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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Income Taxes [Abstract] |
Income Taxes | Note 17. Income Taxes Loss before income taxes is attributed to the following geographic locations for the years ended December 31,
|  | 2012 |  |  | 2011 |
United States |  | $ | 28,355,949 |  |  | $ | 19,677,292 |
Foreign |  |  | 133,103 |  |  |  | 1,651,244 |
Total loss before taxes |  | $ | 28,489,053 |  |  | $ | 21,328,536 |
We follow authoritative guidance regarding accounting for uncertainty in income taxes, which prescribes a recognition threshold a tax position is required to meet before being recognized in the financial statements. As of December 31, 2012 and 2011, we have not recorded any unrecognized tax benefits. Deferred income taxes reflect the 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 our deferred tax assets and liabilities at December 31 are as follows:
|  | 2012 |  |  | 2011 |
Deferred tax assets: |  |  |  |  |  |  |  |
Capitalized research and development costs |  | $ | 53,824,000 |  |  | $ | 53,565,000 |
Net operating losses |  |  | 53,687,000 |  |  |  | 53,065,000 |
Research and development credits |  |  | 7,777,000 |  |  |  | 8,038,000 |
Accrued wind down cost |  |  | 292,000 |  |  |  | 630,000 |
Stock-based compensation |  |  | 853,000 |  |  |  | 512,000 |
Capital loss carryover |  |  | 544,000 |  |  |  | 596,000 |
Fixed assets |  |  | 430,000 |  |  |  | 458,000 |
Other |  |  | 1,002,000 |  |  |  | 731,000 |
|  |  | 118,409,000 |  |  |  | 117,595,000 |
Valuation allowance |  |  | (118,045,000 | ) |  |  | (117,181,000 | )
Total deferred tax assets |  | $ | 364,000 |  |  | $ | 414,000 |
Deferred tax liability: |  |  |  |  |  |  |  |
Intangible assets |  |  | (364,000 | ) |  |  | (414,000 | )
Total deferred tax liability |  | $ | (364,000 | ) |  | $ | (414,000 | )
Net deferred tax assets |  | $ | — |  |  | $ | — |
Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by approximately $864,000 in 2012, $7,871,000 in 2011, and $7,030,000 in 2010. As of December 31, 2012, we had the following:
| • |  | Net operating loss carry forwards for federal income tax purposes of approximately $143,909,000 which expire in the years 2018 through 2032.
| • |  | Federal research and development tax credits of approximately $4,846,000 which expire in the years 2018 through 2031.
| • |  | Net operating loss carry forwards for state income tax purposes of approximately $47,105,000 which expire in the years 2013 through 2032.
| • |  | State research and development tax credits of approximately $4,441,000 ($2,931,000 net of federal tax effect) which do not expire.
| • |  | Net operating loss carry forwards in foreign jurisdictions of approximately $11,713,000 which do not expire.
| • |  | Capital loss carry forwards for federal and state income tax purposes of $1,592,000 which expire in the years 2014 through 2016.
Utilization of the federal and state net operating loss and federal and state research and development tax credit carry forwards may be subject to annual limitations due to the ownership percentage change provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitations may result in the inability to fully offset future annual taxable income and could result in the expiration of the net operating loss carry forwards before utilization. Utilization of foreign net operating loss carry forwards may be limited or disallowed under similar foreign income tax provisions. The effective tax rate as a percentage of income before income taxes differs from the statutory federal income tax rate (when applied to income before income taxes) for the years ended December 31 as follows:
|  | 2012 |  |  | 2011 |  |  | 2010 |
Statutory federal income tax (benefit) rate |  |  | (34 | )% |  |  | (34 | )% |  |  | (34 | )%
State income tax (benefit) rate |  |  | (3.3 | ) |  |  | (3.4 | ) |  |  | (3.6 | )
Increase resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Expenses not deductible for taxes |  |  | 8.8 |  |  |  | (6.7 | ) |  |  | (0.4 | )
Increase in valuation allowance |  |  | 3.7 |  |  |  | 32.8 |  |  |  | 36.8 |
Change in state deferred tax rate |  |  | 17.7 |  |  |  | 0 |  |  |  | 0 |
Change in foreign deferred tax rate |  |  | 1.8 |  |  |  | 0 |  |  |  | 0 |
Expiration of tax attributes |  |  | 5.3 |  |  |  | 11.3 |  |  |  | 1.2 |
Effective tax (benefit) rate |  |  | 0 | % |  |  | 0 | % |  |  | 0 | %
We did not have any unrecognized tax benefits at December 31, 2012. Our policy is to recognize interest and penalties related to income tax matters in income tax expense. Because we have no tax liabilities, no tax-related interest and penalties have been expensed in our consolidated statements of operations during 2012 or accrued as a liability in our consolidated balance sheets at December 31, 2012. We do not anticipate any significant changes to total unrecognized tax benefits as a result of settlement of audits or the expiration of statute of limitations within the next twelve months. We file U.S. federal income tax returns, as well as tax returns with the State of California and the State of Rhode Island. Due to the carry forward of unutilized net operating losses and research and development credits, our federal tax returns from 1998 forward remain subject to examination by the Internal Revenue Service, and our State of California tax returns from 2001 forward and our State of Rhode Island tax returns from 2008 forward remain subject to examination by the respective state tax authorities. We file income tax returns in various foreign jurisdictions. Tax years from 2007 forward remain subject to examination by the appropriate foreign governmental agencies. The Credit for Increasing Research Activities expired for amounts incurred after December 31, 2011. However, The American Taxpayer Relief Act of 2012, which was signed into law on January 2, 2013, extended the credit for amounts incurred before January 1, 2014. The Act also retroactively restored the credit for amounts incurred in 2012. However, since Act was not signed until January 2, 2013 the amount of credit generated in 2012 is not reflected in the deferred tax amounts as of December 31, 2012. The amount of this credit that was generated in 2012 was approximately $400,000. The deferred tax asset for this credit will be increased by this amount in 2013. On November 6, 2012, California voters approved Proposition 39 which mandates single sales factor apportionment for most multi-state taxpayers. As a result, we have decreased our state deferred income taxes by approximately $5 million. The valuation allowance has been decreased by a corresponding amount.

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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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