INCOME TAXES

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

8. INCOME TAXES

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

	Years ended December 31,
	2015			2014			2013
Income (loss) from continuing operations before income taxes and discontinued operations
Domestic	$	1,057		$	480		$	(6,275	)
Foreign		(656	)		(2,669	)		(1,160	)
Total	$	401		$	(2,189	)	$	(7,435	)

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

	Years ended December 31,
	2015		2014			2013
Current:
Federal	$	—	$	(158	)	$	(230	)
State		7		3			(7	)
Foreign		9		17			80
	$	16	$	(138	)	$	(157	)
Deferred:
Federal	$	—	$	—		$	4,083
State		—		—			120
Foreign		2		(16	)		(51	)
		2		(16	)		4,152
Total income tax expense (benefit)	$	18	$	(154	)	$	3,995

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

	Years ended December 31,
	2015			2014			2013
United States federal tax statutory rate	$	137		$	(766	)	$	(2,528	)
State taxes, net of federal benefit		(6	)		(233	)		(36	)
Valuation allowances against deferred tax assets		637			769			6,657
Research and development tax credits		(716	)		(374	)		(252	)
Foreign provision different than U.S. tax rate		104			483			148
Stock option expense		21			33			28
Adjustment of prior year tax credits and refunds		(40	)		102			(63	)
Uncertain tax positions		—			(10	)		(8	)
Other		(119	)		(158	)		49
Total	$	18		$	(154	)	$	3,995

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

	Years ended December 31,
	2015			2014
Deferred tax assets:
Accrued compensation and benefits	$	186		$	141
Inventory reserves		27			217
Allowance for doubtful accounts		9			112
Warranty reserves		168			194
Intangible and other assets		3,027			3,476
Net operating loss carryforwards		6,898			5,620
Non-qualified stock option expense		114			77
Property, equipment and other		133			158
Research and development credit		1,710			913
Total deferred tax asset:		12,272			10,908
Less: valuation allowance		(12,205	)		(10,950	)
Net deferred tax assets:		67			(42	)
Deferred tax liabilities:
Prepaid expenses and other		(48	)		(61	)
Total deferred tax liability:		(48	)		(61	)
Total net deferred tax asset/(liability)	$	19		$	(103	)

As of December 31, 2015, the Company had sustained a significant loss. The net operation loss (“NOL”) carry forward in the United States, United Kingdom, Hong Kong, Canada and China is $14.1 million, $8.8 million, $1.3 million, $70,000 and $113,000, respectively. The Company’s management believes that it is not more likely than not the net operating losses will be utilized. Accordingly, as of December 31, 2015, a full valuation allowance is provided, except Canadian NOL.

In accordance with 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. 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.

The Company has recognized no material uncertain tax positions as of December 31, 2015. The Company files income tax returns in the U.S federal jurisdiction, various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S federal or state and local income tax examinations by tax authorities for years before 2011. It is difficult to predict the final timing and resolution of any particular uncertain tax position. Based on the Company’s assessment of many factors, including past experience and complex judgments about future events, the Company does not currently anticipate significant changes in its uncertain tax positions over the next 12 months.