INCOME TAXES

6 Months Ended

Jun. 30, 2012

INCOME TAXES

INCOME TAXES

NOTE 10 — INCOME TAXES

Effective tax rates differ from federal statutory income tax rates primarily due to changes in the Company’s valuation allowance, permanent differences and provisions for state and local income taxes. As of June 30, 2012, the Company had no net deferred income taxes due to the full recorded valuation allowance. During the three months ended June 30, 2012, the Company recorded a provision for income taxes of $10 from continuing operations compared to a provision for income taxes of $16 from continuing operations during the three months ended June 30, 2011. During the six months ended June 30, 2012, the Company recorded a provision for income taxes of $30 from continuing operations compared to a provision for income taxes of $33 from continuing operations during the six months ended June 30, 2011.

The Company files income tax returns in U.S. federal and state jurisdictions. As of June 2012, open tax years in federal and some state jurisdictions date back to 1996 due to the taxing authorities’ ability to adjust operating loss carryforwards. As of December 31, 2011, the Company had net operating loss carryforwards of $136,189 expiring in various years through 2031.

The Company does not anticipate there will be a material change in the total amount of unrecognized tax benefits within the next twelve months. However, Section 382 of the Internal Revenue Code of 1986, as amended (the “IRC”), generally imposes an annual limitation on the amount of net operating loss carryforwards and associated built-in losses that may be used to offset taxable income when a corporation has undergone certain changes in stock ownership. The Company’s ability to utilize net operating loss carryforwards and built-in losses may be limited, under this section or otherwise, by the Company’s issuance of common stock or by other changes in stock ownership. Upon completion of the Company’s analysis of IRC Section 382, the Company has determined that aggregate changes in stock ownership have triggered an annual limitation of net operating loss carryforwards and built-in losses available for utilization. To the extent the Company’s use of net operating loss carryforwards and associated built-in losses is significantly limited in the future due to additional changes in stock ownership, the Company’s income could be subject to U.S. corporate income tax earlier than it would if the Company were able to use net operating loss carryforwards and built-in losses without such limitation, which could result in lower profits and the loss of benefits from these attributes.

As of June 30, 2012, the Company has $435 of unrecognized tax benefits, all of which would have a favorable impact on income tax expense. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company has accrued interest and penalties of $149 as of June 30, 2012. As of December 31, 2011, the Company had unrecognized tax benefits of $417, of which $131 represented accrued interest and penalties.