Income Taxes

Income tax provision for the years ended December 31 differed from the U.S. federal income tax rate of 34% approximately in the amounts indicated as a result of the following:



	2011			2010
Computed “expected” tax provision	$	(2,242	)	$	203
Increase in the valuation allowance for deferred tax assets	2,752			—
State taxes	25			54
Short-fall on stock options and RSUs	145			—
Change in fair value of warrant derivative liability	—			(6		)
Return to provision adjustment	—			(167		)
Other	(36		)	27
Total income tax provision	$	644		$	111

Differences between financial accounting principles and tax laws cause differences between the bases of certain assets and liabilities for financial reporting purposes and tax purposes.

The tax effects of these differences, to the extent they are temporary, are recorded as deferred tax assets and liabilities and consisted of the following components:



	2011			2010
Deferred tax assets:
Operating loss carryforward	$	872		$	101
Accounts receivable allowance	72			69
Warrants	202			179
Texas tax credit carryforward	232			238
Stock option compensation	1,206			1,140
Goodwill	843			—
Accrued expenses	195			203
Alternative Minimum Tax credit carryforwards	16			16
Total deferred tax assets	3,638			1,946
Deferred tax liabilities:
Goodwill	—			(563		)
Property and equipment	(570		)	(496		)
Prepaid expense	(84		)	(41		)
Total deferred tax liabilities	(654		)	(1,100		)
Valuation allowance	(2,752		)	—
Net deferred tax assets	$	232		$	846

During the year ended December 31, 2011, the Company recognized a valuation allowance of approximately $2.8 million, which was included in the income tax provision for the year ended December 31, 2011. Due to the nature and timing of the reversal of the deferred tax assets and liabilities, the valuation allowance was established against the net deferred tax assets with the exception of the Texas tax credit carryforward of approximately $232,000.

As of December 31, 2011 and 2010, the net operating loss carryforwards were approximately $7.9 million and $5.7 million, which expire in 2025 through 2031. Included in the net operating loss carryforward is approximately $5.4 million which related to the excess tax benefits for stock options and warrants exercised which will result in a credit to additional paid in capital of approximately $1.9 million when the associated tax deduction results in a reduction in the income taxes payable.

The income tax provision shown on the statement of operations for the years ended December 31, 2011 and 2010 consisted of the following:



	2011		2010
Current	$	30	$	64
Deferred	614		47
	$	644	$	111

The Company has evaluated the accounting guidance for uncertainty in income taxes. Management has evaluated their material tax positions and determined no income tax effects with respect to the financial statements. The Company has identified the United States and Texas as major tax jurisdictions and is no longer subject to federal or state income tax examinations by tax authorities for years before 2007. The Company is currently undergoing an examination by tax authorities for its U.S. federal return for the year ended 2009.