Income Taxes

6 Months Ended

Jun. 30, 2013

Income Taxes

Income Taxes

(6) Income Taxes

The Company did not record an income tax provision or benefit for the three and six months ended June 30, 2013 and 2012 as the Company has a deferred tax asset related to its net operating loss carry forwards which are fully reserved with a valuation allowance at June 30, 2013 and December 31, 2012.

Before becoming consolidated subsidiaries of the Company, HCG and TLC reported earnings and losses under the Subchapter S-Corporation election and thereby all taxable income passed through to the shareholders and was taxed at the shareholders’ ordinary tax rates.  As a result, there has been no provision for income taxes in the prior years.

The acquisition of TLC resulted in the Company recognizing a deferred tax asset which is fully reserved with a valuation allowance.  The purchase accounting adjustment for TLC’s property, plant and equipment resulted in a book value lower than the tax book value.