WOW! $123,000,000 in federal tax loss carryforwards and a many millions more in other tax credits!
PROVISION FOR INCOME TAXES
We account for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Income tax expense consists of foreign income tax withholding on foreign source royalties paid us. As of March 31, 2004, we had net operating loss carryforwards for U.S. federal income tax purposes of approximately $123,000,000 and for U.K. income tax purposes of approximately $3,860,000 and for state income tax purposes of approximately $31,770,000. We also had research and development credit carryforwards for federal income tax purposes of approximately $3,426,000 and for state income tax purposes of approximately $1,506,000. Utilization of our U.S. net operating loss and research credit carryforwards will be subject to annual limitations based on the "change of ownership" provisions of the Tax Reform Act of 1986. These limitations may result in the expiration of net operating loss and research credit carryforwards before utilization.
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