INCOME TAXES UPDATE

9 Months Ended

Sep. 30, 2011

INCOME TAXES - UPDATE [Abstract]

INCOME TAXES - UPDATE

7. INCOME TAXES  - UPDATE

The significant components of the Company's deferred tax assets, pursuant to Accounting Standards Codification 740-10-50 consist of net operating losses, orphan tax credits, stock-based compensation and deferred revenues. For the nine month period ended September 30, 2011 net income tax benefit was $2.6 million, primarily a non-cash credit. In the 2011 period, we reduced our tax assets valuation allowance and recorded net deferred tax assets of $4.2 million that we believe will more likely than not be realized as we expect to achieve sustained profitability on an on-going annual basis. In making such determination, we considered all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. Included in the valuation adjustment is an increase in the net operating loss carry-forward of approximately $1.0 million which was applied to the current period's federal and state income taxes, $1.1 million orphan tax credit, $1.6 million stock based deferred tax asset and $0.4 million tax asset from deferred revenues.  We had $2.2 million NOL carryforwards from windfall tax benefits from stock compensation awards and used $0.4 million to reduce taxes payable for the nine month period of 2011.