Annual report pursuant to Section 13 and 15(d)

Income Taxes

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Income Taxes
12 Months Ended
Dec. 31, 2011
Income Taxes  
Income Taxes
15. 
Income Taxes
 
No provision for federal and state income taxes was required for the years ended December 31, 2011 and 2010, due to the Company's operating losses and increased deferred tax asset valuation allowance.  At December 31, 2011 and 2010, the Company has unused net operating loss carry-forwards of approximately $55,394,000 and $46,283,000 which expire at various dates between 2021 and 2031.  Some of this amount may be subject to annual limitations under certain provisions of the Internal Revenue Code related to "changes in ownership".  During the year ended December 31, 2011, the Company amended prior years' tax returns to correct prior errors, which adjusted the net operating loss carryforward.
 
As of December 31, 2011 and 2010, the deferred tax assets related to the aforementioned carry-forwards have been fully offset by valuation allowances, since significant utilization of such amounts is not presently expected in the foreseeable future.
 
Deferred tax assets and valuation allowances consist of:
 
   
2011
   
2010
 
Net operating loss carry-forwards
  $ 21,603,700     $ 18,050,380  
Stock option compensation
    1,753,400       1,568,000  
Book tax differences on assets and liabilities
    348,600       392,600  
Valuation allowance
    (23,705,700 )     (20,010,980 )
                 
Net deferred tax assets
  $ -     $ -  
 
The Company files income tax returns in the U.S. federal and Maryland state jurisdictions. The 2008 through 2011 tax years are open and potentially subject to examination by the federal and Maryland state taxing authorities.
 
The Company was awarded a refundable tax credit of $822,137 in 2010 from the federal government through the Qualified Therapeutic Discovery Project Program enacted from the Patient Protection and Affordable Care Act of 2010.  The Company was eligible for this tax credit based upon its expenses for qualified projects in 2009 and 2010.  Qualified projects include defined projects which treat preventable diseases and conditions by conducting pre-clinical activities, clinical trials, or carrying out research protocols.  The tax credit is reflected as a reduction to research and development expenses.  The full amount of the credit has been received by December 31, 2011. As of December 31, 2010, $676,624 of the credit had been received and the remaining $145,513 was included as a receivable.