Note 7 – Income Taxes

The composition of deferred tax assets and the related tax effects at September 30, 2015 and 2014 are as follows:

	2015			2014
Net operating losses	$	10,932,812		$	8,753,206
Allowance for loss on deposits		1,443,651			1,799,584
Other		1,702,196			827,010
Total deferred tax assets		14,078,659			11,379,800
Valuation allowance		(14,078,659	)		(11,379,800	)

Net deferred tax asset	$	-		$	-

The difference between the income tax benefit (provision) in the accompanying statement of operations and the amount that would result if the U.S. Federal statutory rate of 34% were applied to pre-tax income (loss) for years ended September 30, 2015 and 2014, is as follows:

	2015			2014

Income tax benefit at federal statutory rate	$	2,254,677		$	673,402
Change in valuation allowance		(3,408,739	)		(637,154	)
Expiration and adjustment of NOLs		1,019,766			(94,021	)
Stock compensation		(2,856	)		(9,166	)
Other		137,152			66,939
	$	-		$	-

In preparing the Company’s consolidated financial statements, the Company assesses the likelihood that its deferred tax assets will be realized from future taxable income. The Company establishes a valuation allowance if it determines that it is more likely than not that some portion of the deferred tax assets will not be realized. Changes in the valuation allowance, when recorded, would be included in its consolidated statements of operations as a provision for (benefit from) income taxes. The Company exercise significant judgment in determining its provisions for income taxes, its deferred tax assets and liabilities and its future taxable income for purposes of assessing its ability to utilize any future tax benefit from its deferred tax assets. During 2015, the Company assessed the need for a valuation allowance against its deferred tax assets. The deferred tax asset valuation allowance was $14,078,659 as of September 30, 2015. The valuation allowance relates primarily to the net operating losses and various expense deductions for which a tax benefit is currently unavailable.

At September 30, 2015, the Company has Federal net operating loss carry forward of approximately $32,155,328. The federal loss carry forward expires on various dates through 2035.

Uncertainty in Tax Positions

On October 1, 2007, the Company adopted the guidance related to accounting for uncertainty in income taxes, which provides a financial statement recognition threshold and measurement attribute for a tax position taken or expected to be taken in a tax return. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740 also provides guidance on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and income tax disclosures.

The Company is subject to taxation in the United States and various foreign jurisdictions. The Company’s tax years for 2007 through 2014 are subject to examination by the tax authorities. The Company is currently under examination by the Internal Revenue Service for the 2006 tax year. Management has determined that the Company has no uncertain tax positions requiring recognition under ASC 740 as of September 30, 2015 and 2014.