7. INCOME TAXES

12 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

INCOME TAXES

      The Company’s provision (benefit) for income taxes consists of the following United States federal and state, and foreign components: 

		For the Fiscal Years Ended
		September 30,
		2017			2016
Current:
Federal	$	-		$	-
State		-			-
Foreign		-			-
Deferred:
Federal		234,521			74,467
State		13,795			10,951
Foreign		(21,861	)		127,454
		226,455			212,872
Change in valuation allowance		(226,455	)		(212,872	)
Income tax provision (benefit)	$	-		$	-

     The deferred tax expense (benefit) is the change in the deferred tax assets and liabilities representing the tax consequences of changes in the amounts of temporary differences, net operating loss carryforwards and changes in tax rates during the fiscal year. The Company’s deferred tax assets and liabilities are comprised of the following:

		September 30,
		2017			2016
Deferred tax assets:
Net operating losses	$	3,522,733		$	3,689,028
Capital loss carryforwards		354,272			383,795
Share-based compensation		127,821			155,180
Alternative minimum tax credit		99,757			99,757
Excess tax over book basis in inventory		49,032			85,573
Excess tax over book basis in fixed assets		1,254			-
		4,154,869			4,413,333
Valuation allowance		(4,114,043	)		(4,340,498	)
Net deferred tax assets		40,826			72,835
Deferred tax liabilities:
Prepaid insurance		(40,826	)		(59,599	)
Excess book over tax basis in fixed assets		-			(13,236	)
		(40,826	)		(72,835	)
Total	$	-		$	-

     As of September 30, 2017 and 2016, the Company has no unrecognized income tax benefits. At September 30, 2017, the Company had available total net operating loss carryforwards for U.S. federal and state income tax purposes of approximately $9,268,000 and $1,744,000, respectively, expiring through 2037, resulting in deferred tax assets in respect of U.S. federal and state income taxes of approximately $3,151,000 and $69,000, respectively. In addition, at September 30, 2017 and 2016, the Company had total available net operating loss carryforwards for foreign income tax purposes of approximately $3,360,000 and $3,188,000, resulting in a deferred tax asset of approximately $302,000 and $281,000, respectively, expiring through 2024. The Company has capital loss carryovers of approximately $984,000 expiring through 2020, resulting in deferred tax assets in respect of U.S. federal and state income taxes of approximately $354,000. Total net deferred tax assets, before valuation allowances, was $4,155,000 and $4,413,000 at September 30, 2017 and 2016, respectively. Undistributed earnings of the Company’s foreign subsidiaries are considered to be permanently reinvested; therefore, in accordance with U.S. generally accepted accounting principles, no provision for U.S. federal and state income taxes would result. In the fiscal year ended September 30, 2017, Forward Switzerland had net income of approximately $627,000, however, the Company’s foreign subsidiary had an accumulated deficit as of September 30, 2017.

     As of September 30, 2017, as part of its periodic evaluation of the necessity to maintain a valuation allowance against its deferred tax assets, and after consideration of all factors, both positive and negative (including, among others, projections of future taxable income, current year net operating loss carryforward utilization and the extent of the Company’s cumulative losses in recent years), the Company determined that, on a more likely than not basis, it would not be able to use its remaining deferred tax assets (except in respect of the United States income taxes in the event the Company elects to effect the repatriation of certain foreign source income of its Swiss subsidiary, which income is currently considered to be permanently reinvested and for which no United States tax liability has been accrued). Accordingly, the Company has determined to maintain a full valuation allowance against its net deferred tax assets. As of September 30, 2017 and 2016, the valuation allowances were approximately $4,114,000 and $4,340,000, respectively. In the future, the utilization of the Company's net operating loss carryforwards may be subject to certain change of control limitations. If the Company determines in a future reporting period that it will be able to use some or all of its deferred tax assets, the adjustment to reduce or eliminate the valuation allowance would reduce its tax expense and increase after-tax income. Changes in deferred tax assets and valuation allowance are reflected in the “Provision for income taxes” line item of the Company’s consolidated statements of operations and comprehensive income.

     The significant elements contributing to the difference between the United States federal statutory tax rate and the Company’s effective tax rate are as follows:

	For the Fiscal Years Ended
	September 30,
	2017	2016
US federal statutory rate	34.0%	34.0%
State tax rate, net of federal benefit	(0.2%)	5.0%
Permanent differences:
Share-based compensation	2.5%	(8.3%)
Other	(0.6%)	0.4%
Foreign rate differential	(27.1%)	(13.3%)
Other	34.3%	17.3%
Change in valuation allowance	(42.9%)	(35.1%)
Income tax provision (benefit)	0.0%	0.0%

     As of September 30, 2017 and 2016, the Company has not accrued any interest and penalties related to uncertain tax positions. It is the Company’s policy to recognize interest and/or penalties, if any, related to income tax matters in income tax expense in the consolidated statements of operations and comprehensive income. For the periods presented in the accompanying consolidated statements of operations and comprehensive income, no material income tax related interest or penalties were assessed or recorded. All fiscal years prior to the fiscal year ended September 30, 2014 are closed to federal and state examination.