6. Income Taxes

The Company's loss from continuing operations before income taxes for the years ended December 31, was as follows (in thousands):



	2015			2014			2013
Income (loss) before provision for income taxes:
United States	$	(13,254	)	$	(18,455	)	$	(9,267	)
Foreign	629			(1,740		)	1,420
	$	(12,625	)	$	(20,195	)	$	(7,847	)

The components of the provision (benefit) for income taxes attributable to continuing operations are as follows (in thousands):



	2015			2014			2013
Current
Federal	$	—		$	—		$	—
State	(100		)	54			18
Foreign	932			163			1,136
Total Current	$	832		$	217		$	1,154

Deferred
Federal	$	293		$	300		$	(417	)
State	31			10			(67		)
Foreign	(117		)	(605		)	38
Total Deferred	207			(295		)	(446		)
	$	1,039		$	(78	)	$	708

As of December 31, 2015, the Company had federal net operating loss carryforwards of approximately $70 million. and research and development credit carryforwards of approximately $1.2 million. The net operating loss and credit carryforwards will expire beginning in 2017, if not utilized. Utilization of the net operating losses and tax credits may be subject to substantial annual limitation due to the “change of ownership” provisions of the Internal Revenue Code of 1986. The annual limitation will result in the expiration of approximately $16.2 million of net operating losses and $0.8 million of credit carryforwards before utilization.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred taxes as of December 31 are as follows (in thousands):



	2015			2014
Deferred tax assets:
Current deferred tax assets:
Accrued expenses and allowances	$	793		$	733
Deferred revenue	671			549
Other	22			62
Valuation allowance for current deferred tax assets	(1,183		)	(964		)
Net current deferred tax assets	303			380
Noncurrent deferred tax assets:
Intangible assets				—
Stock compensation	582			350
Net operating loss and tax credit carryforwards	20,871			16,755
Other	174			61
Valuation allowance for noncurrent deferred tax assets	(17,324		)	(12,143		)
Net noncurrent deferred tax assets	$	4,303		$	5,023
Deferred tax liabilities:
Current deferred tax liabilities:
Prepaid expenses	$	(1	)	$	(1	)
Total current deferred tax liabilities	(1		)	(1		)
Noncurrent deferred tax liabilities:
Stock compensation	—			—
Capital expenses	(2		)	(202		)
Intangible assets	(6,481		)	(7,217		)
Goodwill	(561		)	(252		)
Tax credit carryforwards	(379		)	(737		)
Total noncurrent deferred tax liabilities	(7,423		)	(8,408		)
Net current deferred tax asset	$	302		$	379
Net noncurrent deferred tax liability	$	(3,120	)	$	(3,385	)
Net deferred taxes	$	(2,818	)	$	(3,006	)

Due to the uncertainty surrounding the timing of realizing the benefits of its domestic favorable tax attributes in future tax returns, the Company has placed a valuation allowance against its domestic net deferred tax asset, exclusive of goodwill. During the year ended December 31, 2015 and 2014, the valuation allowance increased by approximately $5.4 million and $7.5 million, respectively, due primarily to operations and acquisitions.

The Company’s provision for income taxes differs from the expected tax expense (benefit) amount computed by applying the statutory federal income tax rate of 34% to income before taxes due to the following:



	2015		2014		2013
Federal statutory rate	34.0	%	34.0	%	34.0	%
State taxes, net of federal benefit	3.5		3.5		4.3
Tax credits	(0.2	)	(1.1	)	(5.3	)
Effect of foreign operations	(2.2	)	0.1		2.0
Stock compensation	(2.9	)	—		—
Permanent items and other	(3.3	)	(1.7	)	(13.7	)
Tax carryforwards not benefited	(37.1	)	(34.4	)	(30.3	)
	(8.2	)%	0.4	%	(9.0	)%

Under ASC 740-10, Income Taxes - Overall, the Company periodically reviews the uncertainties and judgments related to the application of complex income tax regulations to determine income tax liabilities in several jurisdictions. The Company uses a “more likely than not” criterion for recognizing an asset for unrecognized income tax benefits or a liability for uncertain tax positions. The Company has determined it has the following unrecognized assets or liabilities related to uncertain tax positions as of December 31, 2015. The Company does not anticipate any significant changes in such uncertainties and judgments during the next 12 months. To the extent the Company is required to recognize interest and penalties related to unrecognized tax liabilities, this amount will be recorded as an accrued liability, (in thousands).

In the fourth quarter of 2015, the Company recorded approximately $399,000 of additional income tax expense for tax matters that related to prior periods. The Company has concluded that the correction of the error in prior period amounts is not material to the current period or any previously reported periods.



Balance at January 1, 2013	$	70
Additional based on tax positions related to the current year	—
Additions for tax positions of prior years	—
Reductions for tax positions of prior years	(7		)
Settlements	—
Balance at December 31, 2013	$	63
Additional based on tax positions related to the current year	—
Additions for tax positions of prior years	—
Reductions for tax positions of prior years	(10		)
Settlements	—
Balance at December 31, 2014	$	53
Additional based on tax positions related to the current year	—
Additions for tax positions of prior years	568
Reductions for tax positions of prior years	—
Settlements	—
Balance at December 31, 2015	$	621

Due to the existence of the valuation allowance, future changes in our unrecognized tax benefits will not materially impact the Company’s effective tax rate. If the Company were to recognize unrecognized tax benefits as of December 31, 2015, $399,000 would impact the effective tax rate.

The Company’s assessment of its unrecognized tax benefits is subject to change as a function of the Company’s financial statement audit.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2015, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company and its subsidiaries file tax returns in the U.S. federal jurisdiction and in several state and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations for years ending before December 31, 2012 and is no longer subject to state and local or foreign income tax examinations by tax authorities for years ending before December 31, 2011. The Company is not currently under audit for federal, state or any foreign jurisdictions.