Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Taxes

12. INCOME TAXES

A reconciliation of income tax expense at the statutory rate to income tax expense at our effective tax rate is as follows:

	2011			2010			2009
Tax Expense Computed at 34 % of Pretax Income	$	(7,291,000	)	$	(912,000	)	$	(1,870,000	)
Effect of Permanent Differences Principally Related to Non-taxable government grants		—			(83,000	)		—
State Income Taxes		2,005			—			—
Effect of Change in Valuation Allowance		(7,291,000	)		(995,000	)		(1,870,000	)
Total Income Tax Expense	$	2,005		$	-0-		$	-0-

The details of the net deferred tax asset are as follows:

	December 31,
	2011			2010
Deferred tax assets:
Net Operating Loss Carryforward	$	16,728,000		$	10,130,000
Stock Based Compensation		3,467,000			2,208,000
Accrued Expenses		78,000			73,000
Inventories		66,000			82,000
Accounts Receivable		10,000			8,000
Subtotal		20,349,000			12,501,000
Deferred Tax Liabilities:
Tax over Book Depreciation		323,000			230,000
Goodwill & Intangible Assets		297,000			261,000
Prepaid Expenses		3,000			47,000
Subtotal		623,000			538,000
Subtotal		19,726,000			11,963,000
Valuation Allowance		(19,726,000	)		(11,963,000	)
Net Deferred Tax Asset	$	-0-		$	-0-

Deferred tax assets result primarily from net operating loss carryforwards. For tax purposes, we have net operating loss carryforwards of approximately $49,201,000 that expire between 2018 and 2031.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized upon the generation of future taxable income during the periods in which those temporary differences become deductible. We recognized no income tax expense or benefit for the years ended December 31, 2011, 2010 and 2009. Due to anticipated spending on research and development over the next several years, coupled with our limited history of operating income and our net losses in 2011, 2010 and 2009, management has placed a full valuation allowance against the net deferred tax assets as of December 31, 2011 and 2010. The portion of the valuation allowance resulting from excess tax benefits on share based compensation that would be credited directly to contributed capital if recognized in subsequent periods is $1.9 million.

The Company accounts for its uncertain tax positions in accordance with ASC 740-10, Income Taxes and the amount of unrecognized tax benefits related to tax positions is not significant at December 31, 2011 and 2010.