Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Income taxes

10. Income taxes:

The Company had income tax expense in 2012 of $0.1 million. The Company did not record income tax expense in 2011 or 2010 as the Company had incurred net operating losses. The Company has recognized valuation allowances for all deferred tax assets for years ending 2012, 2011 and 2010. Reconciliation of the Federal statutory income tax rate of 34% to the effective rate is as follows:

	Year Ended December 31,
	2012			2011			2010
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-derivative loss (gain)		110.51			7.02			1.42
Permanent differences-other		44.12			(2.76	)		(3.79	)
Research and development (“R&D”) credit		(129.12	)		2.92			5.22
Other		(30.89	)		(6.63	)		(2.79	)
Valuation allowance		(24.82	)		(38.00	)		(37.51	)
		7.25	%		0.00	%		0.00	%

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)	2012			2011
Deferred revenue	$	4,010,493		$	5,291,485
Basis difference in equipment		(926,735	)		(1,008,114	)
Basis difference in intangibles		(618,403	)		(1,090,516	)
Accrued liabilities and other		263,364			686,809
Loss on extinguishment		—			—
R&D credit		8,720,314			5,591,029
Stock options		1,557,756			1,606,254
Derivative		—			—
Net operating loss carry-forward (NOL)		16,575,544			19,055,559
		29,582,333			30,132,506
Less: valuation allowance		(29,582,333	)		(30,132,506	)
	$	—		$	—

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 $45 million as of December 31, 2012. 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 $38.8 million as of December 31, 2012. These loss carryforwards expire principally beginning in 2020 through 2026 for federal and 2028 for state purposes.