EFTA01377805.pdf

S- ILA State (161) Foreign Total deferred provision for income taxes (2,664) Total provision for income taxes $ — $ 513 $ 1,440 The following is a reconciliation of the statutory federal income tax rate to the Company's effective tax rate: Balance at December 31, 2012 2013 2014 Tax at federal statutory rate 34.0% 34.0% 34.0% State taxes, net of federal benefit — — (0.1) Foreign rate differential — (9.0) (1.5) Nondeductible expenses - (1.0) (1.8) Credits - 3.0 2.7 Other items — — 0.7 Change in valuation allowance (34.0) (27.0) (35.0) Total —% —% (1.0)% F-30 Table of Contents( The tax effects of temporary differences and related deferred tax assets and liabilities are as follows (in thousands): Balance at December 31, 2012 2013 2014 Deferred tax assets: Capitalized costs $ 416 $ 468 $ 28.102 Accrued expenses 2,498 5,746 19.714 Net operating loss carryforwards 47,565 53,505 54.528 Tax credit carryforwards 1,493 7,699 11,662 Depreciation and amortization — 2,381 - Share-based compensation 2,981 5,085 13,153 Other — — 542 Total deferred tax assets 54,953 74,884 127,701 Valuation allowance (54,943) (74,884) (125,368) Total deferred tax assets, net of valuation allowance 10 — 2,333 Deferred tax liabilities: Property, equipment and intangible assets (10) — (2,333) Total deferred tax liabilities (10) — (2,333) Net deferred tax assets S — $ — $ Realization of deferred tax assets is dependent upon the generation of future taxable income. the timing and amount of which are uncertain. Due to the history of losses the Company has generated in the past. the Company believed as of December 31, 2014 that it is more likely than not that its deferred tax assets would not be realized. Accordingly, the Company retained a full valuation allowance on its deferred tax assets. The amount of deferred tax assets considered realizable in future periods may change as management continues to reassess the underlying factors it uses in estimating future taxable income. The valuation allowance increased by approximately $34.0 million, $19.9 million, and $50.5 million during the years ended December 31, 2012, 2013. and 2014, respectively. As of December 31, 2014. the Company had $45.7 million of federal, $123.3 million of state, and $31.3 million of foreign net operating loss carryforwards, which will begin to expire in 2032 for federal and 2019 for state tax purposes. The foreign net operating loss carryforwards do not expire. The benefit of stock options will only be recorded to stockholders' equity when cash taxes payable is reduced. As of December 31, 2014. approximately $62.3 million of net operating loss is attributable to certain employee stock option deductions. http://vAvw..us:. gov/A rehi vestedgar/data/ I 512673ANS1I 1931251 5369092/d937622ds I a. htmI I I/6/2015 7:37:12 A MI CONFIDENTIAL - PURSUANT TO FED. R. GRIM. P. 6(e) DB-SDNY-0074957 CONFIDENTIAL SDNY_GM_00221141 EFTA01377805