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Income Taxes

12 Months Ended

Sep. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 18 – INCOME TAXES

The Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017. The Tax Act reduces the maximum U.S. federal corporate tax rate from 35% to 21%, allows net operating losses incurred in 2018 and beyond to be carried forward indefinitely, allows alternative minimum tax carryforwards to be partially refunded, beginning in 2018, and fully refunded by 2021, and creates new taxes on certain foreign sourced earnings.

The following is a geographical breakdown of (loss) income before the provision for income taxes:

		Year ended September 30,
		2018				2017
Domestic		$	(5,864,209	)		$	(148,185	)
Foreign			(4,761,409	)			4,653,748
Income before provision for income taxes		$	(10,625,618	)		$	4,505,563

The provision for income taxes consisted of the following:

		September 30, 2018				September 30, 2017
Current (benefit)/provision
Federal		$	-			$	(38,059	)
State			1,859				(12,686	)
Foreign			245,419				166,393
Total current (benefit)/provision			247,278				115,648

Deferred provision
Federal			(2,155,797	)			-
State			(667,270	)			-
Foreign			16,385				-
Total deferred provision		$	(2,806,682	)		$	-

Total (benefit)/provision for income taxes		$	(2,559,404	)		$	115,648

Effective Income tax rate			24.09	%			2.57	%

The following is a reconciliation of the effective income tax rate to the federal and state statutory rates:

		For the Fiscal Year				For the Fiscal Year
		Ended				Ended
		September 30, 2018				September 30, 2017
U.S. statutory rate			21.00	%			34.00	%
State statutory rate			6.50	%			9.00	%
Foreign tax rate differential			-2.22	%			-40.72	%
Nondeducttible expenses			-1.20	%			0.29	%
Effective rate			24.09	%			2.57	%

The effective tax rate decreased mainly due to the change from net income in 2017 to net loss in 2018 and from the impact of the decrease in federal and state income tax rates in 2018.

The components of our deferred tax assets and liabilities are summarized as follows:

		September 30, 2018				September 30, 2017
Deferred Tax Assets:
Net operating loss carryforwards			4,153,803				-
Fixed asset depreciation			254,579				-
Prepaid expenses			12,837				-
Gain/loss on fixed asset disposal			31,747				-
Allowance for bad debt			-				-
Total gross deferred taxes			4,452,966				-
Valuation allowance			(1,485,437	)			-
Net deferred tax assets			2,967,529				-

Deferred Tax Liabilities:
Accrued vacation			(4,336	)			-
Goodwill amortization			(71,101	)			-
Research and development expenses			(69,025	)			-
Depreciation			(1,907,385	)			(1,891,000	)
Total deferred tax liabilities			(2,051,847	)			(1,891,000	)

Total deferred tax assets (liabilities)			915,682				(1,891,000	)

Recorded as:
Non-current deferred tax assets (in other assets)			2,967,529				-
Non-current deferred tax liabilities			(2,051,847	)			(1,891,000	)
Total deferred tax assets (liabilities)			915,682				(1,891,000	)

As of September 30, 2018, the recorded deferred tax assets were $4,452,966, for the United States and India, offset by a valuation allowance of $1,485,437.

At September 30, 2018, the Company has $9,703,148 of operating loss carryovers, expiring at various dates from 2027 through 2030.