Note 8 - Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Text Block]

8. INCOME TAXES

A reconciliation of the Company’s statutory tax rate to the effective rate for the years ended December 31, 2012, 2011 and 2010 is as follows:

	2012			2011			2010
Federal statutory rate		34.0	%		34.0	%		34.0	%
State taxes, net of federal tax benefit		5.9			4.6			5.4
Recapture of alternative minimum tax		–			–			–
Valuation allowance		(39.9	)		(38.6	)		(39.4	)
Effective tax rate		–	%		–	%		–	%

The components of the Company’s deferred tax asset as of December 31, 2012 and 2011 are as follows:

	December 31,
In thousands	2012			2011
Net operating loss carry forwards	$	49,408		$	40,104
Compensation expense related to employee stock options		2,817			2,285
Subtotal		52,225			42,389
Valuation allowance		(52,225	)		(42,389	)
Total deferred tax asset	$	-		$	-

The evaluation of the realizability of such deferred tax assets in future periods is made based upon a variety of factors that affect the Company’s ability to generate future taxable income, such as intent and ability to sell assets and historical and projected operating performance. At this time, the Company has established a valuation reserve for all of its deferred tax assets. Such tax assets are available to be recognized and benefit future periods.

During 2012 and 2011 the Company performed analyses to determine if there were changes in ownership, as defined by Section 382 of the Internal Revenue Code that would limit its ability to utilize certain net operating loss and tax credit carryforwards. The Company determined that it experienced an ownership change, as defined by Section 382, in connection with its registered direct and private placement offerings on July 25, 2011. As a result, the utilization of the Company's federal tax net operating loss carryforwards generated prior to the ownership change is limited. As of December 31, 2012, the Company has net operating loss carryforwards for U.S. federal and state tax purposes of approximately $129 million, before excluding net operating losses that have been limited as a result of Section 382 limitations. The annual limitation due to Section 382 for net operating loss carry forward utilization is approximately $4.9 million per year for approximately $96 million in net operating loss carryforwards existing at the date of the ownership change. The utilization of these net operating loss carryforwards may be further limited if the Company experiences future ownership changes as defined in Section 382 of the Internal Revenue Code.

Approximate Amount Of Unused Operating Loss Carry Forwards ($000s)		Expiration During Year Ended
$	4,843		2022
	2,293		2023
	15,647		2024
	8,168		2025
	7,361		2026
	11,905		2028
	18,547		2029
	18,145		2030
	21,386		2031
	20,587		2032
$	128,882