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Income Taxes
 12 Months Ended
Sep. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes

 

Note 6 Income Taxes

  

The Company’s U.S. and foreign loss before income taxes are set forth below:

  2020  2019
United States  $(18,096,148)  $(18,031,016)
Foreign   (8,161,658)   (8,181,782)
Total  $(26,257,806)  $(26,212,798)

 

The components of net deferred income tax assets as of September 30, 2020 and 2019 are as follows:

  2020  2019
Net operating loss carryforwards  $23,397,000   $18,704,000 
Research and development tax credit carry forwards   2,069,000    1,162,000 
Stock-based compensation   8,283,000    6,570,000 
Unpaid charges   83,000    69,000 
Intangible asset costs   132,000    30,000 
Foreign exchange and other   27,000    15,000 
Valuation allowance deferred tax assets   (33,991,000)   (26,550,000)
Net deferred tax assets  $—     $—   

 

A reconciliation of income tax expense at the statutory federal income tax rate and income taxes as reflected in the consolidated financial statements for the years ended September 30, 2020 and 2019 is as follows:

 

   2020  2019
Income tax benefit at statutory federal rate  $(5,519,000)  $(5,505,000)
Foreign income taxed at other rates   (723,000)   (825,000)
Other permanent differences   35,000    140,000 
Research and development credit benefit   1,267,000    914,000 
State and local taxes   (2,911,000)   (1,487,000)
Adjustment and true up to prior year tax provision   373,000    194,000 
Effect of change in statutory rates   36,000    —   
State minimum and excise taxes   22,664    82,181 
Change in valuation allowances   7,442,000    6,569,000 
Income tax expense  $22,664   $82,181 

 

As of September 30, 2020, the Company had U.S. federal net operating loss carryforwards of approximately $76.8 million (2019: $60.8 million) which will begin to expire in 2027 and state and local net operating loss carryforwards of approximately $103.1 million (2019: $64.0 million) which will begin to expire in 2036, The Company had approximately $4.3 million (Approximately AUD$ 6.0 million) (2019: $3.5 million) of net operating loss carryforwards in Australia, which have an indefinite life, available to offset future taxable income in those jurisdictions.

 

The Company evaluates its valuation allowance requirements based on available evidence. 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 has been established at September 30, 2020 and 2019.

 

Uncertain Tax Positions

 

The Company files income tax returns in the U.S. federal jurisdiction and various state and local 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 2013.

 

Under the provisions of the Internal Revenue Code, the net operating loss (“NOL”) carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL and tax credit carryforwards may become subject to an annual limitation in the event of an over 50% cumulative change in the ownership interest of significant stockholders over a three-year period, as defined under Sections 382 and 383 of the Internal Revenue Code, as well as similar state tax provisions. This could limit the amount of NOLs that the Company could be entitled to utilize annually to offset future taxable income or tax liabilities. The amount of the annual limitation, if any, would be determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may affect the limitation in future years. The Company completed a Section 382 analysis through the fiscal year ended September 30, 2020 and currently does not believe Section 382 will apply to limit the utilization of available NOLs.