Income taxes

3 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income taxes

Deferred tax assets at December 31, 2013 and September 30, 2013 and 2012 consisted of the following:

	As of December 31,			As of September 30,
	2013			2013			2012
Deferred tax asset
Net operating loss carryovers	$	17,467,761		$	17,183,108		$	12,885,000
Total deferred tax assets		17,467,761			17,183,108			12,885,000
Valuation Allowance		(17,467,761	)		(17,183,108	)		(12,885,000	)
Deferred tax asset, net of allowance	$	-		$	-		$	-

As of September 30, 2013 and September 30, 2012, the Company had federal and state net operating loss carryovers of approximately $42.6 million and $32.0 million, which will begin to expire in 2022. As of December 31, 2013, the Company had federal and state net operating loss carryovers of approximately $43.3 million and $38.0 million, which will begin to expire in 2022.The net operating loss carryover may be subject to limitation under Internal Revenue Code section 382, should there be a greater than 50% ownership change as determined under the regulations.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment. The Company has determined that, based on objective evidence currently available, it is more likely than not that the deferred tax assets will not be realized in future periods. Accordingly, the Company has provided a valuation allowance for the full amount of the deferred tax assets at September 30, 2013 and September 30, 2012. 

A reconciliation of the expected tax benefit computed at the U.S. federal and state statutory income tax rates to our tax benefit is as follows:

	For the three months ended			For the twelve months ended
	December 31,			September 30,
	2013			2013			2012
Statutory federal income tax rate		-34.0	%		34.0	%		34.0	%
State income tax, net of federal benefit		-6.3	%		6.0	%		6.0	%
Permanent differences		21.9	%		-6.0	%		-27.0	%
Valuation Allowance		18.4	%		-34.0	%		-13.0	%
Income tax provision (benefit)		0.0	%		0.0	%		0.0	%

We file income tax returns in the U.S. and in the state of California with varying statutes of limitations. Our policy is to recognize interest expense and penalties related to income tax matters as a component of our provision for income taxes. There were no accrued interest and penalties associated with uncertain tax positions as of December 31, 2013. All operations are in California and the Company believes it has no tax positions which could more-likely-than not be challenged by tax authorities. We have no unrecognized tax benefits and thus no interest or penalties included in the financial statements. The Company is subject to examination for tax years after 2009 for federal purposes and after 2010 for California state tax purposes.