Income Taxes (Tables)

6 Months Ended

Jun. 30, 2013

Components of income tax expense (benefit)

The components of income tax expense (benefit) are as follows:

(in thousands)	Second Quarter Ended						Six Months Ended
	June 30, 2013			June 30, 2012			June 30, 2013			June 30, 2012
Federal – current	$	272		$	-		$	272		$	-
State – current		476			11			540			22
Total current		748			11			812			22

Federal – deferred		(222	)		(165	)		(451	)		(335	)
Change in valuation allowance		222			165			451			335
Total deferred		-			-			-			-

Income tax expense (benefit)	$	748		$	11		$	812		$	22

Income tax reconciliation

The components of pretax income (loss) and the difference between income taxes computed at the statutory federal rate of 35% in 2013 and 2012, and the provision for income taxes are as follows:

(in thousands)	Second Quarter Ended						Six Months Ended
	June 30, 2013			June 30, 2012			June 30, 2013			June 30, 2012
Income (loss) before income taxes	$	(635	)	$	(471	)	$	(1,288	)	$	(956	)
Tax expense (benefit):
Tax at statutory federal rate	$	(222	)	$	(165	)	$	(451	)	$	(335	)
State income taxes		64			11			128			22
Federal interest		272			-			272			-
State interest		412			-			412			-
Permanent items		-			-			-			-
Accounting loss benefit not recognized		-			-			-			-
Change in valuation allowance		222			165			451			335

Income tax expense (benefit)	$	748		$	11		$	812		$	22

A reconciliation of the United States federal statutory rate to the Company's effective income tax rate is as follows:

	Second Quarter Ended				Six Months Ended
	June 30, 2013		June 30, 2012		June 30, 2013		June 30, 2012
Tax at statutory federal rate	35.0	%	35.0	%	35.0	%	35.0	%
State income taxes	(10.1	)	(2.3	)	(9.9	)	(2.3	)
Federal interest	(42.8	)	-		(21.1	)	-
State interest	(64.9	)	-		(32.0	)	-
Accounting loss benefit not recognized	-		-		-		-
Change in valuation allowance	(35.0	)	(35.0	)	(35.0	)	(35.0	)
Permanent differences, tax credits and other adjustments	-		-		-		-
Effective income tax rate	(117.8	)%	(2.3	)%	(63.0	)%	(2.3	)%

Interest expense related to uncertain tax positions

The interest expense related to the uncertain tax positions is as follows:

(in thousands)	Second Quarter Ended				Six Months Ended
	June 30, 2013		June 30, 2012		June 30, 2013		June 30, 2012
Federal	$	272	$	-	$	272	$	-
State jurisdictions		412		-		412		-

Interest expense - taxes	$	684	$	-	$	684	$	-

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

+ References+ Details