12. INCOME TAXES

The Company’s total provision (benefit) from income taxes consists of the following for the years ended December 31, 2013 and 2012:

(in thousands)	2013		2012

Current income tax provision (benefit):
Federal	$	20	$	-
State		-		-
Total		20		-

Deferred income tax provision (benefit):
Federal		635		(1,486)
State		(221)		(35)
Total		414		(1,522)

Change in valuation allowance		(414)		1,522

Tax provision (benefit) from continuing operations		20		(36)
Tax provision from discontinued operation		38		36
Total provision (benefit) for income taxes	$	58	$	-

The difference between the Company's expected income tax provision (benefit) from applying federal statutory tax rates to the pre-tax income (loss) from continuing operations and actual income tax provision (benefit) from continuing operations relates primarily to the effect of the following:

	As of December 31,
(in thousands)	2013			2012

US Federal statutory rate		35.0	%		(34.0)	%
State taxes, net of Federal benefit		1.0	%		(0.9)	%
Non-deductible expenses		245.9	%		17.7	%
Change in valuation allowance		(300.4)	%		100.7	%
Change in tax rates and other		34.6	%		(85.7)	%
Total income tax provision (benefit)		16.1	%		(2.2)	%

Deferred income taxes reflect the net tax effects of differences between the bases of assets and liabilities for financial reporting and income tax purposes. The Company's deferred income tax assets and liabilities consisted of the following:

	As of December 31,
(in thousands)	2013		2012

Deferred tax assets:
Accruals and advances	$	1,160	$	383
Net operating loss carryforward		16,409		11,271
Other		418		193
Total deferred tax assets		17,987		11,847

Deferred tax liabilities:
Depreciation		(220)		(236)
Intangible assets		(526)		-
Other		(374)		(52)
Total deferred tax liabilities		(1,120)		(288)

Valuation allowance		(16,867)		(11,559)
Total deferred tax asset (liability), net	$	-	$	-

As of December 31, 2013, the Company had Federal net operating loss carryforwards of approximately $235.3 million, which expire beginning in 2018, and a portion of which arose as a result of the merger. The utilization of the net operating loss carryforwards may be limited in future years as prescribed by Section 382 of the U.S. Internal Revenue Code, which results in a deferred tax asset related to the net operating loss carryforward after application of the Section 382 limitations of approximately $16.4 million.

The Company is required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income in the periods which the deferred tax assets are deductible, the Company has determined that a full valuation allowance is required as of December 31, 2013 and 2012.

The Company is subject to income taxes in numerous jurisdictions in the United States. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. The Company establishes liabilities for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These liabilities are established when the Company believes that certain positions might be challenged despite its belief that its tax return positions are fully supportable. The Company adjusts these liabilities in light of changing facts and circumstances, such as the outcome of a tax audit. The provision for income taxes includes the impact of changes to the liability that is considered appropriate. The Company has identified no material uncertain tax positions as of December 31, 2013.

The Company is subject to income tax audits in all jurisdictions for which it files tax returns. Tax audits by their nature are often complex and can require several years to complete. Neither the Company nor any of its subsidiaries is currently under audit in any jurisdiction. All of the Company’s income tax returns remain subject to examination by tax authorities due to the availability of net operating loss carryforwards.