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INCOME TAXES | 12 Months Ended
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Sep. 30, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE J– INCOME TAXES The income tax provision (benefit) for the fiscal years ended September 30, 2018 and 2017 consists of the following:
|  | 2018 |  |  | 2017 |
Federal: |  |  |  |  |  |  |  |
Current |  | $ | - |  |  |  | - |
Deferred |  |  | 4,430,000 |  |  |  | (4,303,000 | )
|  |  | 4,430,000 |  |  |  | (4,303,000 | )
State and local: |  |  |  |  |  |  |  |
Current |  |  | - |  |  |  | - |
Deferred |  |  | (925,000 | ) |  |  | (376,000 | )
|  |  | (925,000 | ) |  |  | (376,000 | ) |  |
Change in valuation allowance |  |  | (3,505,000 | ) |  |  | 4,679,000 |
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, 2018 and 2017 as follows:
|  | 2018 |  |  | 2017 |
Statutory federal income tax rate |  |  | 24.28 | % |  |  | 34.00 | %
Statutory state and local income tax rate (1%, as of September 30, 2018 and 2017), net of federal benefit |  |  | 2.50 | % |  |  | 1.62 | %
Stock based compensation |  |  | (2.29 | %) |  |  | (2.65 | %)
Other permanent differences |  |  | 4.24 | % |  |  | 3.42 | %
Impact of change in Federal statutory tax rate |  |  | (58.71 | %) |  |  | - | %
Change in valuation allowance |  |  | 29.98 | % |  |  | (36.39 | %)
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, |
|  | 2018 |  |  | 2017 |
Deferred tax assets (liabilities): |  |  |  |  |  |  |  |
Stock based compensation |  | $ | 1,947,000 |  |  | $ | 2,836,000 |
Depreciation and amortization |  |  | 339,000 |  |  |  | 500,000 |
Net operating loss carry forward |  |  | 13,248,000 |  |  |  | 16,143,000 |
Tax credits |  |  | 944,000 |  |  |  | 521,000 |
Other |  |  | 69,000 |  |  |  | 52,000 |
Less: valuation allowance |  |  | (16,547,000 | ) |  |  | (20,052,000 | )
Net deferred tax asset |  | $ | - |  |  | $ | - |
As of September 30, 2018, the Company has approximately $53,619,000 of Federal and $73,236,000 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 decreased by $3,505,000. Additionally, deferred tax asset at September 30, 2017 has been revised as follows: deferred tax asset related to amortization of debt discounts is decreased by $16,311,000; the valuation allowance decreased by $16,311,000, completely offsetting the increase in the deferred tax assets. The revision resulted in no change to the net tax provision of the Company as of September 30, 2017 and for the fiscal year ended. The Company has Federal research and development credits of approximately $597,000 that will begin to expire after 2034. The Company also has state investment tax credits of $340,000 that will begin to 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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