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:



	2012			2011
Computed “expected” tax provision	$	(1,040	)	$	(2,242	)
Increase in the valuation allowance for deferred tax assets	845			2,752
Short-fall on stock options, warrants, and RSUs	245			145
State taxes	25			25
Permanent items	10			—
Other	(54		)	(36		)
Total income tax provision	$	31		$	644

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:



	2012			2011
Deferred tax assets:
Operating loss carryforward	$	1,919		$	872
Accounts receivable allowance	106			72
Warrants	—			202
Texas tax credit carryforward	228			232
Stock option compensation	1,306			1,206
Goodwill	723			843
Accrued expenses	121			195
Alternative Minimum Tax credit carryforwards	16			16
Total deferred tax assets	4,419			3,638
Deferred tax liabilities:
Property and equipment	(514		)	(570		)
Prepaid expense	(80		)	(84		)
Total deferred tax liabilities	(594		)	(654		)
Valuation allowance	(3,597		)	(2,752		)
Net deferred tax assets	$	228		$	232

In 2011, a valuation allowance in the amount of $2.8 million was established against the net deferred tax assets with the exception of the Texas tax credit carryforward of approximately $232,000. During the year ended December 31, 2012, the Company increased the valuation allowance by approximately $845,000, which was included in the income tax provision for the year ended December 31, 2012. 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 $228,000.

As of December 31, 2012 and 2011, the net operating loss carryforwards were approximately $10.9 million and $7.9 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, 2012 and 2011 consisted of the following:



	2012		2011
Current	$	27	$	30
Deferred	4		614
	$	31	$	644

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 consolidated 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. During 2011 and the early part of 2012 the Company underwent an examination by tax authorities for its U.S. federal return for the year ended 2009. In August of 2012, the Company was notified that there were no changes proposed to the 2009 income tax return.