INCOME TAX

The domestic and foreign components of loss before income taxes from operations for the years ended December 31, 2016 and 2015 are as follows:



	For the Years Ended December 31,
	2016			2015
	(in thousands)
Domestic	$	1,094		$	(12,001	)
Foreign	(744		)	(601		)

	$	350		$	(12,602	)

The provisions for income tax for the years ended December 31, 2016 and 2015, consist of the following and are included as general and administrative expense, in the accompanying consolidated statements of operations:



	For the Years Ended December 31,
	2016			2015
	(in thousands)
Federal:
Current	$	—		$	—
Deferred	416			(3,868		)

State:
Current	3			5
Deferred	(380		)	488

Foreign:
Current	—			—
Deferred	(174		)	(159		)

	(135		)	(3,534		)

Change in valuation allowance	138			3,539
Income tax provision	$	3		$	5

The expected tax expense (benefit) based on the statutory rate is reconciled with actual tax expense (benefit) as follows:



	For the Years Ended December 31,
	2016		2015
U.S. Federal statutory rate	34.0	%	34	%
State rate, net of federal benefit	7.8	%	1.3	%
Permanent differences:
Change in tax rate	(113.0	)%	—	%
Deferred tax adjustment	(19.1	)%	—	%
Stock based compensation	28.9	%	(1.1	)%
Foreign tax rate difference	19.3	%	(0.4	)%
Other	3.0	%	—	%
Change in valuation allowance	40.0	%	(33.9	)%
Income tax provision	0.9	%	(0.1	)%

The approximate tax effects of temporary differences, which give rise to significant deferred tax assets and liabilities, are as follows:



	As of December 31,
	2016			2015
	(in thousands)
Deferred tax assets
Net operating losses	$	10,032		$	9,666
Stock-based compensation	949			890
Intangible assets	3,748			3,752
Other	77			50
Total deferred tax assets	14,806			14,358
Valuation allowance	(14,497		)	(14,358		)
Deferred tax asset, net of valuation allowance	309			—
Deferred tax liability	(309		)
Net deferred tax liability	$	—		$	—

As of December 31, 2016 and 2015, the Company had NOL carryforwards of approximately $26.1 million and $25.5 million, respectively. The federal and state net operating loss carryforwards will begin to expire in 2026.

The valuation allowance associated with discontinued operations which are not reflected in the above table are approximately $418,000 for both years ended December 31, 2016 and 2015.

Utilization of the Company’s NOLs may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the NOLs before utilization.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary difference become deductible.

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment. Based on this assessment, management has established a full valuation allowance against all of the deferred tax assets in excess of the deferred tax liabilities for each period, since it is more likely than not that the deferred tax assets will not be realized. The change in valuation allowance for the years ended December 31, 2016 and 2015, is $0.1 million and $3.5 million, respectively.