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TAXES AND NET OPERATING LOSS CARRYFORWARDS | 12 Months Ended
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Dec. 31, 2012
TAXES AND NET OPERATING LOSS CARRYFORWARDS [Abstract] |
TAXES AND NET OPERATING LOSS CARRYFORWARDS | NOTE 9. TAXES AND NET OPERATING LOSS CARRYFORWARDS During 2010, our 2008 and 2009 federal tax returns were selected for examination by the United States Internal Revenue Service ("the IRS"). The exam was concluded in March, 2011. As a result of the IRS exam, our federal net operating loss carryforwards were reduced by approximately $350,000 and R&D credits were reduced by approximately $55,000. Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. The tax effects of these temporary differences representing the components of deferred tax assets (liabilities) at December 31 were approximately as follows (in thousands):
|  | 2012 |  |  | 2011 |
Deferred tax assets, current: |  |  |  |  |  |
U.S. net operating loss carryforwards |  | $ | 1,097 |  |  | $ | 980 |
State net operating loss carryforwards |  |  | 197 |  |  |  | 176 |
Research and development credits |  |  | 774 |  |  |  | 774 |
AMT credits |  |  | 73 |  |  |  | 73 |
Accounts receivable |  |  | 12 |  |  |  | 16 |
Reserves |  |  | 1 |  |  |  | -- |
Inventory |  |  | -- |  |  |  | 1 |
Charitable |  |  | 9 |  |  |  | 9 |
Accrued expenses |  |  | 132 |  |  |  | 56 |
Accrued Settlement |  |  | -- |  |  |  | 593 |
Non-current estimate of loss and credit carryforwards |  |  | (2,295 | ) |  |  | (2,178 | )
Total deferred tax assets, current |  |  | -- |  |  |  | 500 |
Deferred tax assets, non-current: |  |  |  |  |  |  |  |
Investment in subsidiary |  |  | 128 |  |  |  | -- |
Loss and credit carryforwards |  |  | 2,295 |  |  |  | 2,178 |
Stock based compensation |  |  | 95 |  |  |  | 70 |
Total deferred tax assets, non- current |  |  | 2,518 |  |  |  | 2,248 |
Deferred tax liabilities, non-current: |  |  |  |  |  |  |  |
Inventory |  |  | (1 | ) |  |  | -- |
State taxes (capital) |  |  | (4 | ) |  |  | -- |
Property and equipment |  |  | (361 | ) |  |  | (422 | )
Intangibles |  |  | (304 | ) |  |  | (254 | )
Unrecognized tax benefit liability for non-current temporary differences |  |  | (49 | ) |  |  | (63 | )
Total deferred tax liabilities, non- current |  |  | (719 | ) |  |  | (739 | )
Net non-current deferred income tax asset |  | $ | 1,799 |  |  | $ | 1,509 |
We consider all positive and negative evidence regarding the realization of deferred tax assets, including past operating results and future sources of taxable income. U.S. net operating losses will begin to expire in years beginning in 2019. The impact of an uncertain tax position taken or expected to be taken on an income tax return is recognized in the financial statements at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not of being sustained. All of our positions arise from taxable temporary differences and, as such, the liability has been recognized in the net deferred tax asset, current and non-current items to which they relate. The calculated amount of penalties and interest related to these timing differences were immaterial at December 31, 2012 and 2011. In addition, because the amounts are related to temporary timing differences, there would be no material impact on our effective tax rate if recognized. Below is a reconciliation of the statutory federal income tax rate to our effective tax rate for the fiscal years ended December 31, 2012, 2011 and 2010:
|  | 2012 |  |  | 2011 |  |  | 2010 |
Federal Tax Provision |  |  | 34.0 | % |  |  | 34.0 | % |  |  | 34.0 | %
State taxes (net of federal benefit) |  |  | 4.1 | % |  |  | (32.0 | %) |  |  | 4.3 | %
Stock based compensation* |  |  | - |  |  |  | (27.8 | %) |  |  | 0.5 | %
Research and development credits* |  |  | - |  |  |  | (78.0 | %) |  |  | 5.0 | %
Warrant Gains |  |  | - |  |  |  | (175.9 | %) |  |  | - |
Meals and Entertainment |  |  | - |  |  |  | 39.1 | % |  |  | - |
Other |  |  | (12.2 | %) |  |  | - |  |  |  | (6.1 | %)
|  |  | 25.9 | % |  |  | (240.6 | %) |  |  | 37.7 | %
* Net of IRS Exam adjustments for 2010

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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