13.	INCOME TAXES

For the years ended December 31, 2015 and 2014, the Company did not record a current or deferred income tax expense or benefit due to current and historical losses incurred by the Company.

The components of loss before income taxes were as follows:

 

		As of December 31,
		2015				2014
U.S.		$	(31,332	)		$	(22,240	)
Foreign			(692	)			(553	)
Total		$	(32,024	)		$	(22,793	)

A reconciliation of income tax expense (benefit) computed at the statutory federal income tax rate to income taxes as reflected in the financial statements is as follows:

 

		As of December 31,
		2015				2014
Federal income tax (benefit) at statutory rate			34.0	%			34.0	%
Increase income tax benefit resulting from:
Permanent differences			(1.2	)%			(4.8	)%
Change in valuation allowance			(31.7	)%			(29.2	)%
Other			(1.1	)%			0.0	%
Income tax expense (benefit)			0.0	%			0.0	%

 

Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets and liabilities are comprised of the following:

 

		As of December 31,
		2015				2014
Deferred tax assets:
Net operating loss carryforwards		$	28,200			$	18,933
Depreciation and amortization			6,688				7,235
Accrued expenses			1,183				698
Capitalized start-up costs			8,531				7,276
Capitalized R&D			—				27
Other			259				67
Deferred tax assets before valuation allowance			44,861				34,236
Valuation allowance			(43,751	)			(31,966	)
			1,110				2,270
Deferred tax liabilities
IPR&D			(36	)			(121	)
Change in accounting method			(1,074	)			(2,149	)
			(1,110	)			(2,270	)
Net deferred tax assets		$	—			$	—

The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. As of December 31, 2015 and 2014, based on the Company’s history of operating losses, the Company has concluded that it is not more likely than not that the benefit of its deferred tax assets will be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of December 31, 2015 and 2014. The valuation allowance increased $11,785 during the year ended December 31, 2015, due primarily to net operating losses generated and capitalized expenses. The valuation allowance increased by $7,710 during the year ended December 31, 2014, due primarily to net operating losses generated and capitalized expenses.

During November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”, which simplifies the presentation of deferred income taxes. This ASU requires that deferred tax assets and liabilities be classified as non-current in a statement of financial position. We early adopted ASU 2015-17 effective December 31, 2015 on a prospective basis. Adoption of this ASU resulted in the removal of gross deferred tax assets and liabilities from the Company’s Consolidated Balance Sheet at December 31, 2015. The impact was zero. No prior periods were retrospectively adjusted. The Company had recorded a current net deferred tax liability of $651 and a noncurrent net deferred tax asset of $651 as of December 31, 2014. The classification of deferred tax assets and liabilities is primarily related to the timing of the reversal of the deferred tax liability related to a change of accounting method in 2013.

As of December 31, 2015 and 2014, the Company had U.S. federal NOL carryforwards of $55,662, and $31,230, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2035. As of December 31, 2015 and 2014, the Company also had U.S. state NOL carryforwards of $55,502 and $31,176, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2035. At December 31, 2015 and 2014, the Company also had $25,627 and $25,128, respectively, of foreign NOL carryforwards which may be available to offset future income tax liabilities, which carryforwards do not expire.

 

Utilization of the NOL and research and development credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that have occurred or that could occur in the future, as required by Section 382 and Section 383 of the Code, as well as similar state and foreign provisions. These ownership changes may limit the amount of NOL and research and development credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders. The Company has completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since its formation. The results of this study indicated that the Company experienced ownership changes as defined by Section 382 of the Code. The Company has not recorded NOLs that, as a result of these restrictions, will expire unused. Accordingly, the Company has recorded NOL carryforwards net of these limitations, which are approximately $47,170 in 2014 and 2015.

The changes in the Company’s unrecognized tax benefits are summarized as follows:

 

		As of December 31,
		2015				2014
Unrecognized tax benefit, beginning of year		$	811			$	935
Increase (decrease) related to current year positions			(124	)			(124	)
Unrecognized tax benefit, end of year		$	687			$	811

As of December 31, 2015 and 2014, the total amount of unrecognized tax benefits was $687 and $811, respectively. The uncertain tax positions giving rise to the unrecognized tax benefits relate primarily to methods of accounting, used in the Company’s tax returns, which accelerated certain deductions for federal income tax purposes. The reversal of the unrecognized tax benefits would not have any impact on effective tax rates in future periods and are not expected to create cash tax liabilities upon settlement due to the Company’s ability to utilize both pre-change and post-change NOLs. The Company believes that it is reasonably possible that $124 of its unrecognized tax benefits may be recognized by the end of 2016.

The Company will recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2015 and 2014 the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s consolidated statements of operations.

The Company files income tax returns in the United States, and various state and foreign jurisdictions. The federal, state and foreign income tax returns are generally subject to tax examinations for the tax years ended December 31, 2011 through December 31, 2015. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, state or foreign tax authorities to the extent utilized in a future period.