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INCOME TAXES | 12 Months Ended
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Sep. 30, 2022
INCOME TAXES |
INCOME TAXES | 13. INCOME TAXES The Company has incurred losses since inception, which have generated net operating loss carryforwards. The net operating loss carryforwards arise from United States sources. Losses arising from United States taxable operations were approximately $7.3 million and $7.5 million for the years ended September 30, 2022 and 2021. The Company has Federal net operating loss carryforwards of approximately $44.6 million which expire in 2028-2042. Because it is not more likely than not that sufficient tax earnings will be generated to utilize the net operating loss carryforwards, a corresponding valuation allowance equal to 100% of the gross deferred tax asset of approximately $11.4 million and $9.7 million was established as of September 30, 2022 and 2021, respectively. The Company does not recognize the majority of state tax loss operating loss carryforwards as a deferred tax asset given it no longer has any operation in those states. Under the Tax Reform Act of 1986, the amounts of, and benefits from, net operating losses may be limited in certain circumstances, including a change in control. Section 382 of the Internal Revenue Code generally imposes an annual limitation on the amount of net operating loss carryforwards that may be used to offset taxable income when a corporation has undergone significant changes in its stock ownership. There can be no assurance that the Company will be able to utilize any net operating loss carryforwards in the future. The Company is subject to possible tax examination for the years 2017 through 2022. The principal components of the Company’s deferred tax assets at September 30, 2022 and 2021 are as follows:
|  | 2022 |  |  | 2021 |
Net operating loss carryforward |  | $ | 9,372,000 |  |  | $ | 8,051,000 |
Stock based compensation |  |  | 1,677,000 |  |  |  | 975,000 |
Intangibles |  |  | 221,000 |  |  |  | 276,000 |
Accruals and reserves |  |  | 97,000 |  |  |  | 399,000 |
Total deferred tax asset |  |  | 11,367,000 |  |  |  | 9,701,000 |
Valuation allowance |  |  | (11,367,000 | ) |  |  | (9,701,000 | )
Net deferred tax assets |  | $ | - |  |  | $ | - |
Change in valuation allowance during the year |  | $ | (1,666,000 | ) |  | $ | (1,092,357 | )
A reconciliation of the United States Federal Statutory rate to the Company’s effective tax rate for the years ended September 30, 2022 and 2021 are as follows. For the years ended September 30, 2022 and 2021, the Company’s effective tax rate differs from the federal statutory rate principally due to nondeductible expenses paid with equity instruments plus an increase in the deferred tax asset valuation allowance.
|  | 2022 |  |  | 2021 |
Income tax provision at statutory rate |  |  | -21 | % |  |  | -21 | %
Non deductible expenses paid with equity instruments |  |  | 9 | % |  |  | 12 | %
Change in valuation allowance |  |  | 8 | % |  |  | 7 | %
Other and prior year true up |  |  | 4 | % |  |  | 2 | %
Effective tax rate |  |  | 0 | % |  |  | 0 | %
As of September 30, 2022, there were no uncertain tax positions. Management does not anticipate any future adjustments in the next twelve months which would result in a material change to its tax position. For the years ended September 30, 2022 and 2021, the Company did not have any interest and penalties.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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