12.

Income Taxes

The components of the net deferred tax assets are as follows at December 31:


	2013			2012
	(in thousands)
Operating loss carryforwards	$	25,881		$	21,753
Tax credit carryforwards		400			317
Other temporary differences		4,302			2,921

		30,583			24,991
Less valuation allowance		(30,583	)		(24,991	)

Net deferred tax asset	$	—		$	—

The primary factors affecting the Company’s income tax rates were as follows:


	2013			2012
Tax benefit at U.S. statutory rates		(34	%)		(34	%)
State tax benefit		(5.3	%)		(5.3	%)
Credit		0	%		(0.2	%)
Permanent differences		0.9	%		1.4	%
Expiring state NOL’s		1.8	%		3.3	%
Changes in valuation allowance		36.6	%		34.8	%

		0	%		0	%

As of December 31, 2013, the Company has federal and state net operating loss carryforwards totaling $69,888,000 and $29,881,000 respectively, which expire through 2032. The net operating losses include Federal and State excess benefits related to stock options of $707,000 that will be charged to additional paid-in capital when utilized. In addition, the Company has federal and state research and development credits of $284,000 and $176,000, respectively, which expire through 2032. Ownership changes, as defined by Section 382 of the Internal Revenue Code, may have limited the amount of net operating loss carryforwards that can be utilized annually to offset future taxable income. Subsequent ownership changes could further affect the limitation in future years. Because of the Company’s limited operating history and its recorded losses, management has provided, in each of the last two years, a 100% valuation allowance against the Company’s net deferred tax assets.

The Company is subject to taxation in the U.S. and various states. Based on the history of net operating losses all jurisdictions and tax years are open for examination until the operating losses are utilized or the statute of limitations expires. As of December 31, 2013 and 2012, the Company does not have any significant uncertain tax positions.