7.	Income Taxes

Income (loss) before income taxes consists of the following (in thousands):

	Year Ended
	December 31,
	2014		2013
U.S.	$	1,805	$	(3,084	)
Foreign		578		21
Total	$	2,383	$	(3,063	)

Income tax expense (benefit) consists of the following (in thousands):

	Year Ended
	December 31,
	2014			2013
Current taxes:
Federal	$	(106	)	$	—
State and local		8			(14	)
Foreign		212			52
Current taxes		114			38
Deferred taxes:
Federal	$	—		$	2,181
State and local		—			—
Foreign		(76	)		(25	)
Deferred taxes		(76	)		2,156
Total	$	38		$	2,194

The components of net deferred tax assets consist of the following (in thousands):

	December 31,
	2014			2013
Net deferred income tax assets:
Depreciation and amortization	$	472		$	775
Accrued expenses and reserves		921			2,968
Net operating loss carryforwards		22,194			20,652
Capital loss carryforwards		197			290
Research and development credit carryforwards		2,700			2,673
Stock-based compensation		615			487
Gross deferred tax assets		27,099			27,845
Less: valuation allowance		(26,842	)		(27,673	)
Net deferred tax assets	$	257		$	172

Our net deferred tax assets are recorded as follows (in thousands):

	December 31,
	2014			2013
Net deferred tax assets:
Deferred tax assets—current	$	10		$	12
Deferred tax assets—non-current		391			304
Deferred tax liability		(144	)		(144	)
Net deferred tax assets	$	257		$	172

As of December 31, 2014, our deferred tax assets were primarily the result of U.S. net operating loss and R&D credit carryforwards. Valuation allowances of $26.8 million and $27.7 million have been recorded against our gross deferred tax asset balance as of December 31, 2014, and December 31, 2013, respectively.

The provision for income taxes differs from the amount of expected income tax expense (benefit) determined by applying the applicable U.S. statutory federal income tax rate to pre-tax income (loss), as a result of the following (in thousands, except percentages):

	Year Ended
	December 31,
	2014					2013
U.S. Federal tax expense (benefit) at statutory rates	$	810		34.0	%	$	(1,041	)	34.0	%
Increase (decrease) resulting from:
Tax credits		(27	)	(1.1	)%		(138	)	4.5	%
State income tax		4		0.2	%		(19	)	0.6	%
International operations		(360	)	(15.2	)%		(315	)	10.3	%
Incentive stock options		70		3.0	%		17		(0.6	)%
Valuation allowance		(696	)	(29.2	)%		3,614		(118.0	)%
Expiration of state NOLs		245		10.3	%		190		(6.2	)%
Other, net		(8	)	(0.4	)%		(114	)	3.7	%
Tax expense and effective tax rate	$	38		1.6	%	$	2,194		(71.7	)%

At December 31, 2014, we had approximately $59.7 million of federal and $3.4 million of state net operating loss carryforwards, which have begun to expire, including $0.3 million of state losses which will expire in 2015. Of the federal net operating loss carryforwards, an aggregate of $41.8 million will expire in 2022 and 2023. We also have $2.7 million of Research and Development (“R&D”) credit carryforwards, which begin to expire in 2018. Use of these carryforwards may subject us to an annual limitation due to Section 382 of the U.S. Internal Revenue Code which restricts the ability of a corporation that undergoes an ownership change to use its carryforwards. Under the applicable tax rules, an ownership change occurs if holders of more than five percent of an issuer’s outstanding common stock, collectively, increase their ownership percentage by more than 50 percentage points over a rolling three-year period. We periodically perform analyses of possible ownership changes, including consideration of third party studies, and do not believe that an ownership change of more than 50 percentage points has occurred based upon the latest study completed as of December 31, 2014.

We have evaluated all the material income tax positions taken on our income tax filings to various tax authorities, and we determined that we did not have unrealized tax benefits related to uncertain tax positions recorded at December 31, 2014 or 2013.

Because of net operating loss and tax credit carryforwards, substantially all of our tax years remain open and subject to examination.