Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Income Taxes

8. Income Taxes

Income (loss) before income taxes consists of the following (in thousands):

	Year Ended December 31,
	2012			2011
U.S.	$	1,687		$	(717	)
Foreign		(405	)		88
Total	$	1,282		$	(629	)

Income tax expense (benefit) consists of the following (in thousands):

	Year Ended December 31,
	2012			2011
Current taxes:
Federal	$	—		$	(90	)
State and local		27			33
Foreign		72			(11	)
Current taxes		99			(68	)
Deferred taxes:
Federal	$	459		$	—
State and local		—			—
Foreign		(192	)		(98	)
Deferred taxes		267			(98	)
Total	$	366		$	(166	)

The components of net deferred tax assets consist of the following (in thousands):

	December 31,
	2012			2011
Net deferred income tax assets:
Depreciation and amortization	$	917		$	1,055
Accrued expenses and reserves		1,771			1,796
Net operating loss carryforwards		20,509			20,768
Capital loss carryforwards		290			345
Research and development credit carryforwards		2,535			2,535
Stock-based compensation		425			305
Gross deferred tax assets		26,447			26,804
Less: valuation allowance		(24,102	)		(24,192	)
Net deferred tax assets	$	2,345		$	2,612

Our net deferred tax assets are recorded as follows (in thousands):

	December 31,
	2012			2011
Net deferred tax assets:
Deferred tax assets—current	$	296		$	520
Deferred tax assets—non-current		2,255			2,302
Deferred tax liability		(206	)		(210	)
Net deferred tax assets	$	2,345		$	2,612

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pre-tax income, as a result of the following:

	Year Ended December 31,
	2012			2011
Taxes at the U.S. statutory rate		34.0	%		34.0	%
Increase (decrease) resulting from:
Tax credits		—			39.5
State income tax		0.7			(2.5	)
International operations		(21.3	)		(4.9	)
Incentive stock options		1.0			7.9
Valuation allowance		(8.3	)		(21.2	)
Transaction costs		—			(6.1	)
Expiration of state NOLs		22.1			(14.0	)
Other, net		0.4			(6.3	)
		28.6	%		26.4	%

At December 31, 2012, we had approximately $57.0 million of federal and $12.1 million of state net operating loss carryforwards, which have begun to expire including $4.8 million of state losses in 2012. Of the federal net operating loss carryforwards, $42.6 million will expire in 2022 and 2023. We also have $2.5 million of tax credit carryforwards, which begin to expire in 2022. Utilization of these carryforwards may be subject to an annual limitation due to Section 382 of the U.S. Internal Revenue Code which restricts the ability of a corporation that undergoes an ownership change to use its carryforwards. Under the applicable tax rules, an ownership change occurs if greater than five percent shareholders of an issuer’s outstanding common stock, collectively, increase their ownership percentage by more than 50 percentage points over a rolling three-year period. We have performed analyses of possible ownership changes in the past, which included consideration of a third-party study, and do not believe that an ownership change of more than 50 percentage points has occurred. We have evaluated all the material income tax positions taken on the Company’s income tax filings to various tax authorities, and we determined that we did not have unrealized tax benefits related to uncertain tax positions recorded at December 31, 2012 or 2011.

Because of net operating loss and tax credit carryforwards, substantially all of our tax years remain open and subject to examination.