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:



	2013			2012
Computed “expected” tax provision (benefit)	$	(1,278	)	$	(1,040	)
Increase in the valuation allowance for deferred tax assets	1,009			845
Short-fall on stock options, warrants, and RSUs	330			245
State taxes	19			25
Permanent items	12			10
Other	(67		)	(54		)
Total income tax provision	$	25		$	31

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:



	2013			2012
Deferred tax assets:
Operating loss carryforward	$	3,197		$	1,919
Accounts receivable allowance	69			106
Texas tax credit carryforward	221			228
Stock option compensation	1,070			1,306
Goodwill	602			723
Accrued expenses	120			121
Alternative Minimum Tax credit carryforwards	16			16
Total deferred tax assets	5,295			4,419
Deferred tax liabilities:
Property and equipment	(397		)	(514		)
Prepaid expense	(71		)	(80		)
Total deferred tax liabilities	(468		)	(594		)
Valuation allowance	(4,606		)	(3,597		)
Net deferred tax assets	$	221		$	228

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, 2013, the Company increased the valuation allowance by approximately $1,009,000, which was included in the income tax provision for the year ended December 31, 2013. 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 $221,000.

As of December 31, 2013 and 2012, the net operating loss carryforwards were approximately $14.5 million and $10.9 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, 2013 and 2012 consisted of the following:



	2013		2012
Current	$	18	$	27
Deferred	7		4
	$	25	$	31

The Company has evaluated the accounting guidance for uncertainty in income taxes. Management has evaluated their material tax positions and determined there is 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.