11. Income Taxes

During the years ended December 31, 2015, 2014 and 2013, the Company recorded no income tax benefits for the net operating losses incurred in each year, due to its uncertainty of realizing a benefit from those items.

Loss before income taxes is allocated as follows:


	Year Ended December 31,
	2015		2014		2013
U.S. operations	$	(11,823)	$	(8,517)	$	(5,236)
Foreign operations		(8,740)		—		—
Loss before income taxes	$	(20,563)	$	(8,517)	$	(5,236)

A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate is as follows:


	Year Ended December 31,
	2015		2014		2013
Federal statutory income tax rate	(34.0)	%	(34.0)	%	(34.0)	%
State taxes, net of federal benefit	(3.8)		(6.6)		(6.6)
Foreign rate differential	6.0		—		—
Research and development tax credits	(1.5)		(1.0)		(1.6)
Change in deferred tax asset valuation allowance	33.3		41.6		42.2
Effective income tax rate	—	%	—	%	—	%

Net deferred tax assets as of December 31, 2015 and 2014 consisted of the following:


		December 31,
	2015		2014
Deferred tax assets:
Net operating loss carryforwards	$	5,750	$	5,606
Capitalized start up costs		4,401		—
Research and development tax credit carryforwards		500		203
Capitalized research and development expenses		611		620
Intangible asset		1,650		—
Stock‑based compensation expenses		373		11
Other		1		4
Total deferred tax assets		13,286		6,444
Deferred tax liabilities:
Other		—		—
Total deferred tax liabilities		—		—
Valuation allowance		(13,286)		(6,444)
Net deferred tax assets	$	—	$	—

As of December 31, 2015, the Company had federal and state net operating loss carryforwards of $13,917 for each, which begin to expire in 2032. As of December 31, 2015, the Company also had federal research and development tax credit carryforwards of $500, which begin to expire in 2032. The Company had no state research and development tax credit carryforwards. The Company also has $490 of loss carry forwards in the United Kingdom, which can be carried forward indefinitely. Utilization of the net operating loss carryforwards and research and development tax credit carryforwards in the United States may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership changes that may have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three year period. The Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study. If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the net operating loss carryforwards or research and development tax credit carryforwards would be subject to an annual limitation under Section 382, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long term tax exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization. Further, until a study is completed and any limitation is known, no amounts are being presented as an uncertain tax position.

The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s history of cumulative net losses incurred since inception and its lack of commercialization of any products or generation of any revenue from product sales since inception and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the deferred tax assets as of December 31, 2015 and 2014. Management reevaluates the positive and negative evidence at each reporting period.

Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2015, 2014, and 2013 related primarily to the increases in net operating loss carryforwards, capitalized start-up costs, and research and development tax credit carryforwards and were as follows:


		Year Ended December 31,
		2015		2014		2013
Valuation allowance at beginning of year	$	(6,444)	$	(2,899)	$	(690)
Decreases recorded as benefit to income tax provision		—		—		—
Increases recorded to income tax provision		(6,842)		(3,545)		(2,209)
Valuation allowance as of end of year	$	(13,286)	$	(6,444)	$	(2,899)

During 2015, the Company has recorded unrecognized tax benefits in the amount of $4,440 related to start-up costs that were previously deducted beginning in the initial return filing period ended December 31, 2012. The following table summarizes the changes in the Company’s unrecognized tax benefits:


	Year ended December 31,
	2015		2014		2013
Unrecognized tax benefits at beginning of year	$	—	$	—	$	—
Increases related to prior year tax provisions		(2,624)		—		—
Increases related to current year tax provisions		(1,776)		—		—
Unrecognized tax benefits as of end of year	$	(4,400)	$	—	$	—

The total amount of unrecognized tax benefits that, if recognized, would impact the Company’s effective tax rate were $0 as of both December 31, 2015 and 2014. The Company accrues interest and penalties related to unrecognized tax benefits in income tax expense in the consolidated statements of operations and comprehensive loss. During each of the years ended December 31, 2015, 2014 and 2013, the Company recognized expense/(benefit) of $0 related to interest and penalties.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending income tax examinations. The Company’s tax years are still open under statute from 2012 to the present. All open years may be examined to the extent that tax credit or net operating loss carryforwards are used in future periods. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision.