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Note 10 - Income Taxes | 12 Months Ended
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Sep. 30, 2014
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | 10. INCOME TAXES Income taxes consisted of the following:
|  | Years ended September 30, |
|  | 2014 |  |  | 2013 |
Current tax expense |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | - |
State |  |  | 16,000 |  |  |  | 2,000 |
|  |  | 16,000 |  |  |  | 2,000 |
Deferred (benefit) expense |  |  |  |  |  |  |  |
Federal |  |  | (2,309,000 | ) |  |  | (779,000 | )
State |  |  | (408,000 | ) |  |  | (138,000 | )
|  |  | (2,717,000 | ) |  |  | (917,000 | )
Change in valuation allowance |  |  | 2,717,000 |  |  |  | 917,000 |
Provision for income taxes |  | $ | 16,000 |  |  | $ | 2,000 |
A reconciliation of income taxes at the federal statutory rate of 34% to the effective tax rate was as follows:
|  | Years ended September 30, |
|  | 2014 |  |  | 2013 |
Income taxes computed at the federal statutory rate |  | $ | 1,137,000 |  |  | $ | 430,000 |
Change in valuation allowance |  |  | (2,717,000 | ) |  |  | (917,000 | )
Expired net operating loss carryforwards |  |  | 1,285,000 |  |  |  | - |
Nondeductible compensation, interest expense and other |  |  | 8,000 |  |  |  | 8,000 |
State income taxes, net of federal tax benefit |  |  | 102,000 |  |  |  | 70,000 |
Change in R&D credit carryover |  |  | 79,000 |  |  |  | (56,000 | )
Stock options and other prior year true-ups |  |  | 105,000 |  |  |  | 462,000 |
State business credit utilization |  |  | - |  |  |  | (4,000 | )
Prior year tax adjustments |  |  | - |  |  |  | 9,000 |
Other |  |  | 17,000 |  |  |  | - |
|  | $ | 16,000 |  |  | $ | 2,000 |
The types of temporary differences between the tax basis of assets and liabilities and their approximate tax effects that give rise to a significant portion of the net deferred tax asset at September 30, 2014 and 2013 were as follows:
|  | At September 30, |
Deferred tax assets: |  | 2014 |  |  | 2013 |
Net operating loss carryforwards |  | $ | 16,920,000 |  |  | $ | 19,576,000 |
Research and development credit |  |  | 2,182,000 |  |  |  | 2,257,000 |
Share-based compensation |  |  | 414,000 |  |  |  | 526,000 |
Equipment |  |  | (6,000 | ) |  |  | (18,000 | )
Patents |  |  | 174,000 |  |  |  | 230,000 |
Accruals and other |  |  | 630,000 |  |  |  | 463,000 |
State tax deduction |  |  | (3,000 | ) |  |  | (2,000 | )
Federal AMT Credit |  |  | 49,000 |  |  |  | 49,000 |
Allowances |  |  | 131,000 |  |  |  | 127,000 |
Gross deferred tax asset |  |  | 20,491,000 |  |  |  | 23,208,000 |
Less valuation allowance |  |  | (20,491,000 | ) |  |  | (23,208,000 | )
|  | $ | - |  |  | $ | - |
At September 30, 2014, the Company had net deferred tax assets of approximately $20,491,000. The deferred tax assets are primarily composed of federal and state NOL carryforwards and federal and state research and development (“R&D”) credit carryforwards. At September 30, 2014, the Company, for federal income tax purposes, had NOL carryforwards of approximately $47,830,000, which expire through 2028. The Company recognizes windfall tax benefits associated with the exercise of stock options directly to stockholders’ equity only when realized. Accordingly, deferred tax assets are not recognized for NOL carryforwards resulting from windfall tax benefits occurring from October 1, 2008 onward. At September 30, 2014, deferred tax assets do not include excess tax benefits from stock-based compensation of approximately $970,000. Due to uncertainties surrounding the Company’s ability to generate future taxable income to realize these assets, a full valuation allowance has been established to offset net deferred tax assets as realization of such assets has not met the threshold under ASC 740-10, “Income Taxes.” The future utilization of the Company’s NOL carryforwards to offset future taxable income may be subject to a substantial annual limitation as a result of ownership changes that could occur in the future. The Company has an estimated $1,673,000 and $771,000 of federal and state R&D tax credits, respectively, at September 30, 2014, a portion of which began to expire in the 2012 tax year. Further, due to a change in California tax law in fiscal year 2008, NOL carryforwards were not able to be used in tax years 2008, 2009, 2010 and 2011, and R&D credit utilization was limited to fifty percent of the Company’s net tax in tax years 2008 and 2009. The Company is evaluating the deferred asset balance to determine if a valuation allowance will be required in future periods. The Company recorded a tax provision during the year ended September 30, 2014 for Alternative Minimum Tax for California. The Company did not record a tax provision during the year ended September 30, 2014 for Federal taxes as the Company’s annual effective tax rate is zero. During the quarter ended June 30, 2012, the Company amended its federal tax return for the year ended September 30, 2008 to make an election to carry back its fiscal year ended September 30, 2008 applicable NOL for a period of 3 years, and carry forward the loss for up to 20 years, as per Section 172(b)(1)(H) of the Internal Revenue Code of 1986 (“Section 172”), as amended per the American Recovery and Reinvestment Tax Act of 2009 for eligible small businesses. The Company also amended its federal tax returns for the years ended September 30, 2009 and 2010 and filed its federal tax return for the year ended September 30, 2011, during the fiscal year ended September 30, 2012, resulting in a federal income tax benefit of $152,333. Of this benefit, $112,009 was received from the Internal Revenue Service in the year ended September 30, 2012, and the remaining $40,324 was received in the year ended September 30, 2013. As of September 30, 2014, the Company had no unrecognized tax benefits and there were no material changes during the year. Due to the valuation allowance, future changes in the Company’s unrecognized tax benefits will not impact its effective tax rate. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company is subject to taxation in the U.S. and various state jurisdictions. All of the Company’s historical tax years are subject to examination by the Internal Revenue Service and various state jurisdictions due to the generation of NOL and credit carryforwards.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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