(7) INCOME TAXES

Income tax (benefit) expense consists of the following for the years ended December 31, 2015 and 2014:

	2015			2014
Current tax (benefit) expense:
Federal	$	(57	)	$	(49	)
State		—			—
Penalties and interest		—			—
		(57	)		(49	)
Deferred tax (benefit) expense:
Federal		(992	)		(1,994	)
State		(68	)		(131	)
Valuation allowance		1,060			2,125
		—			—
	$	(57	)	$	(49	)

A reconciliation of income tax computed at the U.S. statutory rate of 34% to the effective income tax rate is as follows:

	2015			2014
Statutory rate		(34	)%		(34	)%
State taxes		(3	)		(2	)
Permanent differences and other		2			2
Change in valuation allowance		35			34
Effective rate		0	%		0	%

The tax effects of temporary differences that give rise to deferred tax assets (liabilities) at December 31, 2015 and 2014 are as follows:

	2015			2014
Current deferred tax assets (liabilities):
Accrued expenses	$	22		$	114
Accounts receivable		730			1,185
Inventory		32			1,603
Prepaid expenses		—			(90	)
Stock based compensation		23			23
Other		9			9
		816			2,844
Less: Valuation allowance		(816	)		(2,844	)
Net current deferred tax assets	$	—		$	—
Long-term deferred tax assets (liabilities):
Amortization	$	115		$	125
Property and equipment		(293	)		(553	)
Tax credits and NOL carryforward		4,482			1,644
Net long-term deferred tax liabilities		4,304			1,216
Less: valuation allowance		(4,304	)		(1,216	)
Net deferred tax assets	$	—		$	—

The Company has generated a net operating loss carryforward (NOL) for federal income tax purposes of approximately $11,100 as of December 31, 2015, which is available to offset taxable income in the future at various dates through 2035. The Company also has available NOL carryforwards of approximately $19,900 for state purposes, which expire at various dates ranging from five to seven years.

The accounting standard related to income taxes applies to all tax positions and defines the confidence level that a tax position must meet in order to be recognized in the financial statements. This accounting standard requires that the tax effects of a position be recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If a tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are to be recognized. This accounting standard requires additional disclosures. The recognition of uncertain tax benefits are not expected to have a material impact on the Company’s effective tax rate or results of operations. These uncertain tax benefits relate primarily to taxes potentially due in state where the Company has nexus, but has not yet filed tax returns. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2015		2014
Uncertain tax benefits at the beginning of the period	$	250	$	194
Gross increases for State income tax liabilities				56
Uncertain tax benefits at the end of the period	$	250	$	250