9.	Income taxes:

The Company had income tax expense in 2009 of $0.3 million. The Company did not record income tax expense in 2010 or 2011 as the Company had incurred net operating losses. The Company has recognized valuation allowances for all deferred tax assets for years ending 2011, 2010 and 2009. Reconciliation of the Federal statutory income tax rate of 34% to the effective rate is as follows:


	Year Ended December 31,
	2011			2010			2009
Federal statutory income tax rate		34.00	%		34.00	%		34.00	%
State taxes, net of federal benefit		3.45			3.45			3.45
Permanent differences		4.26			(2.36	)		7.00
Research and development ("R&D") credit		2.92			5.22			(3.32	)
Other		(6.63	)		(2.79	)		(0.66	)
Valuation allowance		(38.00	)		(37.51	)		(39.53	)

		0.00	%		0.00	%		0.94	%

The tax effects of temporary differences and net operating losses that give rise to significant components of deferred tax assets and liabilities consist of the following:


	December 31,
Deferred tax assets (liabilities)	2011			2010			2009
Deferred revenue	$	5,291,485		$	5,007,111		$	3,061,084
Basis difference in equipment		(1,008,114	)		(831,921	)		(831,921	)
Basis difference in intangibles		(1,090,516	)		(1,248,886	)		(1,004,670	)
Accrued liabilities and other		686,809			1,042,745			80,537
loss on extinguishment		—			3,080,454			3,080,454
R&D Credit		5,591,029			4,569,159			3,876,140
Stock options		1,606,254			1,451,561			1,165,932
Derivative		—			(1,751,245	)		(765,928	)
AMT credit		—			—			312,128
Net operating loss carry-forward (NOL)		19,055,559			9,951,000			7,406,919

		30,132,506			21,269,978			16,380,675

Less: valuation allowance		(30,132,506	)		(21,269,978	)		(16,380,675	)

	$	—		$	—		$	—

In accordance with GAAP, it is required that a deferred tax asset be reduced by a valuation allowance if, based on the weight of available evidence it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. The valuation allowance should be sufficient to reduce the deferred tax asset to the amount which is more likely than not to be realized. As a result, the Company recorded a valuation allowance with respect to all of the Company's deferred tax assets.

The Company has a federal net operating loss of approximately $51 million as of December 31, 2011. Under Section 382 and 383 of the Internal Revenue Code, if an ownership change occurs with respect to a "loss corporation", as defined, there are annual limitations on the amount of the net operating loss and other deductions which are available to the Company. Some of these losses may be subject to these limitations. The Company's State NOLS are approximately $45.4 million as of December 31, 2011.