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INCOME TAXES
 12 Months Ended
Sep. 30, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 21 – 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, 2023, the Company had approximately $74,648,921 of federal and $51,175,344 of state net operating losses. The net operating loss carryforwards, if not utilized, will begin to expire in 2037 for federal purposes and in 2037 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, 
   2023   2022 
         
Domestic  $(6,279,077)  $(9,429,686)
Foreign   277,964    (1,397,394)
Loss before provision for income taxes  $(6,001,113)  $(10,827,080)

 

The provision for income taxes consisted of the following:

  

   September 30, 2023   September 30, 2022 
         
Current (benefit)/provision          
Federal  $-   $- 
State   319,427    (209,345)
Foreign   74,845    - 
Total current (benefit)/provision   394,272    (209,345)
           
Deferred provision          
Federal   -    - 
State   -    - 
Foreign   -    - 
Total deferred provision  $-   $- 
           
Total (benefit)/provision for income taxes  $394,272   $(209,345)
           
Effective Income tax rate   -6.57%   1.93%

 

 

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, 2023   September 30, 2022 
         
U.S. statutory rate   21.00%   21.00%
State taxes, net of federal   -4.21%   1.22%
Foreign tax rate differential   -0.45%   -1.04%
Change in valuation allowance   -22.51%   -13.73%
Return to provision   0.98%   1.72%
Goodwill impairment   0.00%   -5.16%
SEC settlement payment   0.00%   -3.42%
PPP loan forgiveness   0.00%   1.51%
Global intangible income   -0.97%   0.00%
Permanent differences   -0.42%   -0.17%
Effective rate   -6.57%   1.93%

 

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

 

   September 30, 2023   September 30, 2022 
         
Deferred Tax Assets:          
Net operating loss carryforwards  $20,375,296   $18,563,887 
Inventory   1,221,903    1,330,547 
Allowance for bad debt   32,633    8,304 
Warrants (interest expense)   4,193,177    2,975,593 
Accruals   293,956    289,426 
Warranty Reserve   476,045    27,764 
Capitalized research and development   27,359    - 
Other   6,927    5,847 
Total gross deferred taxes   26,627,296    23,201,368 
Valuation allowance   (24,744,527)   (20,895,094)
Net deferred tax assets   1,882,769    2,306,274 
           
Deferred Tax Liabilities:          
Inventory and other Reserves   (363,423)   (490,967)
Prepaid expenses   (127,852)   (124,399)
Goodwill amortization   (512,702)   (525,898)
Depreciation   (878,792)   (1,165,010)
Total deferred tax liabilities   (1,882,769)   (2,306,274)
           
Total deferred tax assets (liabilities)  $-   $- 

 

Management has concluded that it is more likely than not that the deferred tax assets will not be realized and has reduced the asset by a valuation allowance.