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INCOME TAXES | 12 Months Ended
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Dec. 31, 2012
INCOME TAXES [Abstract] |
INCOME TAXES | NOTE 12 - INCOME TAXES Income tax expense differs from the statutory amounts as follows:
|  | 2012 |  |  | 2011 |
Income taxes at U.S. statutory rate |  | $ | (4,260,000 | ) |  | $ | (861,000 | )
State taxes |  |  | - |  |  |  | 17,000 |
Current year reserve |  |  | 3,578,000 |  |  |  | 857,000 |
Expenses not deductible |  |  | 682,000 |  |  |  | 4,000 |
Total tax expense |  | $ | - |  |  | $ | 17,000 |
Deferred taxes are provided for the temporary differences between the financial reporting bases and the tax bases of our assets and liabilities. The temporary differences that give rise to deferred tax assets were as follows:
|  | December 31, |
|  | 2012 |  |  | 2011 |
Deferred tax assets |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 64,147,000 |  |  | $ | 63,830,000 |
General business credit carryforwards |  |  | 2,450,000 |  |  |  | 2,439,000 |
State credits |  |  | 3,072,000 |  |  |  | 3,097,000 |
Property and equipment |  |  | 57,000 |  |  |  | 46,000 |
Stock options |  |  | 1,531,000 |  |  |  | 1,480,000 |
Derivatives |  |  | 4,007,000 |  |  |  | 2,018,000 |
Deferred revenue |  |  | 899,000 |  |  |  | 1,221,000 |
Intangible assets |  |  | 517,000 |  |  |  | 415,000 |
Accrued interest |  |  | 253,000 |  |  |  | 253,000 |
Other |  |  | 230,000 |  |  |  | 231,000 |
Gross deferred tax assets |  |  | 77,163,000 |  |  |  | 75,030,000 |
Valuation allowance |  |  | (77,163,000 | ) |  |  | (75,030,000 | )
Net deferred taxes |  | $ | - |  |  | $ | - |
At December 31, 2012, we had approximately $188,666,000 of net operating loss carryforwards and approximately $2,450,000 of general business credit carryforwards. These carryforwards expire as follows:
|  | Net operating |  |  | General business |
|  | loss carryforwards |  |  | credit carryforwards |
2012 |  | $ | - |  |  | $ | - |
2013 |  |  | - |  |  |  | - |
2014 |  |  | - |  |  |  | - |
2015 |  |  | - |  |  |  | - |
Thereafter |  |  | 188,666,000 |  |  |  | 2,450,000 |
|  | $ | 188,666,000 |  |  | $ | 2,450,000 |
As a result of a merger on January 25, 1996, a change in control occurred for federal income tax purposes, which limits the utilization of pre-merger net operating loss carryforwards of approximately $3,100,000 to approximately $530,000 per year. Additionally, we acquired MacroChem Corporation on February 25, 2009 and Somanta Pharmaceuticals, Inc. on January 4, 2008. Both corporations were loss companies at the time of the acquisition. Therefore, the net operating losses related to those acquisitions may be subject to annual limitations as provided by IRC Sec. 382. We account for uncertain income tax positions in accordance with FASB ASC 740, Income Taxes. Interest costs and penalties related to income taxes are classified as interest expense and general and administrative costs, respectively, in our consolidated financial statements. For the years ended December 31, 2012 and 2011, we did not recognize any uncertain income tax positions or interest or penalty expense related to income taxes. It is determined not to be reasonably likely for the amounts of unrecognized tax benefits to significantly increase or decrease within the next 12 months. We are currently subject to a three year statute of limitations by major tax jurisdictions. We and our subsidiaries file income tax returns in the U.S. federal jurisdiction.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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