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c INTERMEDIX HOLDINGS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2010 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2010 are presented below (in thousands): Deferred tax assets: Equity-based compensation $ 323 Allowance for doubtful accounts 372 Accrued bonus 893 Accrued vacation 631 Deferred revenue 332 Acquisition costs 3,514 Net operating loss carryforwards 3,621 Other 271 Gross deferred income tax assets 9,957 Deferred tax liabilities: Property and equipment 2,189 Intangible assets 84,259 Goodwill 1,311 Other 442 Gross deferred income tax liabilities 88,201 Net deferred income tax liabilities $ (78,244) Consolidated balance sheet presentation: Current deferred income tax assets, net $ 1,961 Noncurrent deferred income tax liabilities, net (80,205) Net deferred income tax liabilities $ (78,244) Realization of deferred tax assets is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards. Although realization is not assured, management believes it is more likely than not that all of the deferred tax assets will be realized. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. The Company has recorded a deferred tax asset of $3.6 million reflecting the benefit of federal and state net operating loss carryforwards. Such deferred tax assets expire at various dates from 2027 through 2030. The Company recognizes valuation allowances on deferred tax assets reported if, based on the weight of evidence, management believes that it is more likely than not that some or all of the deferred tax assets will not be realized. The valuation allowance is based on the Company's estimates of taxable income and the period over which deferred tax assets will be recovered. There is no valuation allowance recorded at December 31, 2010 because management believes that the deferred tax assets will be recognized due to the reversal of significant taxable temporary differences and the anticipated future taxable income from operations. 25 (Continued)