12.

Income Taxes

The geographical breakdown of loss before provision for income taxes is as follows:


	Year Ended December 31,
	2015			2014			2013
	(in thousands)
United States	$	(53,376	)	$	(23,872	)	$	(6,832	)
International		171			1			—

Loss before provision for income taxes	$	(53,205	)	$	(23,871	)	$	(6,832	)

The components of the provision for income taxes are as follows:


	Year Ended December 31,
	2015			2014			2013
	(in thousands)
Current tax provision:
Federal	$	—		$	—		$	—
State		—			—			—
Foreign		59			4			—

Total current tax provision		59			4			—

Deferred tax provision (benefit):
Foreign		(4	)		(2	)		—

Total deferred tax provision (benefit)	$	(4	)	$	(2	)	$	—

Total provision for income taxes	$	55		$	2		$	—

The reconciliation between income taxes computed at the federal statutory income tax rate and the provision for income taxes is as follows:


	Year Ended December 31,
	2015			2014			2013
	(in thousands)
Federal statutory rate		34.0	%		34.0	%		34.0	%
Effect of:
Change in valuation allowance		(27.8	)		(37.3	)		(23.1	)
Federal tax credit		2.6			1.8			1.8
State income tax benefit, net of federal benefit		2.9			4.0			2.2
Conversion costs		—			—			(13.5	)
Change in fair value of preferred stock warrants		(11.1	)		(2.0	)		(1.1	)
Other permanent items		(0.7	)		(0.5	)		(0.3	)

Total provision for income taxes		(0.1	)%		—	%		—	%

The components of the deferred tax assets are as follows:


	December 31,
	2015			2014
	(in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	21,482		$	8,941
Research and development credits		1,923			649
License fee		3,413			3,880
Other		1,649			177

Gross deferred tax assets		28,467			13,647
Valuation allowance		(28,448	)		(13,645	)

Total deferred tax assets		19			2

Deferred tax liabilities:
Other		10			—

Total deferred tax liabilities		10			—

Total net deferred tax assets	$	9		$	2

Recognition of deferred tax assets is appropriate when realization of these assets is more likely than not. Based upon the weight of available evidence, which includes historical operating performance and the recorded cumulative net losses in prior fiscal periods, the Company recorded a full valuation allowance of $28.4 million and $13.6 million against the net U.S. deferred tax assets as of December 31, 2015 and 2014. The net valuation allowance increased by $14.8 million for the year ended December 31, 2015 and increased by $8.9 million for the year ended December 31, 2014.

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. Based on the weight of all evidence, including a history of operating losses and the Company’s ability to generate future taxable income to realize the assets, management has determined that it is more likely than not that the deferred tax assets will not be realized.

As a result of certain realization requirements of Accounting Standards Codification (ASC) 718, Compensation—Stock Compensation, the table of deferred tax assets and liabilities above does not include certain deferred tax assets as of December 31, 2015, that arose directly from tax deductions related to equity compensation that are greater than the compensation recognized for financial reporting. Equity will be increased by $0.1 million if and when such deferred tax assets are ultimately realized.

As of December 31, 2015, the Company has federal operating loss carryforwards of $57.0 million and state operating loss carryforwards of $54.5 million, expiring in years ranging from 2021 to 2035. The Company also had net tax credit carryforwards of $1.9 million available to reduce future tax liabilities, if any, for federal tax purposes. The net tax credit carryforwards begin to expire in 2031.

Future utilization of the Company’s net operating loss and research and development credits carryforwards to offset future taxable income are subject to an annual limitation, pursuant to Internal Revenue Code (IRC) Sections 382 and 383, as a result of ownership changes that have occurred.

Uncertain Tax Positions

The activity related to the gross amount of unrecognized tax benefits is as follows:


	Year Ended December 31
	2015			2014
	(in thousands)
Beginning balance	$	162		$	58
Increases based on tax positions related to prior years		—			—
Decreases based on tax positions related to prior years		(77	)		—
Increases based on tax positions in current year		147			104
Settlement		—			—
Lapse of statute of limitations		—			—

Ending balance	$	232		$	162

If recognized, gross unrecognized tax benefits would not have an impact on the Company’s effective tax rate due to the Company’s full valuation allowance position. While it is often difficult to predict the final outcome of any particular uncertain tax position, the Company does not believe that the amount of gross unrecognized tax benefits will change significantly in the next twelve months.

The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes in the accompanying consolidated statement of operations. Accrued interest and penalties, if applicable, are included in accrued liabilities in the consolidated balance sheet. For the years ended December 31, 2015 and 2014, the Company did not recognize any accrued interest and penalties.

The Company is subject to taxation in the United States, various states, Canada and Australia. Tax years 2012 through 2014 remain open to examination by the United States and various state jurisdictions. The 2014 tax year remains open to examination in Canada. The Company is not currently under examination by the Internal Revenue Service or any other jurisdiction for any year.