10. INCOME TAXES

The Company’s provision (benefit) for income taxes is summarized as follows:


	For the year ended
Amounts in thousands	December 31, 2012
	2012	2011
U.S. Federal - Current	$ 67	$ 27
U.S. Federal - Deferred	0	0
Provision for U.S. federal income taxes	67	27

Foreign - Current	$ 1,009	$ 721
Foreign - Deferred	(48)	(81)
Provision for foreign income taxes	961	640
Total provision for income taxes	$ 1,028	$ 667

The Company’s effective income tax rate differs from the statutory federal income tax rate as follows:


Amounts in thousands	2012	2011
U.S. Federal income tax statutory rate	34.0%	34.0%
Foreign income taxes	-10.0%	-26.4%
Equity in Polish investment	0.2%	-0.6%
State income tax (net of federal benefit)	0.8%	-0.4%
Effect of stock option exercises	0.0%	1.8%
Valuation allowance	-2.6%	1.7%
Permanent and other items	-2.3%	8.0%
Total provision for income taxes	20.1%	18.1%

The effective tax rates of the Company’s foreign properties are impacted by the movement of exchange rates primarily due to loans, which are denominated in U.S. dollars. Therefore, foreign currency gains or losses recorded in each property’s local currency do not impact the Company’s earnings reported in U.S. dollars. Also, foreign currency gains or losses can significantly impact each jurisdiction’s effective tax rate.

The Company records deferred tax assets and liabilities based on the difference between the financial statement and income tax basis of assets and liabilities using the enacted statutory tax rate in effect for the year these differences are expected to be taxable or reversed. Deferred income tax expenses or credits are based on the changes in the asset or liability from period to period. The recorded deferred tax assets are reviewed for impairment on a quarterly basis by reviewing the Company’s internal estimates for future taxable income.

The Company assesses the continuing need for a valuation allowance that results from uncertainty regarding its ability to realize the benefits of the Company’s deferred tax assets. The ultimate realization of deferred income tax assets depends on generation of future taxable income in the jurisdictions where the assets are located during the periods in which those temporary differences become deductible. If the Company concludes that its prospects for the realization of its deferred tax assets are more likely than not, the Company will then reduce its valuation allowance as appropriate and credit income tax expense after considering the following factors:

·	The level of historical taxable income and projections for future taxable income in the jurisdictions where the assets are located over periods in which the deferred tax assets would be deductible;

·	Accumulation of net income before tax utilizing a look-back period of three years, and

·	Implementation of certain tax planning strategies.

The Company’s deferred income taxes at December 31, 2012 and 2011 are summarized as follows:


Amounts in thousands	2012	2011
Deferred tax assets (liabilities) - U.S. Federal and state:

Deferred tax assets - current:
Accrued liabilities and other	$ 181	$ 156
Deferred tax (liabilities) - current:
Prepaid expenses	(101)	(120)
Valuation allowance	(177)	(144)
Net deferred tax (liabilities) - current	(97)	(108)

Deferred tax assets - non-current:
Amortization of goodwill for tax	526	578
Amortization of startup costs	359	401
Property and equipment	1,089	1,333
NOL carry forward	2,584	2,102
Accrued liabilities and other	371	1,005
Total deferred tax assets - non-current	4,929	5,419
Deferred tax (liabilities) - non-current:
Accumulated other comprehensive eanings	0	(310)
Valuation allowance	(4,832)	(5,001)
Net deferred tax assets - non-current	97	108
Total deferred tax assets - U.S. federal and state	$ 0	$ 0

Amounts in thousands	2012	2011
Deferred tax assets (liabilities) - foreign

Deferred tax assets - current:
NOL carryforward	$ 0	$ 13
Other	79	65
Net deferred tax assets - current	79	78

Deferred tax assets - non-current:
Property and equipment	621	620
NOL carryforward	2,504	2,748
Tax credits	348	0
Accrued liabilities and other	322	443
Deferred tax (liabilities) - non current:
Property and equipment	(2,682)	(2,292)
Others	0	(22)
Valuation allowance	(1,745)	(2,175)
Net deferred tax (liabilities) - non-current	(632)	(678)
Total deferred tax (liabilities) - foreign	($553)	($600)
Net deferred tax (liabilities)	($553)	($600)

The following table summarizes the Company’s U.S. pre-tax basis net operating loss carryforwards and related expiration dates at December 31, 2012:


Amounts in thousands	2012
Expiration Date:	Amount
2027	$ 1,372
2028	3,458
2029	270
2031	240
2032	1,175
	$ 6,515

The following table summarized the Company’s foreign pre-tax basis net operating loss carryforwards and related expiration dates at December 31, 2012:


Amounts in thousands
Expiration Date:	Amount
2026	$ 113
2027	0
2028	1,518
2029	1,836
2030	1,516
2031	749
2032	1,196
Never	2,856
	$ 9,784

The Company has analyzed filing positions in all of the U.S. federal, state and foreign jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company has identified its U.S. federal tax return, its state tax return in Colorado and its foreign tax returns in Canada and South Africa as “major” tax jurisdictions, as defined.

The Company’s tax returns for the following periods are subject to examination:


Jurisdiction:	Periods
U.S. Federal	2005- 2011
U.S. State – Colorado	2003- 2011
Canada	2005- 2011
South Africa	1999- 2009

The Company has recognized a $0.1 million tax liability for uncertain tax positions taken on its U.S. tax return and has recognized a $0.2 million tax liability for an uncertain tax position on a foreign tax return. This adjustment has been recorded as a component of taxes payable in the accompanying consolidated balance sheet as of the year ended December 31, 2012.

The Company may, from time to time, be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of earnings before income taxes. Penalties are recorded in general and administrative expenses and interest paid or received is recorded in interest expense or interest income, respectively, in the consolidated statement of earnings.