Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2011
INCOME TAXES

11.  INCOME TAXES

 

    2011     2010  
             
Tax provision (benefit)                
Current                
Federal   $ —     $ —  
State     —       —  
Total current     —       —  
                 
Deferred                
Federal     (944,333 )     (1,592,000 )
State     (161,963 )     (290,000 )
Total deferred     (1,106,296 )     (1,882,000 )
                 
Change in valuation     1,106,296       1,882,000  
                 
Total   $ —     $ —  

  

Deferred tax assets consisted of the following at December 31: 

 

    2011     2010  
             
Deferred tax assets                
Federal net operating loss   $ 19,447,371     $ 6,116,804  
Federal research and development tax credit carryforwards     1,956,146       390,600  
State net operating loss     2,444,816       814,492  
State research and development tax credit carryforwards     597,608       220,738  
Capitalized research and development expenses     13,007,013       —  
Capital loss carryforward (expires beginning in 2012)     340,000       —  
Stock-based compensation expense     333,206       552,859  
Intangible assets     555,198       —  
Charitable contribution carryforwards     44,370       49,725  
Accrued liabilities     35,314       25,327  
Total deferred tax assets     38,761,042       8,170,545  
                 
Deferred tax liabilities                
Depreciable assets     (346,870 )     (434,056 )
Total deferred tax liabilities     (346,870 )     (434,056 )
                 
Net deferred tax assets     38,414,172       7,736,489  
Less valuation allowance     (38,414,172 )     (7,736,489 )
                 
Total deferred tax assets   $ —     $ —  

 

As of December 31, 2011, the Company had federal and state net operating loss carryforwards (“NOLs”) of approximately $57,198,000 and $46,533,000 respectively, which expire beginning in 2031 and 2025, respectively.  In addition, the Company has federal and state research and development and investment tax credits of approximately $1,956,000 and $905,000, respectively.  The amount of NOLs which may be utilized annually in future periods will be limited pursuant to Section 382 of the Internal Revenue Code as a result of substantial changes in the Company’s ownership that have occurred or that may occur in the future.  The Company has not quantified the amount of such limitations.

 

Because of the Company’s limited operating history, continuing losses and uncertainty associated with the utilization of the NOLs in the future, management has provided a full allowance against the gross deferred tax asset.

 

The Company did not have unrecognized tax benefits or accrued interest and penalties at any time during the years ended December 31, 2011 or 2010, and does not anticipate having unrecognized tax benefits over the next twelve months.  The Company is subject to audit by the IRS and state taxing authorities for tax periods commencing January 1, 2008. Additionally, the Company may be subject to examination by the IRS for years beginning prior to January 1, 2008 as a result of its NOLs. However, any adjustment related to these periods would be limited to the amount of the NOL generated in the year(s) under examination.