Income Taxes

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

(16) Income Taxes

The components of the income tax provision (benefit) are summarized as follows (in thousands):

	Year Ended December 31,
	2014		2013
Current:
Federal	$	-	$	(30)
State and foreign		56		2
Total current		56		(28)
Deferred: Federal and State		-		-
Income tax provision (benefit)	$	56	$	(28)

The following table represents reconciliation between the reported income taxes and the income taxes that would be computed by applying the federal statutory rate ( 35 %) to income from continuing operations before taxes (in thousands):

	Year Ended December 31,
	2014		2013
Income tax expense computed at federal statutory rate	$	10,097	$	6,313
Nondeductible expenses		-		183
Add (deduct) effect of:
Tax on earnings of foreign subsidiary		56		-
State income taxes, net of federal tax		-		2
Increase (decrease) in beginning of period valuation allowance		(10,097)		(6,526)
Income tax provision (benefit)	$	56	$	(28)

No federal income tax expense was incurred in relation to normal operating results due to the utilization of deferred tax assets to offset taxes that would otherwise accrue to operating income.

As of December 31, 2014 and 2013, the tax effects of temporary differences that give rise to the deferred tax assets and deferred tax liabilities are as follows (in thousands):

	December 31,		December 31,
	2014		2013
Deferred tax assets:
Federal and state net operating loss carryforward	$	45,221	$	56,198
Research and development credits carryforward		19,911		25,379
Basis difference in fixed Assets		2,915		3,526
Capital loss carryforwards		3,647		3,663
Share-based compensation		2,518		2,518
Federal alternative minimum tax credits		1,530		1,530
Writedown of carrying value of investment		-		-
Accrued compensation		43		84
Other		1,109		1,537
Total gross deferred tax assets		76,894		94,435
Less valuation allowance		(76,894)		94,935
Net deferred tax assets	$	-	$	-

A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. At December 31, 2014, the Company had federal net operating loss carryforwards of approximately $117.4 million that expire in the years 2020 through 2031 and New Jersey state net operating loss carryforwards of approximately $45.7 million that expire in the years 2029 through 2031. Moreover, the Company has federal and New Jersey capital loss carryforwards of approximately $8.9 million that expire in 2016 through 2019. The Company also has federal research and development tax credit carryforwards of approximately $16.6 million for tax reporting purposes that expire in the years 2017 through 2031. In addition, the Company has $3.3 million of state research and development tax credit carryforwards that expire in the years 2015 through 2026. The Company’s ability to use the net operating loss and research and development tax credit carryforwards is subject to certain limitations due to ownership changes, as defined by rules pursuant to Section 382 of the Internal Revenue Code of 1986, as amended.

As of December 31, 2014, management believes that it is more likely than not that the net deferred tax assets will not be realized, based on assumptions regarding future operations, consideration of tax strategies and the reversal of deferred tax liabilities. Inasmuch as the Company has had net income only in each of the last two years and future earnings are not reasonably assured, management of the Company believes that a valuation allowance remains appropriate at this time. The valuation allowance will be reviewed and evaluated on a quarterly and annual basis. As of December 31, 2014 and 2013, the Company had deferred tax assets of $ 76.9 million and $ 94.4 million, respectively. The Company has maintained a valuation allowance of $ 76.9 million and $ 94.4 million at December 31, 2014 and 2013, respectively.

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and Canada. In January 2015, the Company concluded an examination by the U.S. Internal Revenue Service, in connection with the tax years 2010 through 2011. The result of such examination was the reduction of federal net operating loss carryforwards aggregating approximately $1.8 million. State income tax returns for the states of New Jersey and Indiana are generally subject to examination for a period of 3-4 years after filing of the respective returns. Income tax returns for Canada are generally subject to examination for a period of 3-5 years after filing of the respective return. For federal purposes, tax years 2011 through 2013 are open and for New Jersey purposes, tax years 2011 through 2013 are currently open for examination. No tax return in any jurisdiction is currently under audit.