9. Income Taxes

The components of our income tax expense (benefit) in 2013 and 2012 are as follows:


	2013		2012
	(in thousands)
Current Tax Expense (Benefit)
Federal	$	28	$	—
State		—		(2,974	)

	$	28	$	(2,974	)

Deferred Tax Expense (Benefit)
Federal	$	—	$	—
State		—		—

Total Tax Expense (Benefit)	$	28	$	(2,974	)

In 2012, we recognized an approximate $3.0 million income tax benefit as a result of proceeds from the sale of $36 million of New Jersey net operating losses through the Technology Business Certificate Transfer Program, sponsored by the New Jersey Economic Development Authority.

As of December 31, 2013, we have available unused federal net operating loss (NOL) carry-forwards of $348 million which will expire in various years from 2019 to 2032. We have New York State NOL carry-forwards of $289 million, which will expire in various years from 2019 through 2032. We have New Jersey NOL carry-forwards of $24.6 million, which will expire in various years from 2014 through 2019. As of December 31, 2013, we have research and development tax credit carry-forwards of $10.3 million of which $0.7 million will expire in 2013 with the remainder expiring in various years from 2019 through 2032.

The effective rate differs from the statutory rate of 34% for 2013, 2012 and 2011 primarily due to the following:


	2013			2012			2011
Statutory Rate on pre-tax book loss		(34.00	)%		(34.00	)%		(34.00	)%
Stock option issuance		0.08	%		1.22	%		(0.36	)%
Disallowed interest		3.57	%		12.05	%		(3.45	)%
Derivatives		13.71	%		(56.26	)%		64.49	%
Expired net operating losses and credits		48.54	%		61.64	%		(13.35	)%
Utilization of net operating loss		(2.86	)%		—			—
State Tax benefit of Sale of NJ NOL		0.00	%		(60.67	)%		0.00	%
True-ups and adjustments		(0.06	)%		5.29	%		0.81	%
Change in federal valuation allowance		(28.85	)%		10.06	%		(14.14	)%

		0.13	%		(60.67	)%		0.00	%

The tax effect of temporary differences, net operating loss carry-forwards, and research and experimental tax credit carry-forwards as of December 31, 2013 and 2012 is as follows:


	December 31,
	2013			2012
	(in thousands)
Deferred tax assets and valuation allowance:
Current deferred tax asset:
Accrued liabilities	$	16		$	59
Valuation allowance		(16	)		(59	)

Net current deferred tax asset	$	—		$	—

Non-current deferred tax assets:
Fixed and intangible assets	$	54		$	392
Net operation loss carry-forwards		119,797			120,497
AMT credit carry-forwards		74			74
Capital loss and charitable carry-forwards		3			2,749
Research and experimental tax credits		10,307			10,986
Stock compensation		423			360
Deferred revenue		16,621			12,627
Interest		1,101			6,686
Valuation allowance		(148,380	)		(154,371	)

Net non-current deferred tax asset	$	0		$	0

Future ownership changes may limit the future utilization of these net operating loss and research and development tax credit carry-forwards as defined by the Internal Revenue Code. We performed an analysis and determined that the Net operating losses and research and development expenses are not limited under Section 382. The net deferred tax asset has been fully offset by a valuation allowance due to our history of taxable losses and uncertainty regarding our ability to generate sufficient taxable income in the future to utilize these deferred tax assets.

We apply the provisions of ASC 740-10-25. ASC 740-10-25 which provides recognition criteria and a related measurement model for uncertain tax positions taken or expected to be taken in income tax returns. ASC 740-10-25 requires that a position taken or expected to be taken in a tax return be recognized in the financial statements when it is more likely than not that the position would be sustained upon examination by tax authorities. Tax positions that meet the more likely than not threshold are then measured using a probability weighted approach recognizing the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company had no tax positions relating to open income tax returns that were considered to be uncertain. Accordingly, we have not recorded a liability for unrecognized tax benefits upon adoption of ASC 740-10-25. There continues to be no liability related to unrecognized tax benefits at December 31, 2013.

The Company’s 2010, 2011 and 2012 Federal, New York and New Jersey tax returns remain subject to examination by the respective taxing authorities. In addition, net operating losses and research tax credits arising from prior years are also subject to examination at the time that they are utilized in future years. Neither the Company’s federal or state tax returns are currently under examination.