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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes In accordance with the guidance pursuant to accounting for income taxes, a deferred tax asset or liability is determined based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse. The Company provides a valuation allowance against net deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax asset will be realized. The components of the provision for income taxes are presented in the following table:
| Year Ended December 31,
| 2012 |  | 2011 |  | 2010
Current: |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | (4,000 | )
State | 7,000 |  |  | 1,000 |  |  | 22,000 |
| $ | 7,000 |  |  | $ | 1,000 |  |  | $ | 18,000 |
Deferred: |  |  |  |  |
Federal | $ | 20,000 |  |  | $ | 19,000 |  |  | $ | 36,000 |
State | 3,000 |  |  | 7,000 |  |  | 17,000 |
| $ | 23,000 |  |  | $ | 26,000 |  |  | $ | 53,000 |
| $ | 30,000 |  |  | $ | 27,000 |  |  | $ | 71,000 |
The reconciliation of income taxes attributable to operations computed at the statutory tax rates to income tax expense (recovery), using a 35% statutory tax rate, is:
| Year Ended December 31,
| 2012 |  | 2011 |  | 2010
Income (benefit) taxes at statutory rates | $ | (6,894,000 | ) |  | $ | (5,352,000 | ) |  | $ | (6,154,000 | )
State income tax, net of federal benefit | (1,234,000 | ) |  | (1,378,000 | ) |  | (1,189,000 | )
Change in valuation allowance | 7,415,000 |  |  | 7,679,000 |  |  | (13,877,000 | )
IRC Section 382/383 limitation | 18,000 |  |  | 918,000 |  |  | 20,758,000 |
Fair value warrant | (811,000 | ) |  | (3,090,000 | ) |  | (841,000 | )
Stock compensation | 603,000 |  |  | (147,000 | ) |  | 343,000 |
Change in state tax rate | 438,000 |  |  | 125,000 |  |  | 998,000 |
Other | 495,000 |  |  | 1,272,000 |  |  | 33,000 |
| $ | 30,000 |  |  | $ | 27,000 |  |  | $ | 71,000 |
The income tax expense (recovery) has been recorded as a reduction to general and administrative expenses, as its effect is immaterial. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2012 and 2011 are shown below:
| As of December 31,
| 2012 |  | 2011
Deferred tax assets: |  |  |
Capitalized research expense | $ | 3,191,000 |  |  | $ | 4,089,000 |
Net operating loss carry forwards | 43,233,000 |  |  | 34,899,000 |
Research and development and other tax credits | 1,134,000 |  |  | 1,073,000 |
Other | 6,569,000 |  |  | 6,557,000 |
| 54,127,000 |  |  | 46,618,000 |
Valuation allowance | (52,185,000 | ) |  | (44,784,000 | )
Total deferred tax assets | 1,942,000 |  |  | 1,834,000 |
Deferred tax liabilities: |  |  |
Acquired intangibles | (1,532,000 | ) |  | (2,094,000 | )
Investment in affiliated entity | (511,000 | ) |  | 181,000 |
Net deferred tax liabilities | $ | (101,000 | ) |  | $ | (79,000 | )
We have established a valuation allowance for all deferred tax assets including those for net operating loss (“NOL”) and tax credit carryforwards. Such a valuation allowance is recorded when it is more likely than not that the deferred tax assets will not be realized. The Company maintains a deferred tax liability related to goodwill that is not netted against the deferred tax assets, as reversal of the taxable temporary difference cannot serve as a source of income for realization of the deferred tax assets, because the deferred tax liability will not reverse until the asset is sold or written down due to impairment. As of December 31, 2012, the Company had federal, California and Pennsylvania tax net operating loss carry forwards of approximately $108.0 million, $37.4 million and $61.0 million, respectively, net of the net operating losses that will expire due to IRC Section 382 limitations. The federal net operating loss carry forwards will begin to expire in 2018 unless previously utilized. The California net operating loss carry forwards will begin to expire in 2013 and the Pennsylvania net operating loss carry forwards will begin to expire in 2021. In addition, we had federal and state research tax credit carryforwards of approximately $863,000 and $1.9 million, respectively. The federal tax credit carryforwards will begin to expire in 2018. The California research tax credits do not expire. Utilization of the NOL and tax credit carryforwards will be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986, and similar state provisions due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes will limit the amount of NOL and tax credit carryforwards and other deferred tax assets that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions increasing ownership of certain stock holders or public groups in the stock of the corporation by more than 50 percentage points over a three-year period. The Company is in the process of updating the Section 382/383 study for the Company and VGX, both of which experienced ownership changes under Section 382 as a result of the Merger on June 1, 2009. Based upon the preliminary results of the study, it is estimated that approximately $30.5 million of tax benefits related to NOL and tax credit carryforwards will expire unused. Accordingly, the related NOL and R&D credit carryforwards have been removed from deferred tax assets accompanied by a corresponding reduction of the valuation allowance. Upon completion of the study, deferred tax assets relating to NOL and R&D credit carryforwards for the Company and VGX may need to be adjusted with a corresponding adjustment to the valuation allowance. Due to the existence of the valuation allowance, limitations created by current and future ownership changes, if any, related to our operations in the United States will not impact our effective tax rate. Any additional ownership changes, may further limit the ability to use the net operating losses and credits carryovers. The following table summarizes the activity related to our unrecognized tax benefits:
| Year ended December 31,
| 2012 |  | 2011 |  | 2010
Balance at beginning of the year | $ | 1,829,000 |  |  | $ | 629,000 |  |  | $ | 629,000 |
Increases related to current year tax positions | 72,000 |  |  | 158,000 |  |  | — |
Increases related to prior year tax positions | (5,000 | ) |  | 1,042,000 |  |  | — |
Balance at end of the year | $ | 1,896,000 |  |  | $ | 1,829,000 |  |  | $ | 629,000 |
The amount of unrecognized tax benefit that, if recognized and realized would affect the effective tax rate is $1.5 million as of December 31, 2012. The Company has not recorded any interest and penalties on the unrecognized tax positions as the Company has continued to generate net operating losses after accounting for the unrecognized tax benefits. The Company does not anticipate that the total amount of unrecognized tax benefits will significantly increase or decrease within twelve months of the reporting date. The Company and its subsidiaries are subject to United States federal income tax as well as income tax in multiple state and foreign jurisdictions. With few exceptions, the Company is no longer subject to United States federal income tax examinations for years before 2009; state and local income tax examinations before 2008; and foreign income tax examinations before 2009. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses were generated and carried forward, and make adjustments up to the amount of the net operating loss carryforward amount. The Company is not currently under Internal Revenue Service (“IRS”), state or local tax examination. The American Taxpayer Relief Act of 2012 was enacted on January 2, 2013. Included within this legislation was an extension of the research and development credit which had previously expired on December 31, 2011. This legislation retroactively reinstates and extends the credit from the previous expiration date through December 31, 2013. As the legislation was not enacted until after the close of the year ended December 31, 2012, the income tax impact of the retroactive reinstatement and extension will not be recognized until 2013. If the tax impact of the research and development credit was recognized, the Company does not anticipate any federal income tax benefit due to the existence of deferred tax assets offset by a valuation allowance.

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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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