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INCOME TAXES | 12 Months Ended
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Sep. 30, 2016
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE L– INCOME TAXES The income tax provision (benefit) for the fiscal years ended September 30, 2016 and 2015 consists of the following:
|  | 2016 |  |  | 2015 |
Federal: |  |  |  |  |  |  |  |
Current |  | $ | - |  |  |  | - |
Deferred |  |  | (3,780,000 | ) |  |  | 13,924,000 |
|  |  | (3,780,000 | ) |  |  | 13,924,000 |
State and local: |  |  |  |  |  |  |  |
Current |  |  | - |  |  |  | - |
Deferred |  |  | (1,302,000 | ) |  |  | (70,000 | )
|  |  | (1,302,000 | ) |  |  | (70,000 | )
Change in valuation allowance |  |  | 5,082,000 |  |  |  | (13,854,000 | )
Income tax provision (benefit) |  | $ | - |  |  |  | - |
The provision for income taxes differs 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, 2016 and 2015 as follows:
|  | 2016 |  |  | 2015 |
Statutory federal income tax rate |  |  | 34.00 | % |  |  | 34.00 | %
Statutory state and local income tax rate (1%, as of September 30, 2016 and 2015), net of federal benefit |  |  | 7.72 | % |  |  | 0.59 | %
Stock based compensation |  |  | (2.33 | %) |  |  | (8.34 | %)
Other permanent differences |  |  | 0.72 | % |  |  | (4.94 | %)
Effect of change in deferred tax rate |  |  | 2.01 | % |  |  | 4.15 | %
Warrant liability |  |  | - |  |  |  | (33.78 | %)
Adjustment to state tax credits |  |  | 0.41 | % |  |  | - |
Adjustment to depreciation and amortization |  |  | 1.09 | % |  |  | (16.28 | %)
Adjustment to stock based compensation |  |  | (2.43 | %) |  |  | (30,73 | %)
Adjustment of prior years’ NOLs |  |  | 0.55 | % |  |  | (61.28 | %)
Change in valuation allowance |  |  | (41.74 | %) |  |  | 116.61 | %
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, |
|  | 2016 |  |  | 2015 |
Deferred tax assets (liabilities): |  |  |  |  |  |  |  |
Stock based compensation |  | $ | 2,025,000 |  |  | $ | 1,961,000 |
Depreciation and amortization |  |  | 351,000 |  |  |  | 35,000 |
Amortization of debt discount |  |  | 16,269,000 |  |  |  | 16,055,000 |
Net operating loss carry forward |  |  | 12,713,000 |  |  |  | 8,199,000 |
Tax credits |  |  | 221,000 |  |  |  | 86,000 |
Other |  |  | 105,000 |  |  |  | 266,000 |
Less: valuation allowance |  |  | (31,684,000 | ) |  |  | (26,602,000 | )
Net deferred tax asset |  | $ | - |  |  | $ | - |
As of September 30, 2016, the Company has approximately $33,920,000 of Federal and $45,229,000 of State net operating loss “NOL” carryforwards available which begin to expire after 2022. Pursuant to Internal Revenue Code Section 382, the Company’s ability to utilize the NOLs is subject to certain limitations due to changes in stock ownership in prior years. The annual limitation ranges between $786,000 and $1,103,000 and any unused amounts can be carried forward to subsequent years. The Company has provided a full valuation allowance against all of the net deferred tax assets based on management’s determination that it is more likely than not that the net deferred tax assets will not be realized in the future. The valuation allowance increased by $5,082,000. Based on a study of Section 382 of the Internal Revenue Code conducted by the Company at September 30, 2015, deferred tax asset related to net operating loss carryforward is decreased by $21,118,000 and the state NOL is decreased by $20,796,000 at September 30, 2015. A similar study was performed at September 30, 2016, which resulted in no change. The Company has Federal research and development credits of approximately $172,000 that will expire after 2034. The Company also has state investment tax credits of $49,000 that will expire after 2029.

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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 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 2: 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=65882285&loc=d3e32559-109319 Reference 3: 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=65882285&loc=d3e32718-109319 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=65882285&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=65882285&loc=d3e32537-109319 + Details
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