9.	Income Taxes

Loss before income tax benefits was comprised of $8,719 from US and $315 from foreign jurisdictions in 2014, $3,086 from US in 2013, and $4,986 from US in 2012.

The reconciliation of federal income tax attributable to operations computed at the federal statutory tax rate of 34% to income tax expense (benefit) is as follows for the years ended June 30:

	2014			2013			2012
Statutory federal income tax benefit	$	(3,072	)	$	(1,049	)	$	(1,695	)


Unbenefitted net operating losses and credits		2,163			1,272			2,012
State and local taxes		(326	)		(234	)		(329	)
Merger costs		757			-
Other		75			11			12
Total income tax benefit	$	(403	)		-			-

A deferred income tax benefit of $403 was recorded for the year ended June 30, 2014, of which $325 was related to federal taxes, $40 was related to state taxes, and $38 was related to foreign taxes. No tax benefit has been recorded through June 30, 2013 and June 30, 2012 because of the net operating losses incurred and a full valuation allowance has been provided. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized.

At June 30, 2014, we had net operating loss carryforwards for federal and state income tax purposes of $89,860 and $61,920 respectively, that are available to offset future income. The federal and state loss carryforwards expire in various years between 2015 and 2034.

At June 30, 2014, we have research and experimentation credit carryforwards of $1,118 for federal tax purposes that expire in various years between 2015 and 2034, and $1,329 for state income tax purposes that do not have an expiration date.

Significant components of the Company’s deferred tax assets and liabilities for federal and state income taxes are as follows:

	June 30, 2014			June 30, 2013
Deferred tax assets
Net operating loss carryforwards	$	34,154		$	31,342
Income tax credit carryforwards		1,995			2,161
Depreciation and amortization		-			190
Other		1,750			1,490
Valuation allowance		(37,317	)		(35,183	)
Total deferred tax assets		582			-

Deferred tax liabilities
Depreciation and amortization		(8,223	)		-
Net deferred tax assets and liabilities	$	(7,641	)	$	-

The valuation allowance increased by $2,134 in 2014, decreased by $2,630 in 2013 and increased by $43 in 2012. As of June 30, 2014, we have a benefit of $1,849 related to stock option deductions, which will be credited to paid-in capital when realized, of which $1,621 is included in the valuation allowance.

Our deferred income tax benefit of $403 was due to certain intangible assets and the related deferred tax liabilities acquired in the merger with TRX. The recognition of a deferred income tax benefit resulted from netting the deferred tax liabilities against previously generated, but fully reserved, deferred tax assets.

Because of the “change of ownership” provisions of the Tax Reform Act of 1986, a portion of the Company’s federal net operating loss and credit carryovers may be subject to an annual limitation regarding their utilization against taxable income in future periods.