10. Income Taxes

The components of the Company’s loss before provision for income taxes were as follows:


	Years Ended December 31,
	2013			2012			2011
United States of America	$	(24,197	)	$	(27,423	)	$	(17,791	)
International		(11,163	)		1,162			507

	$	(35,360	)	$	(26,261	)	$	(17,284	)

The components of the provision for income taxes were as follows:


	Years Ended December 31,
	2013			2012			2011
Current income tax provision
Federal	$	—		$	—		$	—
State		26			19			8
Foreign		557			310			131

Total current income tax provision		583			329			139

Deferred income tax provision (benefit)
Federal		—			—			—
State		—			—			—
Foreign		(91	)		(108	)		—

Total deferred income tax provision (benefit)		(91	)		(108	)		—

Provision for income taxes	$	492		$	221		$	139

The Company has incurred operating losses and has recorded a full valuation allowance against its deferred tax assets (except for the deferred tax assets associated with the Company’s subsidiary in the United Kingdom) for all periods to date and, accordingly, has not recorded a provision for income taxes for any of the periods presented other than provisions for foreign and state income taxes.

The differences in the total provision for income taxes that would result from applying the 34% federal statutory rate to loss before provision for income taxes and the reported provision for income taxes were as follows:


	Years Ended December 31,
	2013			2012			2011
Tax benefit at U.S. statutory rate	$	(12,022	)	$	(8,929	)	$	(5,877	)
State income taxes, net of federal benefit		19			19			8
Foreign income and withholding taxes		4,382			(184	)		(41	)
Stock-based compensation		863			458			171
Change in valuation allowance		4,437			9,082			5,839
Research and development credits		(776	)		(823	)		—
Uncertain tax positions		1,499			—			—
Provision to return adjustments		1,894			328			—
Other		196			270			39

	$	492		$	221		$	139

Major components of the Company’s deferred tax assets as of December 31, 2013 and 2012 are as follows:


	December 31,
	2013			2012
Current
Accruals and reserves	$	1,816		$	1,509
Stock-based compensation		151			64
Other		(64	)		41

Current deferred tax assets		1,903			1,614
Valuation allowance		(1,853	)		(1,578	)

Total current deferred tax asset, net of valuation allowance		50			36

Noncurrent
Net operating loss		27,355			25,901
Accruals and reserves		149			81
Research and development credits		3,391			1,622
Stock-based compensation		452			192
Property and equipment		914			552
Other		94			—

Noncurrent deferred tax assets		32,355			28,348
Valuation allowance		(32,205	)		(28,276	)

Total non-current deferred tax asset, net of valuation allowance	$	150		$	72

As a result of certain realization requirements of accounting guidance for stock compensation, the table of deferred tax assets and liabilities shown above does not include certain deferred tax assets at December 31, 2013, and 2012 that arose directly from tax deductions related to equity compensation in excess of compensation recognized for financial reporting. Additional paid-in capital will be increased by $1,204 if and when such benefits are ultimately realized and reduce taxes payable.

The Code, as amended, imposes restrictions on the utilization of net operating losses in the event of an “ownership change” of a corporation. Accordingly, a company’s ability to use net operating losses may be limited as prescribed under Internal Revenue Code Section 382 (“IRC Section 382”). Events which may cause limitations in the amount of the net operating losses that the Company may use in any one year include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. Utilization of the federal and state net operating losses may be subject to substantial annual limitation due to the ownership change limitations provided by the IRC Section 382 and similar state provisions. An analysis was conducted through December 31, 2013 to determine whether an ownership change had occurred since inception. The analysis indicated that because an ownership change occurred in a prior year, federal and state net operating losses of $184 and $214, respectively, were significantly limited pursuant to IRC Section 382. In the event the Company has subsequent changes in ownership, net operating losses and research and development credit carryovers could be further limited and may expire unutilized.

As of December 31, 2013, the Company had federal and state net operating loss carryforwards of approximately $77,156 and $66,666, respectively. The federal net operating loss carryforward will begin expiring in 2026 and the state net operating loss carryforward will begin expiring in 2016. As of December 31, 2013, the Company had federal and state research and development credits of approximately $2,816 and $2,418, respectively. The federal research and development credits will begin expiring in 2026. The state research and development credits are not currently subject to expiration. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law. As part of the act, the research and development credit was retroactively extended. Accordingly, the Company did not record a federal research and development credit for 2012. While the applicable credit for 2012 was considered in 2013, no financial statement benefit was recorded as the Company applies a valuation allowance against the credit generated.

The Company has recorded a full valuation allowance against its otherwise recognizable deferred income tax assets as of December 31, 2013 and 2012 (except for the deferred income tax assets associated with the Company’s subsidiary in the United Kingdom). The Company has determined, after evaluating all positive and negative historical and prospective evidence, that it is more likely than not that the deferred tax assets will not be realized. The valuation allowance increased by $4,205, $10,951, and $6,840 during the years ended December 31, 2013, 2012 and 2011, respectively.

The Company files U.S. state and foreign income tax returns in jurisdictions with varying statutes of limitations. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. These audits include questioning the timing and amount of deduction, the nexus of income among various tax jurisdictions and compliance with state, local and foreign tax laws. The Company is not currently under any examination by the U.S. state or foreign tax authorities. Because of net operating loss and credit carry forwards, all of the Company’s tax years dating to inception in 2006 remain open to examination.

As of December 31, 2013 and 2012, the Company did not have any unrecognized tax benefits that if recognized would impact the annual effective tax rate. During 2013, 2012 and 2011, the Company did not recognize any interest or penalties related to unrecognized tax benefits. The aggregate changes in the balance of gross unrecognized tax benefits were as follows:


Beginning balance as of January 1, 2013	$	508
Increase in balances related to tax positions taken during the current period		580

Ending balance as of December 31, 2013	$	1,088

The Company does not anticipate that the amount of unrecognized tax benefits relating to tax positions existing at December 31, 2013 will significantly increase or decrease within the next twelve months.

U.S. income taxes and foreign withholding taxes associated with the repatriation of earnings of foreign subsidiaries were not provided for on a cumulative total of $1,184 of undistributed earnings for certain foreign subsidiaries as of December 31, 2013. The Company intends to reinvest these earnings indefinitely in its foreign subsidiaries. If these earnings were distributed to the United States in the form of dividends or otherwise, or if the shares of the relevant foreign subsidiaries were sold or otherwise transferred, the Company would be subject to additional U.S. income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable.