Entity information:

11.  INCOME TAXES

 

There was no provision for federal or state income taxes for the years ended September 30, 2017, 2016 and 2015 due to the Company’s operating losses and a full valuation reserve on deferred tax assets.

 

The income tax benefit differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income for the years ended September 30, 2017, 2016 and 2015 due to the following:

 

  2017  2016  2015 
Computed “expected” tax benefit  (35.0%)  (35.0%)  (35.0%)
Increase (decrease) in income taxes resulting from:            
State taxes, net of federal benefit  (5.2%)  (5.2%)  (5.2%)
Permanent differences  1.3%  4.2%  (4.6%)
Increase in the valuation reserve  38.9%  36.0%  44.8%
   0.0%  0.0%  0.0%

  

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:

 

  September 30, 
2017		  September 30, 
2016		 
Deferred tax assets:      
Net operating loss carryforward $7,123,000  $3,801,000 
Stock-based compensation  1,425,000   703,000 
Valuation allowance  (8,548,000)  (4,504,000)
Deferred tax assets $—  $— 

       

The Company has recorded a valuation allowance against deferred tax assets as the utilization of the net operating loss carryforward and other deferred tax assets is uncertain.  During the years ended September 30, 2017, 2016 and 2015, the valuation allowance increased by $4,044,000, $2,989,000 and $1,299,000, respectively. The increase in the valuation allowance during the years ended September 30, 2017, 2016 and 2015 was due to the Company’s net operating loss.  At September 30, 2017, the Company has a net operating loss carryforward of approximately $17,719,000 which begins expiring in 2034.