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6. INCOME TAXES | 12 Months Ended
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Sep. 30, 2012
Accounting Policies [Abstract] |
6. INCOME TAXES |
At September 30, 2012, the Company had a federal net operating loss carryforward of approximately $144,518,000 expiring from 2012 through 2032. In addition, the Company has a general business credit as a result of the credit for increasing research activities of approximately $2,259,000 at September 30, 2012. These tax credits begin expiring after twenty years from the year in which the credit was generated. Deferred taxes at September 30, 2012 and 2011 are comprised of the following:
|  |  | 2012 |  |  |  | 2011 |
Net operating loss carryforwards |  | $ | 56,664,358 |  |  | $ | 51,381,945 |
R&D credit |  |  | 2,258,838 |  |  |  | 2,340,614 |
Stock-based compensation |  |  | 2,455,231 |  |  |  | 1,597,790 |
Vacation and other |  |  | 193,163 |  |  |  | 190,522 |
Deferred rent |  |  | 1,278,863 |  |  |  | 991,091 |
Litigation liability |  |  | — |  |  |  | 1,842,297 |
Total deferred tax assets |  |  | 62,850,453 |  |  |  | 58,344,259 |
Derivative gain |  |  | (4,681,855 | ) |  |  | (3,639,050 | )
Depreciation |  |  | (51,980 | ) |  |  | (76,841 | )
Total deferred tax liabilities |  |  | (4,733,835 | ) |  |  | (3,715,891 | )
Valuation allowance |  |  | (58,116,618 | ) |  |  | (54,628,368 | )
Net deferred tax asset |  | $ | — |  |  | $ | — |
In assessing the realization of the deferred tax assets, management considered whether it was more likely than not that some portion or all of the deferred tax asset will be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income. Management has considered the history of the Company’s operating losses and believes that the realization of the benefit of the deferred tax assets cannot be reasonably assured. In addition, under the Internal Revenue Code Section 382, the Company’s ability to utilize these net operating loss carryforwards may be limited or eliminated in the event of a change in ownership in the future. Internal Revenue Code Section 382 generally defines a change in ownership as the situation where there has been a more than 50 percent change in ownership within the last three years. A change of more than 50 percent in the Company’s ownership may have occurred previously. Utilization of the Company’s net operating loss carry forwards may be subject to an annual limitation and as a result, a portion or all of the net operating loss carry forwards of the Company may expire before utilization. The Company’s effective tax rate is different from the applicable federal statutory tax rate. The reconciliation of these rates for the three years ended September 30, 2012 is as follows:
|  |  | 2012 |  |  |  | 2011 |  |  |  | 2010 |
Federal Rate |  |  | 34.00 | % |  |  | 34.00 | % |  |  | 34.00 | %
State tax rate, net of federal benefit |  |  | 5.21 |  |  |  | 3.22 |  |  |  | 5.91 |
State tax rate change |  |  | 18.07 |  |  |  | 12.06 |  |  |  | 0.00 |
Other adjustments |  |  | (0.53 | ) |  |  | (0.04 | ) |  |  | 0.00 |
Expired tax attributes |  |  | (33.54 | ) |  |  | 0.00 |  |  |  | 0.00 |
Nondeductible expenses |  |  | (0.68 | ) |  |  | (0.48 | ) |  |  | 0.02 |
Expiration of NOL |  |  | (33.54 | ) |  |  | 0.00 |  |  |  | 0.00 |
Valuation allowance |  |  | (22.53 | ) |  |  | (24.64 | ) |  |  | (39.93 | )
Effective tax rate |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | %
The Company applies the provisions of Codification 740-10, “Accounting for Uncertainty in Income Taxes,” which requires financial statement benefits be recognized for positions taken for tax return purposes, when it is more likely than not that the position will be sustained. The tax return years 2008 through 2011 remain open to examination by the major domestic taxing jurisdictions to which the Company is subject. All of the Company’s federal NOL’s remain open to adjustments by the IRS and the statute of limitation would run for 3 years after the year the deduction is taken on a tax return.

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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 Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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=6881521&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 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: 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 7: 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 8: 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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