The Company has losses carried forward for income tax purposes through September 30, 2017. There are no current or deferred tax expenses for the years ended September 30, 2017 and 2016 due to the Company’s loss position. The Company has fully reserved for any benefits of these losses utilizing a statutory federal income tax rate of 34%. The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carry-forward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.
The deferred income tax asset for the years ended September 30, 2017 and 2016 consists of the following:
| 2017 | 2016 | |||||||
| Deferred income tax asset attributed to: | ||||||||
| Current operations | $ | 94,962 | $ | 73,393 | ||||
| Less: Change in valuation allowance | (94,962 | ) | (73,393 | ) | ||||
| Net refundable amount | $ | - | $ | - | ||||
The composition of the Company’s deferred tax assets as at September 30, 2017 and September 30, 2016 are as follows:
September 30, 2017 |
Sept. 30, 2016 |
|||||||
| Income tax operating loss carryforward | $ | 2,875,794 | $ | 2,596,494 | ||||
| Statutory federal income tax rate | 34 | % | 34 | % | ||||
| Effective income rate | 0 | % | 0 | % | ||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforward | $ | 914,020 | $ | 882,808 | ||||
| Amortization of intangible assets | 82,497 | 18,747 | ||||||
| Total deferred tax assets | 996,517 | 901,555 | ||||||
| Less: valuation allowance | (996,517 | ) | (901,555 | ) | ||||
| Net deferred tax asset | - | - | ||||||
The potential income tax benefit of these losses has been offset by a full valuation allowance.
As of September 30, 2017, the Company has an unused net operating loss carry-forward balance of approximately $2,876,000 that is available to offset future taxable income. This unused net operating loss carry-forward balance expires between 2025 and 2036.
The issuance of 2,532,054 shares of common stock during the year ended September 30, 2014 affected a change in control of the Company. Due to the change in control, the tax loss carryforward may only be used on a formula basis under IRS section 382 which will affect the benefit the Company can gain from the tax loss.