7.INCOME TAXES

The components of loss before income taxes were as follows (in thousands):


	Years ended December 31,
	2013		2012		2011

Loss before income taxes
Domestic	$	(9,041)	$	(136)	$	(6,761)
Foreign		(2,923)		(3,396)		(6,278)
Total	$	(11,964)	$	(3,532)	$	(13,039)


The components of income tax expense (benefit) are as follows (in thousands):


	Years ended December 31,
	2013		2012		2011

Current:
Federal	$	(234)	$	(48)	$	279
State		(3)		(1)		4
Foreign		153		90		315
Total	$	(84)	$	41	$	598

Deferred:
Federal	$	4,130	$	(31)	$	(2,358)
State		61		—		(35)
Foreign		(170)		(190)		(1,227)
		4,021		(221)		(3,620)
Total	$	3,937	$	(180)	$	(3,022)

A reconciliation from the federal statutory income tax provision to our effective tax expense (benefit) is as follows (in thousands):


	Years ended December 31,
	2013		2012		2011


United States federal tax statutory rate	$	(3,976)	$	(1,201)	$	(4,433)
State taxes, net of federal benefit		(51)		3		(36)
Valuation allowances against deferred tax assets		7,890		90		121
Research and development tax credits		(252)		(135)		(412)
Foreign provision different than U.S. tax rate		391		545		641
Stock option expense		28		(27)		82
Adjustment of prior year tax credits and refunds		(63)		69		50
Goodwill impairment		-		417		1,299
Uncertain tax positions		(8)		(19)		(138)
Other		(22)		78		(196)

Total	$	3,937	$	(180)	$	(3,022)

A summary of the deferred tax assets and liabilities is as follows (in thousands):


	Years ended December 31,
	2013		2012

Current deferred tax assets (liabilities):
Accrued compensation and benefits	$	66	$	42
Prepaid expenses and other		(88)		(31)
Inventory reserves		240		21
Allowance for doubtful accounts		237		115
Warranty reserves		162		39
Total current deferred tax asset:		617		186

Non-current deferred tax assets:
Intangible and other assets		3,525		3,617
Foreign net operating loss carryforwards		3,320		280
Non-qualified stock option expense		47		63
Property, equipment and other		147		96
Research and development credit		378		-
Non-current deferred tax asset:		7,417		4,056
Less: valuation allowance		(8,156)		(280)
Non-current deferred tax asset (liability):		(739)		3,776

Total net deferred tax asset (liability)	$	(122)	$	3,962

As of December 31, 2013, certain of our subsidiaries in the United States, United Kingdom, Hong Kong and Canada had net operating loss carryovers of $6,797,000, $3,864,000, $798,000 and $195,000 respectively. We determined that the benefits of the net operating loss carryovers for the United States, United Kingdom and Hong Kong are uncertain. Accordingly, as of December 31, 2013, we had a full valuation allowance against those deferred tax assets in the amount of $8,156,000.

In accordance with Accounting Standards Codification (“ASC”) 740‑30, we have not recognized a deferred tax liability for the undistributed earnings of certain of our foreign operations because those subsidiaries have invested or will invest the undistributed earnings indefinitely. At December 31, 2013, undistributed earnings were approximately $1,418,000. It is impractical for us to determine the amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings. Deferred taxes are recorded for earnings of foreign operations when we determine that such earnings are no longer indefinitely reinvested.

We realize an income tax benefit from the exercise or early disposition of certain stock options. This benefit results in a decrease in current income taxes payable and an increase in additional paid-in capital.

A reconciliation of the beginning and ending amount of the tax liability for uncertain tax positions is as follows (in thousands):



Balance at December 31, 2011	$	36
Additions for current year tax positions		-
Reductions as a result of lapses in statute of limitations		(18)
Balance at December 31, 2012	$	18

Additions for current year tax positions		-
Reductions as a result of lapses in statute of limitations		(10)
Balance at December 31, 2013	$	8

Included in the balance of uncertain tax positions at December 31, 2013 are immaterial potential benefits that, if recognized, would affect the effective tax rate. The amount of unrecognized tax benefits are not expected to change materially within the next 12 months. At December 31, 2013 and 2012, we had no accrued interest related to uncertain income tax positions. At December 31, 2013 and 2012, no accrual for penalties related to uncertain tax positions existed. Interest and penalties related to uncertain tax positions are included in interest expense and general and administrative expense, respectively, on our Consolidated Statements of Operations.

We are subject to income taxes in the U.S. federal jurisdiction and various state and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and require significant judgment to apply. Generally, we are subject to U.S. federal, state, local and foreign tax examinations by taxing authorities for years after the fiscal year ended December 31, 2009.

At December 31, 2013 and 2012, domestic and certain of our foreign subsidiaries were expected to receive income tax refunds within the next fiscal year. As a result, at December 31, 2013 and 2012, we recognized a current income tax receivable of $244,000 and $452,000, respectively, which is included in Prepaid Expenses and Other Current Assets on our Consolidated Balance Sheets.