Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Components of income tax expense from continuing operations

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

	2013			2012
	(in thousands)
Current:
Federal	$	95		$	12,000
State		113			66
		208			78
Deferred:
Federal		1,353			225
State		902			41
		2,255			266

Valuation Allowance Release		(37,527	)		-

Total income tax expense	$	(35,064	)	$	344

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, 2013 and 2012 are as follows:

	2013			2012
Tax provision at U.S. federal statutory rates		34.0	%		35.0	%
State taxes		3.5			5.9
State rate adjustment		0.5			8.8
Non-deductible permanent items		0.6			0.7
Stock options		0.4			3.4
Other		0.5			(0.7	)
Change in federal valuation allowance		(1,219.1	)		(33.2	)
Effective income tax rate		-1,139.1	%		19.9	%

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, 2013 and 2012 are as follows:

	2013			2012
	(in thousands)
Deferred tax assets:
Allowance for doubtful accounts	$	149		$	160
Accrued liabilities		832			248
Net operating loss carry-forwards		37,426			40,350
Fixed assets		111			144
Intangible assets		2,006			1,991
Share-based compensation expense		1,143			944
Deferred revenue		-			2
Other		184			44
Total gross deferred tax assets		41,851			43,883
Valuation allowance		(6,356	)		(43,883	)
		35,495

Deferred tax liabilities:
Tax deductible goodwill		(843	)		(620	)
Total gross deferred tax liabilities		(843	)		(620	)
Net deferred income taxes	$	34,652		$	(620	)

Summary of net operating loss carry-forwards

At December 31, 2013, the Company had federal and state net operating loss carry-forwards ("NOLs") of approximately $100.9 million and $66.1 million, respectively. The federal NOLs expire through 2031 as follows (in millions):

2021	$	21.6
2022		1.7
2023		-
2024		4.1
2025		7.7
2026		25.5
2027		15.5
2028		5.2
2029		7.7
2030		10.6
2031		1.3
	$	100.9

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

2014	$	4.6
2015		6.6
2016		20.6
2017		3.2
2028		2.6
2029		5.8
2030		11.0
2031		1.3
California NOLs		55.7
Other State NOLs		10.4
Total State NOLs	$	66.1

Reconciliation of unrecognized tax benefits

As of December 31, 2013 and 2012, the Company had unrecognized tax benefits of approximately $0.6 million and $0.6 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:


	2013		2012
	(in thousands)
Balance at January 1,	$	636	$	500
Additions based on tax positions related to prior years		-		136

Balance at December 31,	$	636	$	636