Note 12 - Income Taxes

12 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Text Block]

12. Income Taxes

The Company has incurred losses for each of the periods since its inception. The tax attributes of the legal acquirer (RGHS) prior to the merger included approximately $2,950,000 of net operating losses whose benefits will be substantially limited due to the change in ownership. Those prior Merger losses and losses of the Company after the Merger since being taxable as a corporation have been recorded as a deferred tax asset with an offsetting valuation allowance as the losses are not more likely than not to be utilized prior to their expiration. Accordingly, no tax provision or benefit was recognized during each of the periods presented.

Differences between the income tax provision (benefit) computed at the statutory federal income tax rate and per the consolidated statements of operations are summarized as follows:

	Year Ended September 30, 2012			Year Ended September 30, 2011
Income taxes (benefit) computed at federal statutory rate	$	(404,000	)	$	(955,000	)
Permanent book-tax differences		52,000			64,000
Deferred income tax valuation allowance		352,000			891,000
Income tax provision	$	-		$	-

Deferred federal income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred tax assets and liabilities are as follows:

	September 30,
	2012			2011
Deferred tax assets
Net operating loss carryforwards	$	3,008,000		$	2,664,000
Stock-based compensation		364,000			345,000
Accruals and other		47,000			58,000
		3,419,000			3,067,000
Deferred tax liabilities
Depreciation and amortization		(1,000	)		(1,000	)
		3,418,000			3,066,000
Valuation allowances for deferred tax assets		(3,418,000	)		(3,066,000	)
Net deferred taxes	$	-		$	-

As of September 30, 2012, the Company had federal net operating loss (“NOL”) carryforwards of approximately $8,848,000. These losses will expire in years 2025 through 2032 and the use of any such NOLs may be subject to substantial annual limitation under Section 382 of the Internal Revenue Code and similar state provisions, due to changes in ownership of the Company that have occurred previously and may occur in the future.

The Company continues to maintain a valuation allowance against the value of all deferred tax assets at September 30, 2012 due to the uncertainty of realizing these assets in the future. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

In June 2006, the FASB issued guidance in regard to the recognition of tax benefits for positions claimed or to be claimed in tax returns. Management has evaluated the tax positions claimed and expected to be claimed in its tax returns and has concluded that all positions are more likely than not to be sustained upon examination by applicable taxing authorities. Management has also concluded that no liability for uncertain tax positions should be recorded as of September 30, 2012. The Company is subject to U.S. federal tax examinations for tax years through 2012, subject to the statute of limitations. The Company has no income tax examinations in process.