INCOME TAXES.

6 Months Ended

Jun. 30, 2012

INCOME TAXES.

INCOME TAXES.

NOTE 9 — INCOME TAXES

At December 31, 2011, the Company had a tax valuation allowance for net deferred tax assets of $4.6 million, the utilization of which was uncertain as of that date.   In the second quarter of 2012, the Company determined it was likely the net deferred tax assets would be realized based upon sustained profitability and forecasted future operating results.  As a result, the Company reversed $0.4 million of its $0.8 million valuation allowance, with the reversal recorded as a non-cash income tax benefit for the three and six months ended June 30, 2012.  The Company expects that the remaining valuation allowance will be utilized during the second half of 2012 consistent with the Company’s expected tax position. As the Company has generated taxable income and the release of a portion of the valuation allowance, the Company recorded a tax provision of $0.1 million (effective tax rate of 1.5%) for the three and six months ended June 30, 2012.   Net income for the 2011 period excluded a tax provision due to the tax valuation allowance.  The tax rate for 2013 and beyond could be significantly higher than 2012.