(9)	INCOME TAXES

The Company had losses before income taxes for domestic and foreign operations as follows:

		For the four months ended		For the year ended August 31,
(In thousands)		December 31, 2012		2012		2011		2010
Domestic	$	12,510	$	26,642	$	37,415		18,779
Foreign		6,782		12,002		(220	)	149
Loss before income taxes	$	19,292	$	38,644	$	37,195		18,928

The provision for income taxes differs from the amount estimated by applying the statutory federal income tax rate to loss before taxes as follows:

	December 31,					August 31,
	2012					2012					2011					2010
Federal tax (benefit) at statutory rate	$	(6,536	)	-34.00	%	$	(13,111	)	-34.00	%	$	(12,679	)	-34.00	%	$	(6,391	)	-34.00	%
State tax (benefit) at statutory rate, net of federal tax benefit		(715	)	-3.72	%		(1,069	)	-2.77	%		(2,247	)	-6.03	%		(953	)	-5.07	%
Change in valuation allowance		2,349		12.22	%		4,775		12.38	%		19,278		51.70	%		6,068		32.28	%
Research and development credits		0		0.00	%		(1,034	)	-2.68	%		(1,831	)	-4.91	%		(708	)	-3.77	%
Fair market value of warrants		505		2.62	%		1,079		2.80	%		5,543		14.86	%		2,004		10.66	%
Qualified Therapeutic Discovery Project Grant income		0		0.00	%		0		0.00	%		(297	)	-0.80	%		0		0.00	%
Intangible asset basis allocation		1,670		8.69	%		2,952		7.66	%		(8,633	)	-23.15	%		(20	)	-0.11	%
Stock-based compensation - ISO		755		3.93	%		1,525		3.95	%		493		1.32	%		2		0.01	%
Foreign losses not benefited		1,995		10.38	%		3,848		9.98	%		0		0.00	%		0		0.00	%
Other		(23	)	-0.12	%		1,035		2.68	%		373		1.01	%		(2	)	0.00	%
Provision for income taxes	$	0		0.00	%	$	0		0.00	%	$	0		0.00	%	$	0		0.00	%

Deferred tax assets (liabilities) consist of the following:

				August 31,
	December 31, 2012			2012			2011		2010
Deferred tax assets
Net operating loss carryforwards	$	19,514		$	18,075		$	14,940		9,155
Capitalized start-up costs		11,160			8,946			6,636		3,487
Stock option expense		425			462			462		268
Research credits		7,970			7,873			6,275		3,513
Fixed assets and intangibles		3,786			5,766			7,560		56
Accruals		330			105			138		217
Other		(50	)		(441	)		0		37
Deferred tax assets		43,135			40,786			36,011		16,733
Valuation allowance		(43,135	)		(40,786	)		(36,011		(16,733	)
Deferred tax assets, net	$	0		$	0		$	0		0

As of December 31, 2012, the Company had net operating loss carryforwards for U.S. federal and U.S. state income tax purposes of approximately $45.0 million and $63.1 million, respectively, which expire beginning after 2022 and 2016, respectively. As of December 31, 2012 the Company had federal and state research development credits of $7.5 million and $0.7 million, respectively. The federal credits expire beginning after 2026 and the state credits do not expire. Due to U.S. federal legislation on January 2, 2013 extending federal research development tax credits from January 1, 2012 to December 31, 2012, the Company will record an additional $4.7 million of credits in the tax year 2013.

As of December 31, 2012, the Company's net operating loss carryforwards for federal and state income tax purposes include approximately $0.4 million and $0.0 million on a gross basis, respectively, of losses attributable to stock option tax expense deductions.

The valuation allowance increased approximately $2.3 million during the period ending December 31, 2012, primarily as a result of current year losses and tax credits.

Utilization of the Company's net operating loss may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss before utilization.

The Company has analyzed its tax positions in all of the federal, state and foreign jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. As of December 31, 2012, the Company had no unrecognized tax benefits and has recorded no liability related to uncertain tax positions. The Company did not record a change in its unrecorded tax benefits during the four months ended December 31, 2012, and cannot with certainty predict if a change in its unrecorded tax benefits will occur in the next 12 months.

Due to net operating loss and research credit carryforwards, substantially all of the Company's tax years, from 2001 through 2012, remain open to U.S. federal, state and foreign tax examinations.

The Company is not aware of any pending income tax audits. Significant components of the Company's deferred tax assets for income tax purposes are net operating loss carryforwards, capitalized start-up costs, stock-based compensation and research credits. Due to the Company's lack of earning history, any deferred assets recorded have been fully offset by a valuation allowance.

The Company’s practice is to recognize interest and penalties related to income tax matters as a component of income tax expense. As of December 31, 2012, there was no accrued interest and penalties related to uncertain tax positions.