Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Components of income tax expense from continuing operations

Income tax expense from continuing operations consists of the following for the years ended December 31:


	2012		2011
	(in thousands)
Current:
Federal	$	12	$	—
State		66		91

		78		91
Deferred:
Federal		225		218
State		41		40

		266		258

Total income tax expense	$	344	$	349

Reconciliations of U.S. federal statutory rate to effective income tax rate

The reconciliations of the U.S. federal statutory rate to the effective income tax rate for the years ended December 31, 2012 and 2011 are as follows:


	2012			2011
Tax provision at U.S. federal statutory rates		35.0	%		35.0	%
State taxes		5.9			11.9
State rate adjustment		8.8			—
Non-deductible permanent items		0.7			2.0
Stock options		3.4			0.4
Other		(0.7	)		9.2
Change in federal valuation allowance		(33.2	)		(12.9	)

Effective income tax rate		19.9	%		45.6	%

Components of deferred taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred taxes as of December 31, 2012 and 2011 are as follows:


	2012			2011
	(in thousands)
Deferred tax assets:
Allowance for doubtful accounts	$	160		$	211
Accrued liabilities		248			269
Net operating loss carry-forwards		40,350			40,845
Fixed assets		144			134
Intangible assets		1,991			2,229
Share-based compensation expense		944			696
Deferred revenue		2			4
Other		44			69

Total gross deferred tax assets		43,883			44,457
Valuation allowance		(43,883	)		(44,457	)
Deferred tax liabilities:
Tax deductible goodwill		(620	)		(354	)

Total gross deferred tax liabilities		(620	)		(354	)

Net deferred income taxes	$	(620	)	$	(354	)

Summary of net operating loss carry-forwards

At December 31, 2012, the Company had federal and state NOLs of approximately $106.4 million and $65.9 million, respectively. The federal NOLs expire through 2031 as follows (in millions):


2021	$	24.4
2022		1.7
2023		—
2024		4.1
2025		7.7
2026		26.4
2027		15.5
2028		5.1
2029		8.6
2030		11.6
2031		1.3

	$	106.4

The state NOLs expire through 2031 as follows (in millions):


2013	$	3.1
2014		4.6
2015		6.6
2016		21.3
2017		3.2
2028		2.7
2029		5.8
2030		11.0
2031		1.4
California NOLs		59.7
Other State NOLs		6.2
Total State NOLs	$	65.9

Reconciliation of unrecognized tax benefits

As of December 31, 2012 and 2011, the Company had unrecognized tax benefits of approximately $0.6 million and $0.5 million, respectively, all of which, if subsequently recognized, would have affected the Company's tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


	2012		2011
	(in thousands)
Balance at January 1,	$	500	$	500
Additions based on tax positions related to the current year		—		—
Additions based on tax positions related to prior years		136
Reductions based on tax positions related to prior years and settlements		—		—
Reductions based on the lapse of the statutes of limitations		—		—

Balance at December 31,	$	636	$	500