14. Income Taxes

The Company had net comprehensive losses of $16,291,550 and $8,609,575 for the years ended December 31, 2015 and 2014, respectively.

Due to continued losses, and a full valuation allowance, the Company has not recorded a provision for income taxes for the years ended December 31, 2015 and 2014.

The components of the provision for income taxes during the years ended December 31, 2015 and 2014 is as follows:

	December 31, 2015			December 31, 2014
Current:
Federal	$	—		$	—
State		—			—
Foreign		—			—

Total Current		—			—

Deferred:
Federal		(4,197,007	)		(2,844,539	)
State		(587,696	)		(511,406	)
Foreign		—			—

Total Deferred		(4,784,703	)		(3,355,945	)
Valuation Allowance		4,784,703			3,355,945

Total Provision for Income Taxes	$	—		$	—

The Company's effective tax during the years ended December 31, 2015 and 2014, differed from the federal statutory rate as follows:

	December 31, 2015			December 31, 2014
Statutory Rate		(34.0	)%		(34.0	)%
State Taxes		(3.6	)%		(5.9	)%
Tax Credits		5.2	%		(0.8	)%
Other		1.7	%		2.2	%
Valuation Allowance		30.7	%		38.50	%

Effective Tax Rate		0.0	%		0.0	%

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

	December 31, 2015			December 31, 2014
Non-current Deferred Tax Assets:
Net Operating Costs	$	7,459,489		$	3,610,478
Tax Credits		261,851			124,025
Other		734,611			(56,713	)

		8,455,951			3,677,790
Valuation Allowance		(8,455,951	)		(3,677,790	)

Net Non-current Deferred Tax Assets	$	—		$	—

A valuation allowance is provided when it is more likely than not that the deferred tax assets will not be realized. The Company has established a valuation allowance to offset net deferred tax assets as of December 31, 2015 and 2014, due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets.

The valuation allowance increased by $4,784,703 during the year ended December 31, 2015.

As of December 31, 2015, the Company had federal and California net operating loss carryovers of approximately $19,131,333 and $10,643,472, respectively. The federal and California net operating losses will begin to expire in 2033.

As of December 31, 2015, the Company had federal and California research credit carryovers of approximately $196,593 and $198,062, respectively. The federal research credits will begin to expire in 2033. The California research credits carry forward indefinitely.

The Tax Reform Act of 1986 limits the use of net operating loss and tax credit carryforward in certain situations where changes occur in the stock ownership of a company. The Company does not believe that the use of net operating loss and tax credit carryforwards were limited in prior years, nor as a consequence of the IPO. However, in the event the Company has a change in ownership in the future, as defined by the tax law, utilization of the carryforwards could be limited.

In November 2015, the FASB issued Accounting Standards Update 2015-17, which simplifies the presentation of deferred income taxes by requiring that deferred tax assets and liabilities be presented as non-current. The standard impacts presentation only. The Company elected to early adopt the standard on a retrospective basis effective December 31, 2015 and all deferred tax assets and liabilities are classified as non-current on the Company's consolidated balance sheets. Adoption of this ASU had no effect on the Company's balance sheet for 2015 or 2014 as presented.

Uncertain Tax Positions

The Company has adopted the provisions of ASC 740, "Income Taxes Related to Uncertain Tax Positions." Under these principals, tax positions are evaluated in a two-step process. The Company first determines whether it is more-likely-than-not that a tax positions will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to be recognized in the financial statements. The tax position is measured as the largest amount of benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement.

The following is a reconciliation of the beginning and ending amount of our total gross unrecognized tax benefit liabilities for the years ended December 31, 2015 and 2014:

	December 31, 2015		December 31, 2014
Gross Unrecognized Tax Benefit—Beginning Balance	$	31,006	$	—
Increases Related to Tax Positions from Prior Years		5,920		—
Increases Related to Tax Positions Taken During the Current Year		42,004		31,006

Gross Unrecognized Tax Benefit—Beginning Balance	$	78,930	$	31,006

There are no liabilities from unrecognized tax benefits included in the Company's balance sheet as of December 31, 2015 and 2014, and therefore the Company has not accrued for any penalties or interest. The Company does not have any tax positions that are expected to significantly increase or decrease over the next 12 months.

The Company files income tax returns in the United States and California, where the statute of limitations are 3 years and 4 years, respectively. The Company remains open for audit by the United States Internal Revenue Service and California state tax jurisdictions since inception.

The Company is not currently under examination by income tax authorities in federal or state jurisdictions.