XML 53 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
Income Taxes
 12 Months Ended
Dec. 31, 2012
Income Taxes [Abstract]  
Income Taxes
(8)

Income Taxes

The Company has no income tax provision, current or deferred, relating to U.S. federal, state or local income taxes.

A reconciliation of income tax expense to the amount computed by applying the Federal income tax rate to loss before provision for income taxes as of December 31, 2012 and 2011 is as follows:

 

                 
    2012     2011  

Income tax credit at statutory rates

   $ (813,475 )    $ (1,143,603 ) 

Nondeductible expenses

     2,486       4,699  

State income tax, net of federal benefits

     (122,380 )      (172,045 ) 

Other

     1,253       9,700  

Increase in valuation allowance

     932,116       1,301,249  
   

 

 

    

 

 

  
    $ —       $ —    
   

 

 

    

 

 

  

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred income taxes consist of the following:

 

                 
    As of December 31,  
    2012     2011  

Deferred tax assets:

                

Net operating loss carryforwards

   $ 30,028,000     $ 30,549,000  

Capital loss carryforwards

     109,000       109,000  

Inventory and other allowances

     34,000       36,000  

Charitable contribution carryforwards

     3,000       2,000  

Excess (tax) book depreciation

     361,000       218,000  

Excess (tax) book amortization

     60,000       58,000  

Share-based compensation

     1,159,000       1,045,000  

Other accrued costs

     279,000       290,000  
   

 

 

    

 

 

  

Total deferred tax assets

     32,033,000       32,307,000  

Less: Valuation allowance

     (32,033,000 )      (32,307,000 ) 
   

 

 

    

 

 

  

Deferred income taxes

   $ —       $ —    
   

 

 

    

 

 

  

 

The valuation allowance decreased approximately $0.3 million and $0.9 million for the years ended December 31, 2012 and 2011, respectively (net of approximately $1.2 million and $2.2 million for 2012 and 2011, respectively, for expiring net operating loss carryforwards and credits) due principally to the change in the net operating loss carryforward and uncertainty as to whether future taxable income will be generated prior to the expiration of the carryforward period. Under the Internal Revenue Code, certain ownership changes, including the prior issuance of preferred stock and the Company’s public offering of common stock, may subject the Company to annual limitations on the utilization of its net operating loss carryforward. As of December 31, 2012, the amounts subject to limitations has not yet been determined.

The Company has net operating loss carryforwards for tax purposes of approximately $77 million on December 31, 2012, which expire between 2018 and 2032. The Company has capital loss carryforwards for tax purposes of approximately $0.3 million on December 31, 2012 which expire in 2014.

During 2011, the state of Illinois suspended the use of net operating loss carryforwards for a four year period beginning 2011, extending the term of all net loss carryforwards by a corresponding four years.