13. Income Taxes

The components of income tax (benefit) expense are as follows (in thousands):


	Year Ended June 30,
	2017		2016			2015
U.S. operations:
Current income tax expense	$	—	$	4		$	263
Deferred income tax benefit		—		—			—

		—		4			263

Non-U.S. operations:
Current income tax benefit		—		(159	)		(167	)
Deferred income tax benefit		—		—			—

		—		(159	)		(167	)

Income tax (benefit) expense	$	—	$	(155	)	$	96

The significant components of domestic income tax expense for the fiscal year ended June 30, 2015 included a provision for current income tax expense of $2.8 million, less a tax benefit of operating loss carry forwards of $2.5 million, resulting in a net domestic income tax expense of $263,000, which represented federal alternative minimum tax based on taxable income for the tax year ended December 31, 2014. During the fiscal years ended June 30, 2016 and 2015, the Company also recognized a current income tax benefit of $159,000 and $167,000, respectively, related to foreign research and development tax credits earned by its U.K. subsidiary.

The components of (loss) income before income taxes are as follows (in thousands):


	Year Ended June 30,
	2017			2016			2015
U.S. operations	$	(17,566	)	$	(19,780	)	$	8,120
Non-U.S. operations		(919	)		(1,922	)		(1,677	)

(Loss) income before income taxes	$	(18,485	)	$	(21,702	)	$	6,443

The difference between the Company’s expected income tax (benefit) expense, as computed by applying the statutory U.S. federal tax rate of 34% to (loss) income before income taxes, and actual income tax (benefit) expense is reconciled in the following table (in thousands):


	Year Ended June 30,
	2017			2016			2015
Income tax (benefit) expense at statutory rate	$	(6,284	)	$	(7,379	)	$	2,191
State income taxes, net of federal benefit		(928	)		(1,044	)		435
Non-U.S. income tax rate differential		(121	)		778			137
Research and development tax credits		(242	)		(397	)		(313	)
Capital loss expiration		—			—			511
Permanent items		(9	)		216			236
Changes in valuation allowance		7,489			6,789			(3,572	)
Other, net		95			882			471

Income tax (benefit) expense	$	—		$	(155	)	$	96

The significant components of deferred income taxes are as follows (in thousands):


	June 30,
	2017		2016
Deferred tax assets:
Net operating loss carryforwards	$	39,439	$	31,299
Deferred revenue		20		2,198
Stock-based compensation		5,107		4,111
Tax credits		1,727		1,484
Other		186		141

Total deferred tax assets		46,479		39,233

Deferred tax liabilities:
Intangible assets		123		367

Deferred tax assets, net		46,356		38,866
Valuation allowance		46,356		38,866

Total deferred tax liability	$	—	$	—

The valuation allowance generally reflects limitations on the Company’s ability to use the tax attributes and reduce the value of such attributes to the more-likely-than-not realizable amount. Management assessed the available positive and negative evidence to estimate if sufficient taxable income will be generated to use the existing net deferred tax assets. Based on a weighting of the objectively verifiable negative evidence in the form of cumulative operating losses over the three-year period ended June 30, 2017, management believes that it is not more likely than not that the deferred tax assets will be realized and, accordingly, a full valuation allowance has been established. The valuation allowance increased $7.5 million and $6.8 million during the fiscal years ended June 30, 2017 and 2016, respectively, with such increases attributed to the re-measurement of the net deferred tax assets at the year-end dates. The valuation allowance decreased $3.6 million during the fiscal year ended June 30, 2015, which is attributed to the consumption of $2.5 million in tax benefits from domestic net operating loss carry forwards and a decrease of $1.1 million attributed to re-measurement of the remaining net deferred tax assets which continue to bear a full valuation allowance.

The Company has tax net operating loss and tax credit carry forwards in its individual tax jurisdictions. At June 30, 2017, the Company had U.S. federal net operating loss carry forwards of approximately $92.6 million, which expire at various dates between calendar years 2023 and 2037. The utilization of certain of these loss and tax credit carry forwards may be limited by Sections 382 and 383 of the Internal Revenue Code as a result of historical or future changes in the Company’s ownership. At June 30, 2017, the Company had state net operating loss carry forwards of approximately $51.6 million, which expire between 2033 and 2037, as well as U.S. federal and state research and development tax credit carry forwards of approximately $1.2 million, which expire at various dates between calendar years 2017 and 2037. In addition, at June 30, 2017 the Company had net operating loss carry forwards in the U.K. of £21.1 million (approximately $27.4 million), which are not subject to any expiration dates.

The Company’s U.S. federal income tax returns for calendar years 2003 through 2016 remain subject to examination by the Internal Revenue Service. The Company’s U.K. tax returns for fiscal years 2006 through 2016 remain subject to examination. The Australian tax returns for the Company’s predecessor for fiscal years 2004 through 2008 remain subject to examination.

Through June 30, 2017, the Company had no unrecognized tax benefits in its consolidated statements of comprehensive (loss) income and no unrecognized tax benefits in its consolidated balance sheets as of June 30, 2017 or 2016.

As of June 30, 2017 and 2016, the Company had no accrued penalties or interest related to uncertain tax positions.