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INCOME TAXES
 12 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 17 – 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.

 

At September 30, 2022, the Company had approximately $70,061,515 of federal and $34,312,917 of state net operating losses. The net operating loss carryforwards, if not utilized, will begin to expire in 2036 for federal purposes and in 2036 for state purposes. The company is currently reviewing net operating losses for Section 382 limitation purposes and will make any required adjustments to the net operating losses at the completion of the study.

 

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

 

 

   Year ended September 30, 
   2022   2021 
         
Domestic  $(12,103,393)  $30,957 
Foreign   (1,397,394)   738,255 
Loss before provision for income taxes  $(13,500,787)  $769,212 

 

The provision for income taxes consisted of the following:

 

 

   September 30, 2022   September 30, 2021 
         
Current (benefit)/provision          
Federal  $-   $- 
State   (208,545)   375,434 
Foreign   -    - 
Total current (benefit)/provision   (208,545)   375,434 
           
Deferred provision          
Federal   -    - 
State   -    - 
Foreign   -    - 
Total deferred provision  $-   $- 
           
Total (benefit)/provision for income taxes  $(208,545)  $375,434 
           
Effective Income tax rate   1.54%   48.81%

 

 

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, 2022   September 30, 2021 
         
U.S. statutory rate   21.00%   21.00%
State taxes, net of federal   1.22%   6.50%
Foreign tax rate differential   -1.04%   0.00%
Change in valuation allowance   -13.73%   0.00%
Return to provision   1.33%   0.00%
Goodwill impairment   -5.16%   0.00%
SEC settlement payment   -3.42%   0.00%
PPP loan forgiveness   1.51%   0.00%
Permanent differences   -0.17%   21.31%
Effective rate   1.54%   48.81%

 

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

 

 

   September 30, 2022   September 30, 2021 
         
Deferred Tax Assets:          
Net operating loss carryforwards  $18,563,887   $8,702,738 
Inventory   1,330,547    1,405,057 
Allowance for bad debt   8,304    35,345 
Warrants (interest expense)   2,975,593    1,155,642 
Accruals   289,426    280,447 
Warranty Reserve   27,764    28,002 
Other   5,847    4,358 
Total gross deferred taxes   23,201,368    11,611,589 
Valuation allowance   (20,895,094)   (9,491,650)
Net deferred tax assets   2,306,274    2,119,939 
           
Deferred Tax Liabilities:          
Inventory and other Reserves   (490,967)   (638,230)
Prepaid expenses   (124,399)   (87,934)
Goodwill amortization   (525,898)   (557,074)
Depreciation   (1,165,010)   (836,701)
Other   -    - 
Total deferred tax liabilities   (2,306,274)   (2,119,939)
           
Total deferred tax assets (liabilities)  $-   $-