Note 9 - Income Taxes

12 Months Ended

Sep. 30, 2015

Notes to Financial Statements

Income Tax Disclosure [Text Block]

9. INCOME TAXES

 

A reconciliation of the provision (recovery) of income taxes to the statutory federal income tax rate is as follows:

	2015			2014			2013
Income (Loss) Before Provision for Income Taxes	$	(122,377	)	$	8,376		$	138,805
Statutory rate		34	%		34	%		34	%
		(41,608	)		2,848			47,194
Permanent differences		900			1,200			1,200
Research and development credit - net		(48,500	)		(46,300	)		(44,900	)
Valuation allowance		82,200			44,400			-
Other		7,008			(2,148	)		(3,494	)
	$	-		$	-		$	-

Deferred tax assets (liabilities) consist of the following:

	2015			2014
Current:
Inventories	$	81,500		$	128,900
Bad debts		3,400			3,400
Accrued liabilities		70,600			(11,700	)
Prepaid expense		(13,400	)		(12,900	)
		142,100			107,700
Valuation allowance		(142,100	)		(107,700	)
Total current deferred income taxes		-			-
Noncurrent:
Depreciation and amortization		46,700			45,100
Research and development and other credit carryforwards		1,980,200			1,903,800
Net operating loss carryforward		1,914,300			1,880,200
Contribution carryforward		-			8,900
Directors stock option plan		40,100			40,000
Acquisition costs		125,500			101,000
Accrued liabilities		-			80,000
		4,106,800			4,059,000
Valuation allowance		(4,106,800	)		(4,059,000	)
Total long-term deferred income taxes		-			-
Total	$	-		$	-

The Company did not incur any material impact to its financial condition or results of operations due to the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

The Company has available a net operating loss carryforward of approximately $5,500,000, and a research and development credit carryforward of approximately $1,900,000. The net operating loss, and research and development credit will begin to expire in fiscal 2025 and 2016 respectively.

Management has recorded a valuation allowance on the entire balance of deferred tax assets due to the losses during the past several years, the current economic uncertainties, the negative effects of the recent economic crisis on all the Company's markets and concern that a more likely than not expiration of the Company's net operating loss, and research and development credit carryforwards could occur before they can be used. Because of the uncertainties involved with this significant estimate, it is reasonably possible that the Company's estimate may change in the near term.