Note 10. Income Taxes

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


		2014		2013		2012
Domestic	$	(1,251)	$	774	$	(16,436)
Foreign		26		40		(73)
Total income (loss) before income taxes	$	(1,225)	$	814	$	(16,509)

Current
Federal and state income taxes	$	77	$	3	$	83
Foreign taxes		114		89		(74)
Total current		191		92		9

Deferred
Federal and state income taxes		142		190		144
Foreign taxes		-		-		-
Total deferred		142		190		144
Provision for income taxes	$	333	$	282	$	153

The provision for income taxes for the years ended April 30, 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):


		2014		2013		2012
Computed tax expense (benefit) at statutory rate	$	(420)	$	277	$	(5,613)
Increases (reductions) in tax expense resulting from:
Net operating loss carryforward limitation		219		(235)		7,352
State income taxes, net of federal tax benefit		100		74		102
Capital loss carryforward limitation		84		-		-
Change in valuation allowance for deferred tax assets		190		(88)		(1,752)
Stock-based compensation		56		182		297
Change in fair value of warrants		24		(124)		(358)
Foreign taxes		104		125		(377)
Foreign tax credits		(60)		(70)		(39)
Other		36		141		541
Provision for income taxes	$	333	$	282	$	153

Deferred tax balances at April 30, were as follows (in thousands):


		2014		2013
Deferred tax assets (liabilities):
Non-current assets
Net operating loss carryforwards	$	12,207	$	11,659
Capital loss carryforward		-		8
Foreign tax credits		353		386
Property, equipment and intangible assets		5,135		5,038
Reserves and other accruals		844		629
Current assets
Deferred revenue		320		85
Allowance for doubtful accounts		86		107
Reserves and other accruals		448		466
Total deferred tax assets		19,393		18,378
Valuation allowance		(19,393)		(18,345)
Net deferred tax assets		-		33

Non-current liabilities
Property, equipment and intangible assets		-		(33)
Goodwill		(1,032)		(890)
Total deferred tax liabilities		(1,032)		(923)
Net deferred tax liabilities	$	(1,032)	$	(890)

Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. Accordingly, we maintain a valuation allowance against substantially all of our net deferred tax assets in all the tax jurisdictions. The valuation allowance increased by $1 million in fiscal 2014 and decreased by $0.8 million and $1.9 million in fiscal 2013 and 2012, respectively.

At April 30, 2014, we had approximately $30.6 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, that begin to expire in fiscal year 2014 through 2029, approximately $9.7 million in California state NOL carryforwards that expire in fiscal years 2015 to 2031, approximately $106.3 million in other state NOL carryforwards that expire in fiscal years 2015 to 2031, and approximately $1.6 million in foreign NOL carryforwards that do not expire.

It is our intention to reinvest the earnings of our non-U.S. subsidiary in its operations. We do not provide for U.S. income taxes on the earnings of the foreign subsidiary as such earnings are to be reinvested indefinitely. As of April 30, 2014, there is minimal amount of cumulative earnings upon which U.S. income taxes have not been provided.