Income taxes

12 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Text Block]

Note 12 – Income taxes

We have recorded no provision or benefit for income taxes. The difference between tax at the statutory rate and no tax is primarily due to the full valuation allowance. The increase in the valuation allowance was $268,043 during the year ended September 30, 2012, and $437,000 during the year ended September 30, 2011. A valuation allowance has been recorded in the full amount of total deferred tax assets as it has not been determined that it is more likely than not that these deferred tax assets will be realized. As of September 30, 2012, we have net operating loss carryforwards of $48.57 million, which begin to expire in 2023 and will continue to expire through 2032 if not otherwise utilized. Our ability to use such net operating losses and tax credit carryforwards is subject to annual limitations due to change of control provisions under Sections 382 and 383 of the Internal Revenue Code, and such limitation would be significant. Realization is dependent on generating sufficient taxable income prior to expiration.

Deferred income taxes represent the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes.

Significant components of our deferred tax assets and liabilities and related valuation allowances at September 30, 2012 and September 30, 2011 are as follows:

	2012		2011
Deferred taxes
Non-operating loss carryforward	$	16,512,538	$	16,152,227
Share-based compensation		2,235,711		2,226,186
R&D tax credit carryforward		973,000		973,000
Other		349,028		450,821
Total deferred tax assets		20,070,277		19,802,234
Deferred tax liabilities		(528,808)		(528,808)
Valuation allowance		(19,541,469)		(19,273,426)
Deferred tax assets and liabilities, net		-		-

We have identified our federal tax return as our “major” tax jurisdiction, as defined. Tax years since inception are subject to audit. We believe our income tax filing positions and deductions will be sustained on audit and we do not anticipate any adjustments that would result in a material change to our financial position. No reserves for uncertain income tax positions have been recorded. Our policy for recording interest and penalties associated with uncertain income tax positions is to record such items as a component of interest expense.