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Income Taxes | 12 Months Ended
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Dec. 31, 2014
Income Taxes [Abstract] |
Income Taxes |
12. | Income Taxes
Due to our net losses for the years ended December 31, 2014, 2013 and 2012, and since we have recorded a full valuation allowance against deferred tax assets, there was no provision or benefit for income taxes recorded. There were no components of current or deferred federal or state income tax provisions for the years ended December 31, 2014, 2013 and 2012. A reconciliation of the total income tax provision tax rate to the statutory federal income tax rate of 34% for the years ended December 31, 2014, 2013 and 2012 is as follows:
|  | 2014 |  |  | 2013 |  |  | 2012 |
Income tax expense (benefit) at federal statutory rate |  |  | (34.00) | % |  |  | (34.00) | % |  |  | (34.00) | %
Income tax expense (benefit) at state statutory rate |  |  | (3.52) | % |  |  | (3.54) | % |  |  | (2.79) | %
Gain on previously held equity interest in joint venture |  |  | 0.00 | % |  |  | (7.02) | % |  |  | 0.00 | %
Mark to market permanent adjustment |  |  | (0.37) | % |  |  | (2.15) | % |  |  | (0.24) | %
Change in valuation allowance |  |  | 27.12 | % |  |  | 80.13 | % |  |  | 35.86 | %
Change in state rate |  |  | 0.02 | % |  |  | (1.01) | % |  |  | (8.36) | %
Permanent interest adjustments |  |  | 4.17 | % |  |  | 0.00 | % |  |  | 0.00 | %
Debt refinance permanent adjustment |  |  | 3.92 | % |  |  | 0.00 | % |  |  | 0.00 | %
Acquired NOL’s/Intangibles from joint venture |  |  | 0.00 | % |  |  | (33.40) | % |  |  | 0.00 | %
Foreign rate differential |  |  | 0.00 | % |  |  | 2.48 | % |  |  | (0.04) | %
Other, net |  |  | 2.66 | % |  |  | (1.49) | % |  |  | 9.57 | %
|  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | %
The tax effects of temporary differences that give rise to significant portions of our deferred tax assets and deferred tax liabilities as of December 31, 2014 and 2013 are as follows:
| 2014 |  |  | 2013 |
Deferred tax assets: |  |  |  |  |  |
Allowances and reserves |  | $ | 825,000 |  |  | $ | 639,000 |
Accrued expenses |  |  | 502,000 |  |  |  | 718,000 |
Deferred revenue and gain-on-sale |  |  | 32,000 |  |  |  | 79,000 |
Stock based compensation |  |  | 7,786,000 |  |  |  | 6,962,000 |
Net operating loss carryforwards |  |  | 117,258,000 |  |  |  | 107,846,000 |
Income tax credit carryforwards |  |  | 6,993,000 |  |  |  | 6,710,000 |
Property and equipment, principally due to differences in depreciation |  |  | 926,000 |  |  |  | 804,000 |
Other,net |  |  | 77,000 |  |  |  | 296,000 |
|  |  | 134,399,000 |  |  |  | 124,054,000 |
Valuation allowance |  |  | (132,583,000 | ) |  |  | (122,450,000 | )
Total deferred tax assets, net of allowance |  |  | 1,816,000 |  |  |  | 1,604,000 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Intangibles |  |  | (1,816,000 | ) |  |  | (1,604,000 | )
Total deferred tax liability |  |  | (1,816,000 | ) |  |  | (1,604,000 | )
Net deferred tax assets (liability) |  | $ | — |  |  | $ | — |
We have established a valuation allowance against our net deferred tax assets due to the uncertainty surrounding the realization of such assets. We periodically evaluate the recoverability of the deferred tax assets. At such time as it is determined that it is more likely than not that deferred assets are realizable, the valuation allowance will be reduced. We have recorded a full valuation allowance of $132,583,000 as of December 31, 2014 as we do not believe it is more likely than not our net deferred tax assets will be realized. We increased our valuation allowance by approximately $10,133,000 during the year ended December 31, 2014. The valuation allowance includes approximately $579,000 related to stock option deductions, the benefit of which, if realized, will eventually be credited to equity and not to income. At December 31, 2014, we had federal, and California tax loss carry forwards of approximately $314,349,000, and $187,182,000, respectively, prior to reduction for windfall tax benefits. The federal and state net operating loss carry forwards begin to expire in 2019 and 2015 respectively, if unused. At December 31, 2014, we had federal and state tax credit carry forwards of approximately $4,279,000 and $4,113,000, respectively, after reduction for uncertain tax positions. The Company has not performed a formal reseach and development credit study with respect to these credits. The federal credits will begin to expire in 2018, if unused, and the state credits carry forward indefinitely. Pursuant to the Internal Revenue Code (“IRC”) of 1986, as amended, specifically IRC §382 and IRC §383, our ability to use net operating loss and R&D tax credit carry forwards (“tax attribute carry forwards”) to offset future taxable income is limited if we experience a cumulative change in ownership of more than 50% within a three-year testing period. We have not completed an ownership change analysis pursuant to IRC Section 382 for taxable years ended after December 31, 2007. If ownership changes within the meaning of IRC Section 382 are identified as having occurred subsequent to 2007, the amount of remaining tax attribute carry forwards available to offset future taxable income and income tax expense in future years may be significantly restricted or eliminated. Further, our deferred tax assets associated with such tax attributes could be significantly reduced upon realization of an ownership change within the meaning of IRC §382. We recognize tax benefits associated with the exercise of stock options directly to stockholders’ equity only when realized. Accordingly, deferred tax assets are not recognized for net operating loss carry forwards resulting from windfall tax benefits. At December 31, 2014, deferred tax assets do not include $1,262,000 of excess tax benefits from stock-based compensation. We changed our accounting method of accounting for uncertain tax positions on January 1, 2007. We had no unrecognized tax benefits as of the date of adoption. Following is a tabular reconciliation of the unrecognized tax benefits activity during the years ended December 31, 2014, 2013 and 2012:
|  | 2014 |  |  | 2013 |  |  | 2012 |
Unrecognized Tax Benefits – Beginning |  | $ | 1,723,000 |  |  | $ | 1,394,000 |  |  | $ | 1,304,000 |
Gross increases – tax positions in prior period |  |  | — |  |  |  | 69,000 |  |  |  | — |
Gross decreases – tax positions in prior period |  |  | — |  |  |  | — |  |  |  | — |
Gross increase – current-period tax positions |  |  | 129,000 |  |  |  | 260,000 |  |  |  | 90,000 |
Settlements |  |  | — |  |  |  | — |  |  |  | — |
Lapse of statute of limitations |  |  | — |  |  |  | — |  |  |  | — |
Unrecognized Tax Benefits – Ending |  | $ | 1,852,000 |  |  | $ | 1,723,000 |  |  | $ | 1,394,000 |
The unrecognized tax benefit amounts are reflected in the determination of the Company’s deferred tax assets. If recognized, none of these amounts would affect the Company’s effective tax rate, since it would be offset by an equal reduction in the deferred tax asset valuation allowance. The Company does not foresee material changes to its liability for uncertain tax benefits within the next twelve months. The Company did not recognize interest related to unrecognized tax benefits in interest expense and penalties in operating expenses as of December 31, 2014. The Company’s material tax jurisdictions are United States and California. To our knowledge, the Company is currently not under examination by the Internal Revenue Service or any other taxing authority. The Company’s tax years for 1999 and forward can be subject to examination by the United States and California tax authorities due to the carry forward of net operating losses and research development credits.

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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 Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 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=26873400&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 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: 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 6: 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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