XML 116 R20.htm IDEA: XBRL DOCUMENT
v2.4.0.8

INCOME TAXES | 12 Months Ended
--- | ---
Sep. 30, 2013 | Sep. 30, 2012
Income Tax Disclosure [Abstract] |  |
INCOME TAXES | NOTE J - INCOME TAXES The Company utilizes ASC 740 “Income Taxes”, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the consolidated financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between consolidated financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purpose include, but are not limited to, accounting for intangibles, warrants, equity based compensation and depreciation and amortization. As of September 30, 2013, the Company had available for U.S federal income tax purposes net operating loss carryovers of approximately $46,300,000, which expire beginning the fiscal tax year of 2022. The net operating loss carryovers may be subject to limitations under Internal Revenue Code due to significant changes in the Company’s ownership. The Company has provided a full valuation allowance against the full amount of the net operating loss benefit, since, in the opinion of management, based upon the earnings history of the Company it is more likely than not that the benefits will not be realized. The income tax provision (benefit) for the years ended September 30, 2013 and 2012 consists of the following:
|  | 2013 |  |  | 2012 |
Federal: |  |  |  |  |  |
Current |  | $ | - |  |  | $ | - |
Deferred |  |  | 2,955,000 |  |  |  | 1,422,000 |
|  |  | 2,955,000 |  |  |  | 1,422,000 |
State and local: |  |  |  |  |  |  |  |
Current |  |  | - |  |  |  | - |
Deferred |  |  | 407,000 |  |  |  | 196,000 |
|  |  | 407,000 |  |  |  | 196,000 |
Change in valuation allowance |  |  | (3,362,000 | ) |  |  | (1,618,000 | )
Income tax provision (benefit) |  | $ | - |  |  | $ | - |
The provision for income taxes differ from the amount of income tax determined by applying the applicable U.S statutory rate to losses before income tax expense for the years ended September 30, 2013 and 2012 as follows:
|  | September 30, |
|  | 2013 |  |  | 2012 |
Statutory federal income tax rate |  |  | (34.00 | %) |  |  | (34.00 | %)
Statutory state and local income tax rate (7.1%), net of federal benefit |  |  | (4.69 | %) |  |  | (4.69 | %)
Stock based compensation |  |  | 3.27 | % |  |  | 10.74 | %
Depreciation and amortization |  |  | (0.12 | %) |  |  | (0.28 | %)
Amortization of debt discount |  |  | 0.00 | % |  |  | 2.92 | %
Change in valuation allowance |  |  | 35.54 | % |  |  | 25.31 | %
Effective tax rate |  |  | 0.00 | % |  |  | 0.00 | %
Deferred income taxes result from temporary differences in the recognition of income and expenses for financial reporting purposes and for tax purposes. The tax effect of these temporary differences representing deferred tax asset and liabilities result principally from the following:
|  | September 30, |
|  | 2013 |  |  | 2012 |
Deferred tax assets (liabilities): |  |  |  |  |  |
Stock based compensation |  | $ | 578,000 |  |  | $ | 768,000 |
Depreciation and amortization |  |  | (21,000 | ) |  |  | (20,000 | )
Amortization of debt discount |  |  | - |  |  |  | 209,000 |
Net operating loss carry forward |  |  | 17,913,000 |  |  |  | 14,551,000 |
Less: valuation allowance |  |  | (18,470,000 | ) |  |  | (15,508,000 | )
Net deferred tax asset |  | $ | - |  |  | $ | - |
The provisions of ASC 740 require companies to recognize in their financial statements the impact of a tax position if that position is more likely than not to be sustained upon audit, based upon the technical merits of the position. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. Management does not believe that the Company has any material uncertain tax positions requiring recognition or measurement in accordance with the provisions of ASC 740. Accordingly, the adoption of these provisions of ASC 740 did not have a material effect on the Company’s consolidated financial statements. The Company’s policy is to record interest and penalties on uncertain tax positions, if any, as income tax expense. All tax years for the Company remain subject to future examinations by the applicable taxing authorities. | NOTE H – INCOME TAXES The Company has adopted Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes include, but not limited to, accounting for intangibles, debt discounts associated with convertible debt, equity based compensation and depreciation and amortization. At September 30, 2012, the Company has available for federal income tax purposes a net operating loss carryforward of approximately $38,000,000, expiring in the year 2032 that may be used to offset future taxable income. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, since in the opinion of management based upon the earnings history of the Company; it is more likely than not that the benefits will not be realized. Due to significant changes in the Company’s ownership, the future use of its existing net operating losses may be limited. Components of deferred tax assets as of September 30, 2012 are as follows:
Non current: |  |  |
Net operating loss carryforward |  | $ | 38,000,000 |
Valuation allowance |  |  | (38,000,000 | )
Net deferred tax asset |  | $ | — |

X
- Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration