Income (loss) before income taxes and provision (benefit) for income taxes for the years ended April 30 were as follows (in thousands):


		2012		2011		2010
Domestic	$	(16,436)	$	(14,017)	$	173
Foreign		(73)		(2,593)		(180)
Total income (loss) before income taxes	$	(16,509)	$	(16,610)		(7)

Current
Foreign taxes	$	(74)	$	52	$	55
Federal and state income taxes		83		4		18
Total Current		9		56		73

Deferred
Foreign taxes		-		(91)		(120)
Federal and state income taxes		144		90		(84)
Total Deferred		144		(1)		(204)
Provision (benefit) for income taxes	$	153	$	55	$	(131)

The provision (benefit) for income taxes for the years ended April 30, 2012, 2011 and 2010 differs from the amounts computed by applying the statutory U.S. federal income tax rate to pretax income (loss) as a result of the following (in thousands):


		2012		2011		2010
Computed tax expense (benefit) at statutory rate	$	(5,613)	$	(5,795)	$	(837)
Increases (reductions) in tax expense resulting from:
Change in valuation allowance for deferred tax assets		(1,752)		1,105		339
Stock-based compensation		297		259		180
Impairment		-		3,806		-
Change in fair value of warrants		(358)		(176)		-
Acquisition cost		-		-		224
Foreign operations		(4)		852		-
Net operating loss carryforward limitation		7,352		-		-
Other		231		4		(37)
Provision (benefit) for income taxes	$	153	$	55	$	(131)

The Company provides deferred income taxes which reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at April 30 were as follows (in thousands):


		2012		2011
Deferred tax assets (liabilities):
Non-current assets
Net operating loss carryforwards	$	12,010	$	19,425
Capital loss carryforward		92		120
Foreign tax credits		224		185
Domestic fixed assets and other intangibles		5,106		35
Reserves and other accruals		1,034		304
Current assets
Deferred revenue		213		165
Allowance for losses on accounts receivable		131		110
Reserves and other accruals		412		859
Total deferred tax assets		19,222		21,203
Valuation allowance		(19,187)		(21,072)
Non-current liabilities
Domestic fixed assets and other intangibles		(35)		-
Foreign fixed assets and other intangibles		-		-
Goodwill		(699)		(686)
Total deferred tax liabilities		(734)		(686)
Net deferred tax assets (liabilities)	$	(699)	$	(555)

Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. Accordingly, the Company has maintained a full valuation allowance against its net deferred tax assets in all the tax jurisdictions. The valuation allowance decreased by $1.9 million in fiscal 2012, increased by $1.0 million in fiscal 2011, and increased by $3.0 million in fiscal 2010.

At April 30, 2012, the Company had approximately $28.7 million in federal net operating loss (“NOL”) carryforwards after write-off of the limitations under the Internal Revenue Code Section 382 caused by changes in ownership, which begin to expire in fiscal year 2012 through 2029, approximately $8.0 million in California state NOL carryforwards that expire in fiscal years 2013 to 2031, approximately $93.6 million in other state NOL carryforwards that expire in fiscal years 2014 to 2031, and approximately $1.9 million in foreign NOL carryforwards that do not expire. At April 30, 2012, the Company also had approximately $0.2 million in federal and $0.2 million in California capital loss carryforwards, respectively, which expire beginning in fiscal year 2013 for federal tax purposes and will not expire for State of California purposes.

It is the intention of the Company to reinvest the earnings of its non-U.S. subsidiary in the operations. The Company does not provide for U.S. income taxes on the earnings of foreign subsidiary as such earnings are to be reinvested indefinitely. As of April 30, 2012, there is minimal amount of cumulative earnings upon which U.S. income taxes have not been provided.

At April 30, 2012, the Company had $23,000 of state income tax payable, $39,000 of foreign income tax payable, $310,000 of state income tax receivable, and $78,000 of foreign income tax receivable.

Uncertain Tax Positions

As of April 30, 2012, the Company had no amount of unrecognized tax benefits.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):


		Year ended April 30, 2012		Year ended April 30, 2011
Beginning balance	$	-	$	74
Gross increases - tax positions in current period		-		-
Gross decreases - tax positions in prior period		-		(74)
Gross increases - tax positions in prior period		-		-
Decreases relating to settlements		-		-
Reductions as a result of a lapse of statute of limitations		-		-
Ending balance	$	-	$	-

It is the Company’s policy to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of April 30, 2012, the Company has not recorded any interest or penalties associated with any unrecognized tax benefits.

The Company does not have any tax positions for which it is reasonably possible the total amount of gross unrecognized benefits will increase or decrease within 12 months of the year ended April 30, 2012.

The Company is subject to income taxes in the U.S. federal jurisdiction, and various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. In general, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for the fiscal years before 2007.