4.	INCOME TAXES

The components of deferred income taxes at December 31 are as follows (in thousands):

	December 31
	2014		2013
Accruals and reserves	$	1	$	1
Valuation allowance		(1)		(1)
Total current		-		-
NOL, AMT and general business
credit carryforwards		56,868		56,050
Difference in basis of fixed assets		3		3
Accruals and reserves		28		274
Difference in basis of intangibles		110		13
Difference in currency exchange rate		46
Valuation allowance		(57,055)		(56,340)
Total non current		-		-
Total deferred income taxes	$	-	$	-

ASC 740 requires that a valuation allowance be established when it is more-likely-than-not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period-to-period are included in the tax provision in the period of change. In determining whether a valuation allowance is required, we take into account all evidence with regard to the utilization of a deferred tax asset including past earnings history, expected future earnings, the character and jurisdiction of such earnings, unsettled circumstances that, if unfavorably resolved, would adversely affect utilization of a deferred tax asset, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred tax asset. Management has evaluated the available evidence about future taxable income and other possible sources of realization of deferred tax assets and has established a valuation allowance of approximately $57 million at December 31, 2014 and $56 million at December 31, 2013. The valuation allowance as of December 31, 2014 and 2013 includes approximately $2.7 million for net operating loss carry forwards that relate to stock compensation expense for income tax reporting purposes that upon realization, would be recorded as additional paid-in capital. The valuation allowance reduces deferred tax assets to an amount that management believes will more likely than not be realized.

The components of the income tax provision (benefit) are as follows (in thousands):

	Years Ended December 31
	2014		2013
Provision (benefit) for income taxes
Current	$	(400)	$	(21)
Deferred		-		-
Income tax provision (benefit)	$	(400)	$	(21)

The 2014 income tax benefit results from the Australian refundable research and development tax credit as explained in Note 7. The 2013 income tax benefit results from Arizona state income tax legislation passed in 2010 that provides for the refund of 75 percent of the 2012 Arizona state research and development tax credit for entities that would otherwise not be able to utilize their 2012 Arizona research and development tax credits to reduce 2012 Arizona state income taxes currently payable.

We have accumulated approximately $146 million in federal and $33 million in state net operating loss carryforwards (“NOLs”) and approximately $6 million of research and development and alternative minimum tax credit carryforwards. The federal NOLs expire between 2023 and 2034. The Arizona state NOL’s expire between 2015 and 2034. The availability of these NOL’s to offset future taxable income could be limited in the event of a change in ownership, as defined in Section 382 of the Internal Revenue Code.

A reconciliation of the difference between the provision (benefit) for income taxes and income taxes at the statutory U.S. federal income tax rate is as follows for the years ended December 31, 2014 and 2013:

	Years Ended December 31
	2014		2013
Income tax provision (benefit) at statutory rate	$	(1,417)	$	(1,333)
State income taxes		(165)		(138)
Research credits		(435)		(74)
Expiration of state NOL		649		548
Other		252		324
Change in valuation allowance		716		652
Net provision (benefit)	$	(400)	$	(21)