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Income Taxes

12 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Note 7

Income Taxes

The tax effects of the temporary differences that give rise to the Company’s estimated deferred tax assets and liabilities are as follows:

		2017				2016				2015
Assumed Tax rate			34	%			34	%			34	%

Net operating loss carryforwards		$	14,240,000			$	11,223,000			$	9,177,000
Research and development tax credits			1,344,000				1,036,000				794,000
Foreign exchange			(25,000	)			(25,000	)			(10,000	)
Unpaid charges			28,000				152,000				832,000
Intangible asset costs			51,000				57,000				64,000
Stock-based compensation			3,394,000				2,004,000				581,000
Valuation allowance for deferred tax assets			(19,032,000	)			(14,447,000	)			(11,438,000	)

Net deferred tax assets		$	—			$	—			$	—

The provision for income taxes differ from the amount established using the statutory income tax rate as follows:

		2017				2016				2015

Income benefit at statutory rate of 34%		$	(4,577,000	)		$	(5,010,000	)		$	(4,117,000	)
Foreign income taxed at other rates			68,000				132,000				80,000
Permanent differences
Debt extinguishment			—				—				(29,000	)
Mark-to-market deriative liability adjustment			—				—				193,000
Non-deductible finance and accretion expenses			—				5,000				1,511,000
Non-deductible compensation costs			—				738,000
Other permanent differences			2,000				—				(5,000	)
Research and development tax credit			(23,000	)			628,000				502,000
Expiry of foreign net operating loss carryforwards			—				333,000				—
Adjustment and true up to prior years’ tax provision			(55,000	)			176,000				100,000
Effect of foreign exchange and other			—				(11,000	)			—
Change in valuation allowance related to current year provision			4,585,000				3,009,000				1,765,000

Income Tax Recovery		$	—			$	—			$	—

As of September 30, 2017, the Company had net operating loss carry-forwards of approximately $41,000,000 (2016: $33,000,000; 2015: $25,000,000) in the United States, approximately $850,000 (2016: $250,000; 2015: $Nil) in Australia and approximately $13,000 (2016: $Nil) in Germany, available to offset future taxable income in those jurisdictions. The carry-forwards will begin to expire in 2027.

The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and this causes a change in management’s judgment about the recoverability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current income. Because management of the Company does not currently believe that it is more likely than not that the Company will receive the benefit of these assets, a valuation allowance equal to the deferred tax asset has been established at September 30, 2017, 2016 and 2015.

Uncertain Tax Positions

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company’s tax returns are subject to tax examinations by U.S. federal and state tax authorities, or examinations by foreign tax authorities until the respective statutes of limitation expire. The Company is subject to tax examinations by tax authorities for all taxation years commencing on or after 2009.

Certain of the Company’s net operating loss carryforwards in the United States may be subject to limitations by Section 382 of the Internal Revenue Code with respect to the amount utilizable each year. This limitation reduces the Company’s ability to utilize net operating loss carry-forwards, under certain circumstances. The Company completed a Section 382 analysis through the fiscal year ended September 30, 2017 and currently does not believe Section 382 will apply to limit the utilization of these tax losses.