INCOME TAXES

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Note 6 - INCOME TAXES

Deferred tax assets consist of the following (in thousands):	December 31,
		2011			2010
Net operating loss carry-forwards		$	134,991		$	134,937
Credit carry-forwards			3,209			3,626
Reserves and other			84			83
Total deferred tax assets		$	138,284		$	138, 646
Valuation allowance			(138,284	)		(138, 646	)
Net deferred tax asset		$	-		$	-

The Federal net operating loss carryforward for tax purposes and state net operating loss carryforward for tax purposes is approximately $362.8 million and $147.4 million, respectively, at December 31, 2011, which begin to expire in 2012.  The Company's ability to utilize these carryforwards may be severely limited or lost pursuant to Section 382 of the Internal Revenue Code as a result of the change in control of the Company under the Joint Plan confirmed by the Court on June 14, 2007.  Other limitations may apply as well.  The Company has made no determination as to what these limitations may be.

Deferred income taxes reflect the tax consequences on future years of differences between the tax bases of assets and liabilities and their bases for financial reporting purposes. In addition, future tax benefits, such as net operating loss carry-forwards, are recognized to the extent that realization of such benefits is more likely than not. The Company has assessed its ability to realize future tax benefits, and concluded that as a result of the history of losses, it was more likely than not, that such benefits would not be realized. Accordingly, the Company has recorded a full valuation allowance against future tax benefits.

Reconciliation of the statutory Federal income tax rate to its effective tax rate is as follows:

	December 31,
	2011			2010
Income tax benefit at federal statutory rate		35.0	%		35.0	%
State income taxes net of federal benefit		5.8	%		5.8	%
Expiring credits and other		128.7	%		503.7	%
Change in valuation allowance		(169.5)	%		(544.5)	%
Total		0	%		0.0	%

The federal income tax returns of the Company for 2009, 2010 and 2011 are subject to examination by the Internal Revenue Service, generally for the three years after they were filed.