Income Taxes

12 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

(10)           Income Taxes

The Company recognizes deferred income tax assets or liabilities for the expected future tax consequences of events that have been recognized in the financial statements or income tax returns. Deferred income tax assets or liabilities are determined based upon the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates expected to apply when the differences are expected to be settled or realized.  Deferred income tax assets are reviewed periodically for recoverability and valuation allowances are provided as necessary.  Interest and penalties related to income tax liabilities, when incurred, are classified in interest expense and income tax provision, respectively.

For the fiscal years ended September 30, 2015 and 2014, the Company incurred net losses for income tax purposes of $5,648,369 and $8,419,359, respectively.  The amount and ultimate realization of the benefits from the net operating losses is dependent, in part, upon the tax laws in effect, the Company's future earnings, and other future events, the effects of which cannot be determined.  The Company has established a valuation allowance for all deferred income tax assets not offset by deferred income tax liabilities due to the uncertainty of their realization.  Accordingly, there is no benefit for income taxes in the accompanying statements of operations.

At September 30, 2015, the Company had net carryforwards available to offset future taxable income of approximately $142,000,000 which will begin to expire in 2020.  The utilization of the net loss carryforwards is dependent upon the tax laws in effect at the time the net operating loss carryforwards can be utilized.  The Internal Revenue Code contains provisions that likely could reduce or limit the availability and utilization of these net operating loss carryforwards. An ownership change generally affects the rate at which NOLs and potentially other deferred tax assets are permitted to offset future taxable income. Since the Company maintains a full valuation allowance on all of its U.S. and state deferred tax assets, the impact of prior year ownership changes on the future realizability of its U.S. and state deferred tax assets did not result in an impact to our provision for income taxes for the year ended September 30, 2015, or on the Company’s net deferred tax asset as of September 30, 2015.

The deferred income tax assets (liabilities) were comprised of the following for the periods indicated:

	Fiscal Years Ended
	September 30,
	2015			2014
Net loss carryforwards	$	52,797,000		$	50,933,000
Accruals and reserves		410,000			281,000
Contributions		23,000			8,000
Depreciation		(326,000	)		79,000
Stock-based compensation		714,000			5,980,000
Customer advances		-			1,000
Valuation allowance		(53,618,000	)		(57,282,000	)
Total	$	-		$	-

Reconciliations between the benefit for income taxes at the federal statutory income tax rate and the Company's benefit for income taxes for the years ended September 30, 2015 and 2014 are as follows:

	Fiscal Years Ended
	September 30,
	2015		2014
Federal income tax benefit at statutory rate	$	1,920,000	$	2,863,000
State income tax benefit, net of federal income tax effect		186,000		278,000
Change in estimated tax rate and gain (loss) on non-deductible expenses		(5,771,000)		(5,000	)
Loss of operating loss for IRC Sec 382 limitation		-		(24,738,000	)
Change in valuation allowance		3,665,000		21,602,000
Benefit for income taxes	$	-	$	-

During the fiscal year ended September 30, 2014, the Company began recognizing revenues from international sources from its products and monitoring services.  During the fiscal year ended September 30, 2014, the Company began recognizing a liability for value-added taxes which will be due upon collection. At September 30, 2015, the Company had a net receivable related to payments on VAT tax of $497,053.

The Company’s open tax years for its federal and state income tax returns are for the tax years ended September 30, 2011 through September 30, 2015.