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INCOME TAXES | 12 Months Ended
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Sep. 30, 2012
INCOME TAXES [Abstract] |
INCOME TAXES | 9. INCOME TAXES Significant components of our deferred tax assets and liabilities as of September 30 are as follows:
|  | 2012 |  |  | 2011 |
|  | (Restated) |  |  | (Restated) |
Deferred tax assets - Current: |  |  |  |  |  |  |  |
Inventory |  | $ | 202 |  |  | $ | 236 |
Accrued compensation and vacation |  |  | 255 |  |  |  | 271 |
Accrued expenses and other |  |  | 252 |  |  |  | 118 |
Total current deferred tax assets |  |  | 709 |  |  |  | 625 |
Deferred tax liabilities - Current: |  |  |  |  |  |  |  |
Prepaid expenses |  |  | (74 | ) |  |  | (116 | )
Total net current deferred tax assets |  |  | 635 |  |  |  | 509 |
Deferred tax assets - Noncurrent: |  |  |  |  |  |  |  |
Domestic net operating loss carryforwards |  |  | 2,483 |  |  |  | 1,585 |
Stock compensation expense |  |  | 14 |  |  |  | 29 |
Foreign net operating loss |  |  | 2,334 |  |  |  | 1,326 |
Foreign tax credit carryover |  |  | 119 |  |  |  | 119 |
AMT credit carryover |  |  | 42 |  |  |  | 45 |
Total noncurrent deferred tax assets |  |  | 4,992 |  |  |  | 3,104 |
Deferred tax liabilities - Noncurrent: |  |  |  |  |  |  |  |
Unrealized gain/loss - warrant liability |  |  | (296 | ) |  |  | (685 | )
Basis difference for fixed assets |  |  | (459 | ) |  |  | (562 | )
Basis difference for intangibles |  |  | - |  |  |  | (21 | )
|  |  | (755 | ) |  |  | (1,268 | )
Total net noncurrent deferred tax assets |  |  | 4,237 |  |  |  | 1,836 |
Valuation allowance for net deferred tax assets |  |  | (4,872 | ) |  |  | (2,345 | )
Net deferred tax asset (liability) |  | $ | - |  |  | $ | - |
Significant components of the provision (benefit) for income taxes are as follows as of the year ended September 30:
|  | 2012 |  |  | 2011 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | (3 | ) |  | $ | 37 |
State and local |  |  | 5 |  |  |  | 13 |
Foreign |  |  | - |  |  |  | - |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | - |  |  |  | - |
State and local |  |  | - |  |  |  | - |
Foreign |  |  | - |  |  |  | - |
Income tax expense |  | $ | 2 |  |  | $ | 50 |
The effective income tax rate on continuing operations varied from the statutory federal income tax rate as follows:
|  | 2012 |  |  | 2011 |
Statutory federal income tax rate |  |  | 34.0 | % |  |  | 34.0 | %
Increases (decreases): |  |  |  |  |  |  |  |
State and local income taxes, net of Federal tax benefit, if applicable |  |  | (0.1 | ) |  |  | 0.4 |
Nondeductible expenses |  |  | (0.5 | ) |  |  | 2.9 |
Valuation allowance changes |  |  | (33.5 | ) |  |  | (35.4 | )
Other |  |  | --- |  |  |  | 0.2 |
Effective income tax rate |  |  | (0.1 | )% |  |  | 2.1 | %
In fiscal 2012 and 2011, our foreign operations generated losses before income taxes of $3,636 and $745, respectively. We have foreign net operating loss carryforwards of $8,854 that have an indefinite life under current UK tax law. We have a valuation allowance for the deferred tax asset related to the foreign net operating losses. Realization of deferred tax assets associated with the net operating loss carryforward and credit carryforward is dependent upon generating sufficient taxable income prior to their expiration. The valuation allowance in fiscal 2012 and 2011 was $2,538 and $1,021, respectively for our domestic operations. Payments made in fiscal 2012 and 2011 for income taxes amounted to $12 and $8, respectively. At September 30, 2012, we had domestic net operating loss carryforwards of approximately $4,935 for federal and $9,469 for state, which expire from September 30, 2014 through 2029. Also, we have a foreign tax credit carryforward of approximately $119, which expires September 30, 2016. Further, we have an alternative minimum tax credit carryforward of approximately $42 available to offset future federal income taxes. This credit has an unlimited carryforward period. We may recognize the tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon regulatory examination based on the technical merits of the position. The amount of the benefit for which an exposure exists is measured as the largest amount of benefit determined on a cumulative probability basis that we believe is more likely than not to be realized upon ultimate settlement of the position. At September 30, 2012, a $16 liability remained for other uncertain income tax positions. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Change in unrecognized tax benefits:
|  | 2012 |  |  | 2011 |
Balance at beginning of the year |  | $ | 16 |  |  | $ | 30 |
Additions based on tax positions related to the current year |  |  | - |  |  |  | - |
Additions for tax positions of prior years |  |  | - |  |  |  | - |
Reductions for tax positions of prior years |  |  | - |  |  |  | (14 | )
Settlements |  |  | - |  |  |  | - |
Balance at end of the year |  | $ | 16 |  |  | $ | 16 |
As noted in the table above, there has been no change in our gross uncertain tax positions during fiscal 2012 based on a state tax position. For fiscal 2011, we had a reduction of $14 in our gross uncertain tax positions during fiscal 2011 based on correspondence with a state taxing authority. We are no longer subject to U.S. federal tax examinations for years before 2008 or state and local for years before 2007, with limited exceptions. For federal purposes, the tax attributes carried forward could be adjusted through the examination process and are subject to examination 3 years from the date of utilization. Furthermore, we are no longer subject to income tax examinations in the United Kingdom for years prior to 2007.

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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=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 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 Reference 7: 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 8: 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. + Details
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