The geographical breakdown of income (loss) before income taxes is as follows (in thousands):

	Years ended December 31,
	2019			2018
Loss before income taxes - Domestic	$	(11,069	)	$	(3,003	)
Income before income taxes - Foreign		1,391			7,563
Income (loss) before income taxes	$	(9,678	)	$	4,560

The following is a summary of the components of income tax expense applicable to income (loss) before income taxes (in thousands):

	Years ended December 31,
	2019		2018
Current:
Federal	$	—	$	—
State		16		13
Foreign		2,439		1,509
Total current tax provision	$	2,455	$	1,522
Deferred:
Federal	$	—	$	12
State		—		—
Foreign		1,130		190
Total deferred tax provision (benefit)	$	1,130	$	202
Total tax provision (benefit)	$	3,585	$	1,724

A reconciliation of the expected tax provision (benefit) to the actual tax provision (benefit) is as follows (in thousands):

	Years ended December 31,
	2019			2018
Expected tax provision (benefit) at statutory rate	$	(2,032	)	$	953
State taxes, net of Federal effect		13			297
State change in deferreds		1,927			—
Foreign rate differential		2,751			129
Valuation allowance		557			(906	)
Permanent differences		544			297
Other permanent items		—			1,178
Tax credit carry-forwards		(212	)		(280	)
Tax expense adjustments after tax return for prior period		37			74
Others		—			(18	)
Total tax provision	$	3,585		$	1,724

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2019 and 2018 are as follows (in thousands):

	As of December 31,
	2019			2018
Deferred tax assets:
Net operating loss, capital loss, and tax credit carryforwards	$	23,195		$	12,621
Fixed assets and intangible assets		1,057			1,451
Inventory and other reserves		1,368			1,998
Operating lease liability		1,684			—
Other (mainly accrued expenses)		2,552			2,042
Gross deferred tax assets		29,856			18,112
Less valuation allowance		(26,827	)		(15,360	)
Deferred tax liabilities:
Operating lease right-of-use-asset		(1,407	)		—
Gross deferred tax liabilities		(1,407	)		—
Total net deferred tax assets	$	1,622		$	2,752

For the years ended December 31, 2019 and 2018, the net changes in the valuation allowance were an increase of $11.5 million, and a decrease of $0.9 million, respectively. The increase during the current year is mainly due to the increase of U.S. net deferred tax assets and recognition of the Germany deferred tax assets. The decrease during 2018 is mainly due to the decrease of U.S. net deferred tax assets. The Company maintains a valuation allowance on its U.S. and Germany net deferred tax assets since it is more likely than not that the net deferred tax assets will not be realized due to the lack of previously paid taxes and anticipated taxable income.

As of December 31, 2019, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $38.0 million and $29.4 million, respectively. The federal losses begin to expire in various years beginning in 2030. The state losses begin to expire in various years beginning in 2021. The Federal net operating loss carryforward includes $12.6 million that has an indefinite carryforward period.

Pursuant to Sections 382 and 383 of the Internal Revenue Code, or IRC, annual use of the Company's net operating losses and tax credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. The Company had an ownership change in September 2016, which has resulted in an annual limitation on the amount of net operating loss and tax credit carry forward which arose prior to that date that the Company can utilize in a future year. In addition, some of the pre-acquisition NOLs have written off due to the limitation.

As of December 31, 2019, the Company had research credit carryforwards of approximately $1.2 million and $1.6 million for federal and state purposes, respectively. If not utilized, the federal carryforwards will expire beginning in 2036. The California credit carryforwards do not expire and the Georgia credit carryforwards will expire beginning in 2026.

In accordance with ASC 740 the Company is required to inventory, evaluate, and measure all uncertain tax positions taken or to be taken on tax returns, and to record liabilities for the amount of such positions that may not be sustained, or may only be partially sustained, upon examination by the relevant taxing authorities. At December 31, 2019, the Company had gross unrecognized tax benefits of $1.0 million, none of which if recognized, would reduce the effective tax rate in a future period, due to the Company's full valuation allowance on U.S. net deferred tax assets.

A reconciliation of the beginning and ending unrecognized tax benefit amounts for 2019 and 2018 are as follows (in thousands):

	As of December 31,
	2019		2018
Balance at beginning of the year	$	807	$	380
Increases related to current year tax positions		229		427
Balance at end of the year	$	1,036	$	807

It is the Company's policy to account for interest and penalties related to uncertain tax positions as interest expense and general administrative expense, respectively in the consolidated statements of comprehensive income (loss).

The Company did not record any interest and penalty (benefit) provision during the years ended December 31, 2019 and 2018.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The open tax years for the major jurisdictions are as follows:

Federal		2016 - 2019
California and Canada		2015 - 2019
Brazil		2014 - 2019
Germany		2015 - 2019
Japan		2014 - 2019
Korea		2017 - 2019
United Kingdom		2016 - 2019
Vietnam		2017 - 2019

However, due to the fact the Company had net operating losses and credits carried forward in most jurisdictions, certain items attributable to technically closed years are still subject to adjustment by the relevant taxing authority through an adjustment to tax attributes carried forward to open years. The Company is not currently under examination for income taxes in any material jurisdiction.