8. Income Taxes

The components of the income tax provision were as follows:

	Year Ended December 31,
	20123		2014
Current
Federal	$	—	$	—
Foreign		—		—
State		—		—
Total		—		—
Deferred
Federal		—		—
Foreign		—		—
State		—		—
		—		—
Income tax provision	$	—	$	—

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

	Year Ended December 31,
	2013		2014

Domestic	$	(8,012,906)	$	(13,691,729)
Foreign		(7,609)		(7,633)
	$	(8,020,515)	$	(13,699,362)

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,
	2013		2014
Income tax benefit based on federal statutory rate	$	(2,729,000)	$	(4,658,000)
State income tax benefit, net of federal income tax		(413,000)		(70,000)
Change in deferred tax valuation allowance		3,048,000		4,478,000
Stock-based compensation		75,000		203,000
Foreign net operating loss		-		—
Other, net		19,000		47,000
Income tax provision	$	—	$	—

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, 2013		December 31, 2014
Deferred tax assets:
Domestic net operating loss carryforwards	$	15,627,000	$	20,598,000
Foreign net operating loss carryforwards		800,000		802,000
Deferred revenue		-		—
Federal and state tax credit		297,000		297,000
Stock-based compensation		682,000		803,000
Capitalized costs		1,232,000		1,164,000
Other, net		2,129,000		1,581,000
Total gross deferred tax assets		20,767,000		25,245,000
Less valuation allowance on deferred tax assets		(20,767,000)		(25,245,000)
Net deferred taxes		—		—
Deferred tax liabilities:
Plant and equipment, principally accelerated depreciation		—		—

Total deferred tax liabilities		—		—
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 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 2003 through 2013.

As of December 31, 2014, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $54 million and $41 million, respectively. If not utilized, the federal net operating loss and tax credit carryforwards expire beginning in 2021. The state net operating loss carryforward expires beginning in 2015. Section 382 of the Internal Revenue Code contains rules that limit the ability of a company that undergoes an ownership change, which is generally a change in ownership of more than 50.0 percent of its stock over a three-year period, to utilize its net operating loss carryforwards. The Company has had numerous transactions in its common stock, and these transactions may have resulted in a change in ownership that limits the utilization of net operating loss carryforwards. The Company has not evaluated the impact of Section 382, if any, on its ability to utilize its net operating loss carry forwards in future years.

As of December 31, 2014, the Company had U.K. net operating loss carryforwards totaling approximately $3.0 million that may be carried forward indefinitely. A full valuation allowance has been provided against this asset.