The components of consolidated provision for income taxes for the years ended December 31, 2011, 2010, and 2009 are as follows (in thousands):

The significant components of net deferred income taxes as of December 31, 2011 and 2010 are as follows (in thousands):

The classification of net deferred income taxes as of December 31, 2011 is summarized as follows (in thousands):

The classification of net deferred income taxes as of December 31, 2010 is summarized as follows (in thousands):

The reconciliations of the effective income tax rate to the federal statutory rate are as follows:

As of December 31, 2011, the Company had generated federal and state operating loss carryforwards of approximately $13.5 million and $6.9 million, respectively. The federal net operating losses can be used for a 20-year period, and if unused, will begin to expire in 2028. The state net operating losses have expiration periods that vary by state, which range from 5 to 20 years. The Company expects to be able to utilize these net operating loss carryforwards and therefore has not recorded a valuation allowance which is discussed in more detail below.

The Company's realization of its deferred tax assets is dependent upon many factors, including, but not limited to, the Company's ability to generate sufficient taxable income. Certain deferred tax liabilities can also be considered as a source of future taxable income including those resulting from the acquisition. In prior years, the Company had deferred tax assets to which a full valuation allowance was applied. Based upon the weight of available evidence, it was more likely than not that some portion or all of the deferred tax assets would not be realized at that time. During the year ended December 31, 2010, as a result of a review of the Company's earnings history, existing deferred tax liabilities including those resulting from the First Biomedical acquisition, the Company has removed the valuation allowance previously applied against the net deferred tax asset.

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2011. After adjusting the historical losses for non-recurring items, including the goodwill impairment, sufficient earnings

history exists to support the realization of the deferred tax assets. This evidenced ability to generate sufficient taxable income is the basis for the Company's assessment that the deferred tax assets are more likely than not to be realized.

As indicated in Note 3, there is substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments, if any, that might result from the outcome of this uncertainty. The Company has concluded that this doubt does not change the expectation that the deferred tax assets are more likely than not to be realized. In the event of a default on the Company's debt, it is possible that a series of actions could occur that would result in the recognition of a valuation allowance, resulting in a charge to tax expense. Furthermore, actions resulting in a change of control for income tax purposes under Internal Revenue Code section 382, could limit the amount of net operating losses and certain other deductions available for use on an annual basis, thus potentially impairing the ability of the Company to realize the deferred tax assets.

Following is an analysis of the deferred tax asset valuation allowance for the years ended December 31, 2010, and 2009 (in thousands). A valuation allowance did not exist during the year ended December 31, 2011:

As of December 31, 2011, the Company had gross unrecognized tax benefits of $0.2 million that, if recognized, would result in a net tax benefit of less than $0.1 million and would favorably affect the Company's effective tax rate. It is expected that the amount of unrecognized tax benefits will decrease in the next twelve months due to the lapse in the statute of limitations. The penalties and interest associated with uncertain tax positions are not recorded due to the immateriality of the amount.

The federal income tax returns of the Company for the years 2008 through 2011 are subject to examination by the IRS, generally for three years after the latter of their extended due date or when they are filed. The state income tax returns and other state tax filings of the Company are subject to examination by the state taxing authorities, for various periods generally up to four years after they are filed.