11.

Income Taxes

The components for the income tax expense (benefit) are as follows for the years ended December 31 (in thousands):


	2015			2014		2013
Current income taxes
Federal	$	—		$	—	$	—
State		—			—		—
Foreign		—			—		—
Deferred income taxes
Federal		—			—		—
State		—			—		—
Foreign		(1,024	)		—		—

Total income tax expense (benefit)	$	(1,024	)	$	—	$	—

The United States and foreign components of loss from operations before taxes are as follows for the years ended December 31 (in thousands):


	2015			2014			2013
United States	$	(44,438	)	$	(37,652	)	$	(28,358	)
Foreign		(3,534	)		—			—

Total loss from operations before taxes	$	(47,972	)	$	(37,652	)	$	(28,358	)

Significant components of the Company’s deferred tax assets consist of the following at December 31 (in thousands):


	2015			2014
Current deferred tax assets:
Inventory reserves	$	—		$	537
Accrued expenses		—			373
Deferred rent		—			17
Allowance for uncollectible accounts receivable		—			32

Valuation allowance		—			(959	)

Net current deferred tax asset		—			—

Noncurrent deferred tax assets:
Stock-based compensation		1,543			1,154
Inventory		1,819			—
Accrued expenses and other		936			—
Contribution carryforward		2			2
Research credit carryforward		4,224			3,200
Fixed assets		275			278
Capitalized start-up costs and other intangibles		3,864			4,233
Net operating loss carryforwards		64,867			51,145

		77,530			60,012
Valuation allowance		(75,897	)		(60,009	)

Net noncurrent deferred tax asset		1,633			3

Noncurrent deferred tax liabilities

Fixed assets		(973	)		—
Purchase accounting intangibles		(16,923	)		(3	)

Net noncurrent deferred tax liability		(17,896	)		—

Net deferred tax asset (liability)	$	(16,263	)	$	—

The transaction described in Note 3 was a nontaxable transaction according to ASC 740, and the goodwill recorded under U.S. GAAP purchase accounting is not deductible for tax purposes.

At December 31, 2015 and 2014, the Company has provided a full valuation allowance against its net deferred assets in the US tax jurisdiction, since realization of these benefits is not more likely than not. The valuation allowance increased approximately $14.9 million from the prior year. At December 31, 2015, the Company had federal and state net operating loss tax carryforwards of approximately $178.1 million and $133.7 million, respectively. These net operating loss carryforwards expire in various amounts starting in 2027 and 2018, respectively. The Company’s federal and state net operating loss carryforwards include approximately $0.9 million of excess tax benefits related to deductions from the exercise of stock options. The tax benefit of these deductions has not been recognized in deferred tax assets. If utilized, the benefits from these deductions will be recorded as adjustments to additional paid-in capital. At December 31, 2015, the Company had federal research credit carryforwards in the amount of $4.2 million. These carryforwards begin to expire in 2027. The utilization of the federal net operating loss carryforwards and credit carryforwards will depend on the Company’s ability to generate sufficient taxable income prior to the expiration of the carryforwards. In addition, the maximum annual use of net operating loss and research credit carryforwards is limited in certain situations where changes occur in stock ownership. At December 31, 2015, the Company had foreign operating loss carryforwards of approximately $2.1 million, which can be carried forward indefinitely. The Company has no unremitted foreign earnings as of December 31, 2015.

The Company has evaluated its tax positions to consider whether it has any unrecognized tax benefits. As of December 31, 2015 the Company had gross unrecognized tax benefits of approximately $0.8 million. Of the total, none would reduce the Company’s effective tax rate if recognized. The Company does not anticipate a significant change in total unrecognized tax benefits or the Company’s effective tax rate due to the settlement of audits or the expiration of statutes of limitations within the next twelve months. Furthermore, the Company does not expect any cash settlement with the taxing authorities as a result of these unrecognized tax benefits as the Company has sufficient unutilized carryforward attributes to offset the tax impact of these adjustments.

The following is a tabular reconciliation of the Company’s change in gross unrecognized tax positions at December 31 (in thousands):


	2015		2014		2013
Beginning balance	$	606	$	—	$	—
Gross increases for tax positions related to current periods		256		606		—
Gross increases for tax positions related to prior periods		—		—		—

Ending balance	$	862	$	606	$	—

The Company recognizes interest and penalties related to uncertain tax positions in the provision for income taxes. As of December 31, 2015 and 2014, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company has analyzed its filing positions in all significant federal, state, and foreign jurisdictions where it is required to file income tax returns, as well as open tax years in these jurisdictions. With few exceptions, the Company is no longer subject to United States Federal, state, and local tax examinations by tax authorities for years before 2012, although carryforward attributes that were generated prior to 2012 may still be adjusted upon examination by the taxing authorities if they either have been or will be used in a future period. No income tax returns are currently under examination by taxing authorities.

Taxes computed at the statutory federal income tax rate of 34% are reconciled to the provision for income taxes as follows for the years ended December 31:


	2015						2014						2013
	Amount			% of Pretax Earnings			Amount			% of Pretax Earnings			Amount			% of Pretax Earnings
United States federal tax at statutory rate	$	(16,311	)		34.0	%	$	(12,801	)		34.0	%	$	(9,642	)		34.0	%
State taxes (net of deferred benefit)		(1,121	)		2.3	%		(786	)		2.0	%		(662	)		2.3	%
Nondeductible expenses		1,797			(3.7	%)		253			(0.7	%)		1,556			(5.5	%)
Research & Development credits		(1,281	)		2.7	%		(1,532	)		4.1	%		—			0.0	%
Change in unrecognized tax benefits		256			(0.5	%)		606			(1.6	%)		—			0.0	%
Foreign tax rate differential		175			(0.4	%)		—			0.0	%		—			0.0	%
Adjustment for valuation allowance as part of purchase accounting		—			0.0	%		—			0.0	%		(11,785	)		41.6	%
Other, net		532			(1.2	%)		392			(1.0	%)		(200	)		0.7	%
Change in valuation allowance		14,929			(31.1	%)		13,868			(36.8	%)		20,733			(73.1	%)

Income tax benefit	$	(1,024	)		2.1	%	$	—			0.0	%	$	—			0.0	%