Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes

Income Taxes

8. Income Taxes

Deferred income taxes reflect the net tax effects 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 our deferred tax assets (liabilities) as of December 31, 2011 and 2010 are as follows (in thousands):

	December 31
	2011			2010
Net operating loss carryforwards	$	30,094		$	29,632
Net operating loss carryforwards of foreign subsidiaries	374			374
Book over tax depreciation	(30		)	11
Intangible assets	40			220
Stock-based compensation expense	412			331
Other	121			162
Deferred tax assets	31,011			30,730
Valuation allowance for deferred tax assets	(31,011		)	(30,730		)
Deferred tax assets, net of allowance	$	—		$	—

Deferred tax assets are required to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Realization of the future benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the near to medium term.  Management has considered these factors in determining the valuation allowance for 2011 and 2010.

The differences between the provision for income taxes and income taxes computed using the federal statutory rate for the years ended December 31, 2011 and 2010 are as follows (in thousands):

	2011			2010
Reconciliation of income tax benefit to statutory rate:
Income tax benefit at statutory rate	$	(317	)	$	77
State income taxes, net of federal income tax benefit	2			5
Changes in state net operating loss carryforwards	10			9
Permanent differences	5			3
Change in valuation allowance	277			(99		)
Other	23			5
	$	—		$	—

At December 31, 2011, we had federal net operating loss carryforwards of approximately $87.0 million for income tax purposes that begin to expire in 2021 and are subject to the ownership change limitations under Internal Revenue Code Section 382. We also had approximately $6 million of state net operating loss carryforwards that begin to expire in 2017.