Income Taxes

12 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Note 11 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:

	2015			2014
				(As restated)
Tax rate		34	%		34	%
Net operating loss carryforwards	$	9,177,000		$	8,270,000
Research and development tax credits		794,000			745,000
Foreign exchange		(10,000	)		(23,000	)
Unpaid charges		832,000			170,000
Intangible asset costs		64,000			70,000
Stock-based compensation		581,000			441,000
Valuation allowance for deferred tax assets		(11,438,000	)		(9,673,000	)
Net deferred tax assets	$	-		$	-

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

	2015			2014
				(As Restated)
Income benefit at statutory rate of 34%	$	(4,117,000	)	$	(3,865,000	)
Foreign income taxed at other rates		80,000			13,000
Permanent differences
Effect of stock based compensation		-			202,000
Debt extinguishment		(29,000	)		2,736,000
Mark-to-market deriative liability adjustment		193,000			(994,000	)
Non-deductible finance and accretion expenses		1,511,000			808,000
Other permanent differences		(5,000	)		(16,000	)
Research and development tax credit		502,000			(26,000	)
Adjustment and true up to prior years' tax provision		100,000			14,000
Change in valuation allowance related to current year provision		1,765,000			2,528,000
Income Tax Recovery	$	-		$	1,400,000

As of September 30, 2015, the Company had net operating loss carry-forwards of approximately $25,000,000 (2014: $24,000,000) in the United States available to offset future taxable income. The carry-forwards will begin to expire in 2027 unless utilized in earlier years.

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 both September 30, 2015 and 2014.

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 2007.