report Download - page 100

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):
The Company had federal net operating loss (“NOL”) carryforwards of approximately $71. 0 million and $66.0 million as of
December 31, 2013 and 2012, respectively, which expire between 2020 and 2032. The company also has an Irish NOL carryforward of $5.2M as
of December 31, 2013 that can be carried forward indefinitely. In addition, as of December 31, 2013 and 2012 the Company had state NOL
carryforwards of approximately $16.0 million and $13.0 million, which expire between 2013 and 2032.
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 the Company were to undergo an ownership change, as defined in Section 382. Changes in the Company’s
equity structure and the acquisitions by the Company of eNom, Trails.com, Maps a La Carte, Pagewise, Pluck, and Indie click and Creativebug
resulted in such an ownership change. Currently, the Company does not expect the utilization of its net operating loss and tax credit carry-
forwards in the near term to be materially affected as no significant limitations are expected to be placed on these carry-
forwards as a result of its
previous ownership changes.
The Company reduces 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. The Company has determined it
is more likely than not that it will not realize the benefit of all its deferred tax assets and accordingly a valuation allowance of $2 3.9 million and
$21.1 million against its deferred taxes was required at December 31, 2013 and 2012, respectively. The change in the valuation allowance for the
years ended December 31, 2013, 2012 and 2011 was an increase of $2.8 million, a decrease of $1.5 million and a increase of $8.2 million,
respectively. The valuation allowance is required as a result of the timing of the reversal of deferred tax liabilities associated with tax deductible
goodwill which is not certain and thus not available to assure the realization of deferred tax assets. After consideration of these limitations
associated with deferred tax liabilities, the Company has deferred tax assets in excess of deferred tax liabilities at December 31, 2013. As the
Company has 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 exclude 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 attribut es excluded through 2013 were $4.1 million. The benefit of these deferred tax
assets will be recorded to equity when they reduce taxes payable.
F-24
December 31,
December 31,
2013
2012
Deferred tax assets:
Accrued liabilities not currently deductible
$
4,193
$
5,623
Intangible assets
—
excess of tax basis over financial statement basis
15,008
13,192
Indirect federal impact of deferred state taxes
114
126
Deferred revenue
6,126
5,735
Net operating losses
23,488
21,527
Stock
-
based compensation
14,375
11,359
Other
189
265
63,493
57,827
Deferred tax liabilities:
Deferred registration costs
(23,832
)
(20,582
)
Prepaid expenses
(1,695
)
(1,797
)
Goodwill not amortized for financial reporting
(26,206
)
(21,098
)
Intangible assets
—
excess of financial statement basis over tax basis
(4,731
)
(5,483
)
Property and equipment
(8,674
)
(8,186
)
(65,138
)
(57,146
)
Valuation allowance
(23,882
)
(21,124
)
Net deferred tax liabilities
$
(25,527
)
$
(20,443
)
Current
$
(22,415
)
$
(18,892
)
Non
-
current
(3,112
)
(1,551
)
$
(25,527
)
$
(20,443
)