9. Income Taxes

The components of the income tax provision were as follows:

	Year Ended December 31,
	2010		2011
Current
Federal	$	—	$	—
Foreign		—		—
State		1,256		—
		1,256		—
Deferred
Federal		—		—
Foreign		—		—
State		—		—
		—		—
Income tax provision	$	1,256	$	—

For financial statement purposes, loss before income tax provision includes the following components:

	Year Ended December 31,
	2010			2011

Domestic	$	(4,644,914	)	$	(5,671,528	)
Foreign		(24,209	)		(30,894	)
	$	(4,669,123	)	$	(5,702,422	)

A reconciliation of the expected income tax benefit computed using the federal statutory income tax rate of 34% to the Company’s effective income tax rate is as follows:

	Year Ended December 31,
	2010			2011
Income tax benefit based on federal statutory rate	$	(1,588,000	)	$	(1,928,000	)
State income tax benefit, net of federal income tax		(311,000	)		(191,000	)
Change in deferred tax valuation allowance		1,783,000			1,367,000
Stock-based compensation		—			675,000
Other, net		117,256			77,000
Income tax provision	$	1,256		$	—

The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and deferred tax liabilities are presented below:

	December 31, 2010			December 31, 2011
Deferred tax assets:
Domestic net operating loss carryforwards	$	9,341,000		$	11,411,000
Foreign net operating loss carryforwards		1,572,000			1,581,000
Deferred revenue		550,000			—
Federal and state tax credit		240,000			297,000
Stock-based compensation		2,104,000			1,620,000
Capitalized costs		1,242,000			1,236,000
Other, net		541,000			724,000
Total gross deferred tax assets		15,590,000			16,869,000
Less valuation allowance on deferred tax assets		(15,502,000	)		(16,869,000	)
Net deferred tax assets		88,000			—
Deferred tax liabilities:
Plant and equipment, principally accelerated depreciation		(88,000	)		—

Total deferred tax liabilities		(88,000	)		—
Net deferred taxes	$	—		$	—

Deferred income taxes result from temporary differences between income tax and financial reporting computed at the effective income tax rate. The Company has established a valuation allowance against its net deferred tax assets due to the uncertainty surrounding the realization of such assets. Management periodically evaluates the recoverability of the deferred tax assets. At such time it is determined that it is more likely than not that deferred tax assets are realizable, the valuation allowance will be reduced.

The Company files U.S. federal, U.S. state, and foreign tax returns. The Company’s major tax jurisdictions are U.S. federal and the State of California and are subject to tax examinations for the open years from 2002 through 2011.

As of December 31, 2011, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $29.3 million and $25.1 million, respectively. If not utilized, the federal net operating loss and tax credit carryforwards will expire beginning in 2020. If not utilized, the state net operating loss carryforward will expire beginning in 2012.

As of December 31, 2011, the Company had U.K. net operating loss carryforwards totaling approximately $5.6 million that may be carried forward indefinitely. A full valuation allowance has been provided against this asset.