Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Components of provision (benefit) for income taxes

The components of the provision (benefit) for income taxes for the years ended December 31, 2012 and 2011 consisted of the following:

Current	2012		2011
Federal	$	—	$	—
State		—		—
Foreign		3,500		2,400
	$	3,500	$	2,400
Deferred
Federal	$	—	$	—
State		—		—
Foreign		—		—
		—		—
Total	$	3,500	$	2,400

Differences between income tax expense and the amount computed applying the federal income tax rate

The following table summarizes the differences between income tax expense and the amount computed applying the federal income tax rate of 34% for the years ended December 31, 2012 and 2011:

	2012			2011
Federal income tax (benefit) at statutory rate	$	(2,617,300	)	$	(534,500	)
Federal income tax (benefit) at statutory rate on discontinued operations		(159,300	)		(61,700	)
Foreign taxes		3,500			2,400
Compensation from exercise of non-qualified stock options and restricted stock awards		(215,500	)		—
Change in valuation allowance		2,987,700			593,500
Meals and entertainment (50%)		9,400			4,400
Other items		(5,000	)		(1,700	)
Provision (benefit) for income tax	$	3,500		$	2,400

Deferred income taxes and benefits

Deferred income taxes and benefits result from temporary timing differences in the recognition of certain expense and income items for tax and financial reporting purposes. The following table sets forth those differences as of December 31, 2012 and 2011:

	2012			2011
Net operating loss carryforwards	$	17,022,000		$	15,815,000
Tax credit carryforwards		1,047,000			1,059,000
Depreciation and amortization		39,000			64,000
Compensation expense – non-qualified stock options		583,000			441,000
Deferred revenue and maintenance service contracts		1,391,000			1,329,000
Warrant liability		2,944,000			1,473,000
Deferred compensation		105,000			—
Reserves and other		111,000			89,000
Total deferred tax assets		23,242,000			20,270,000
Deferred tax liability – capitalized software		(89,000	)		(121,000	)
Net deferred tax asset		23,153,000			20,149,000
Valuation allowance		(23,153,000	)		(20,149,000	)
Net deferred tax asset	$	—		$	—