Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Components of Income Tax Expense

The following table presents the components of income tax (benefit) expense (dollars in thousands):

	Years Ended December 31,
	2012			2011		2010
Current tax (benefit) expense:
Federal	$	(77	)	$	26	$	(463	)
U.S. State and local		(61	)		104		113
Total current		(138	)		130		(350	)
Deferred tax expense (benefit):
Federal	$	—		$	—	$	418
U.S. State and local		—			—		(25	)
Total deferred		—			—		393
Total income tax (benefit) expense	$	(138	)	$	130	$	43

Loss Before Income Taxes

The following table presents loss before income taxes (dollars in thousands):

	Years Ended December 31,
	2012			2011			2010
United States	$	(8,706	)	$	(6,092	)	$	(20,546	)
Canada		51			24			12
Total	$	(8,655	)	$	(6,068	)	$	(20,534	)

U.S.Statutory Federal Income Tax Rate and Tax (Benefit) Expense

The following table reconciles the U.S. statutory federal income tax rate and the tax (benefit) expense shown in our Consolidated Statements of Operations and Comprehensive Loss (dollars in thousands):

	Years Ended December 31,
	2012			2011			2010
Tax at statutory U.S. federal income tax rate of 35%	$	(3,029	)	$	(2,124	)	$	(7,187	)
State and local income taxes, net of federal benefit		(293	)		(148	)		(699	)
Permanent differences		33			171			19
Resolution and reevaluation of tax positions		(102	)		75			12
Other		281			(131	)		124
Valuation allowance		2,972			2,287			7,774
Income tax (benefit) expense	$	(138	)	$	130		$	43

Significant Components of Deferred Taxes

The following table shows the significant components of our deferred taxes (dollars in thousands):

	As of December 31,
	2012			2011
Deferred tax assets:
Deferred revenue	$	336		$	1,217
Allowance for doubtful accounts		775			765
Accrued enhancement expense		1,101			1,349
Insurance reserves		1,159			1,281
Deferred lease credits		319			441
Share-based compensation		986			929
Vendor rebates		662			1,192
Investments		—			72
Property and equipment		1,549			778
Net operating and capital loss carryforward		17,563			13,749
Other		2,596			2,245
Valuation allowance		(26,377	)		(23,405	)
Total deferred tax assets	$	669		$	613
Deferred tax liabilities:
Deferred lease incentives	$	566		$	486
Prepaid service		103			124
Other		—			3
Total deferred tax liabilities	$	669		$	613
Net deferred tax assets	$	—		$	—

Changes in Unrecognized Tax Benefits

Changes in unrecognized tax benefits were as follows (dollars in thousands):

	2012			2011
Balance, beginning of year	$	614		$	539
Additions based on tax positions related to the current year		52			50
Additions for tax positions of prior years		1			49
Reductions for tax positions of prior years		—			—
Reductions due to statute expiration		(155	)		(24	)
Settlements		(4	)		—
Balance, end of year	$	508		$	614