Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Income Taxes

Note 6: Income Taxes

The significant components of deferred tax assets as of December 31, 2012 and 2011 are shown below. A valuation allowance has been established to offset the deferred tax assets, as realization of such assets is uncertain.

	Year Ended			Year Ended
	December 31,			December 31,
	2012			2011
Deferred tax assets:
Net operating loss carryforward	$	13,123,326		$	12,558,554
Research and development credits		549,326			567,439
Stock compensation		864,113			758,751
Derivatives/Warrants		783,315			-
Inventory reserve		12,470			12,470
Fixed assets		51,960			25,345
Accrued liabilities and other		63,792			46,200
Total deferred tax assets		15,448,302			13,968,759
Valuation allowance		(14,779,566	)		(12,999,694	)
Net deferred tax assets		668,736			969,065
Deferred tax liabilities
Acquired intangibles		-			-
Patents		(668,736	)		(969,065	)
Total deferred tax liabilities		(668,736	)		(969,065	)
Net deferred taxes	$	-		$	-

 The following reconciles the tax provision with the expected provision obtained by applying statutory rates to pretax (loss):

	Year Ended December 31, 2012						Year Ended December 31, 2011
	Amount			% of Pretax Income			Amount			% of Pretax Income
Income tax at federal statutory rate	$	(3,091,483	)		34.0	%	$	(1,619,000	)		34.0	%
State tax provision, net of federal tax benefit		(530,499	)		5.8	%		(278,000	)		5.8
Nondeductible differences		1,122,878			-4.5	%		(112,000	)		2.3
Nonqualified stock option forfeitures		44,490			-0.5	%		381,000			(8.0	)
Tax credits		11,955			-0.1	%		(44,000	)		0.9
Change in valuation allowance		1,779,872			-27.7	%		1,035,000			(21.7	)
Expiration of net operating losses		650,958			-7.0	%		633,000			(13.3	)
Other		11,829			-0.1	%		4,000			-
Provision for income taxes	$	-			0.0	%	$	-			0.0	%

At December 31, 2012, the Company had federal net operating loss carry-forwards of approximately $32,757,000 that expire from 2013 through 2032. During 2012, the Company had federal net operating losses of approximately $651,000 expire. In addition, the Company had research and development tax credits of approximately $578,000 that expire from 2013 through 2032. As a result of previous stock transactions, the Company's ability to utilize its net operating loss carryforwards to offset future taxable income and utilize future research and development tax credits is subject to certain limitations under Section 382 and Section 383 of the Internal Revenue Code due to changes in equity ownership of the Company.

The Company has a history of operating losses and, as of yet, has not had any taxable income. The Company has calculated a deferred tax asset for its tax credits but offsets the tax asset with a valuation allowance. As a result, the Company has not realized or recorded any tax benefit related to its tax credits.