Income Taxes

12 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

Income Taxes

The income tax provision is based on management's review of the Company's estimated annual tax rate, including state taxes. The tax provision for Fiscal 2013 and Fiscal 2012 consists of state minimum taxes currently payable, as well as foreign taxes payable. In addition to the U.S. federal return and California and Texas state returns, the Company files tax returns internationally in Dubai, Italy, Singapore, and the United Kingdom, and the Company's returns are currently open for examination by taxing authorities for the standard statutory periods of time.

The provision for income taxes from continuing operations is comprised of:

	Fiscal Year Ended
	September 30, 2013		September 30, 2012
Current:
Federal	$	—	$	—
State		3,000		3,000
Foreign		42,000		—
Provision for income taxes	$	46,000	$	3,000

 The provision for income taxes from continuing operations differs from the amount computed by applying the statutory federal income tax rate to loss before provision for income taxes. The sources and tax effects of the differences are as follows:

	Fiscal Year Ended
	September 30, 2013		September 30, 2012
Income tax benefit at the federal statutory rate of 34%	$	(8,371,000)	$	(6,783,000	)
State income tax provision, net of federal benefit		2,000		2,000
Non-cash charges		-		4,000
Other		902,000		16,000
Valuation allowance changes affecting the provision for income taxes		7,513,000		6,764,000
Provision for income taxes	$	46,000	$	3,000

Loss before income taxes consisted of the following components:

	Fiscal Year Ended
	September 30, 2013		September 30, 2012
United States	$	(22,642,000)	$	(20,694,000	)
Foreign		(1,978,000)		-
Total	$	(24,620,000)	$	(20,694,000)

 The tax effect of significant temporary items comprising the Company’s deferred taxes as of September 30, 2013 and September 30, 2012, are as follows:

	September 30, 2013			September 30, 2012
Current deferred tax assets:
Reserves not currently deductible	$	384,000		$	626,000
Current deferred tax liabilities:
Valuation allowance		(384,000	)		(626,000	)
Net current deferred tax assets (liabilities)	$	—		$	—
Non-current deferred tax assets:
Stock-based compensation	$	1,405,000		$	1,086,000
Debt discount & derivative liability		3,183,000			3,925,000
Operating loss carry forwards		25,842,000			15,378,000
Other		692,000			336,000
Non-current deferred tax liabilities:
Valuation allowance		(31,122,000	)		(20,725,000	)
Net non-current deferred tax assets (liabilities)	$	—		$	—

As of September 30, 2013, the Company had federal and California net operating loss (“NOL”) carryover of $65.7 million and $63.6 million, respectively.  As a result of the ownership change that occurred during the year ended September 27, 2009, the Company’s pre-September 27, 2009 NOLs are subject to the annual limitation under Section 382 of the Internal Revenue Code of 1986, as amended, of approximately $105,000 per annum. Various equity transactions have occurred since the ownership change in Fiscal 2009 that may have resulted in a subsequent section 382 limitation, which may further limit the use of the Company’s NOL’s.

 As the realization of the tax benefit of deferred tax assets is uncertain, the Company has provided a 100% valuation allowance against such assets as of September 30, 2013 and September 30, 2012.

 The Company concluded that no additional accrual for taxes, penalty or interest is required for uncertain tax positions. Interest and penalties related to uncertain tax positions will be reflected in income tax expense.