Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.20.4
INCOME TAXES
12 Months Ended
Sep. 30, 2020
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 5 – INCOME TAXES 

 

The provision for income taxes consists of the following for the years ended September 30, 2020 and 2019:

 

    2020     2019  
FEDERAL                
Current   $     $  
Deferred            
STATE                
Current            
Deferred            
TOTAL PROVISION   $     $  

 

The difference between the actual income tax provision versus tax computed at the statutory rate is as follows for the years ended September 30, 2020 and 2019, respectively:

 

    2020     2019  
Expected provision (based on statutory rate of 21%)   $ (507,379 )   $ (2,881,988 )
Effect of:                
Increase (decrease) in valuation allowance     2,399,698     2,879,685  
Non-Allowable (income) expenses     (233,063 )     500,638  
Rate change            
Prior year true-ups to return and other, net     (1,659,256 )     (498,335 )
Total actual provision   $     $  

 

The Company does not have any material uncertain tax positions. The Company’s policy is to recognize interest and penalties accrued related to unrecognized tax benefits as a component of income tax expense (benefit). For the years ended September 30, 2020 and 2019, the Company did not recognize any interest or penalties, nor did we have any interest or penalties accrued as of September 30, 2020 and 2019 relating to unrecognized benefits. Deferred income tax assets and liabilities at September 30, 2020 and 2019, respectively, consist of the following:

 

    2020     2019  
DEFERRED TAX ASSETS (LIABILITIES)                
Net operating losses   $ 13,767,315     $ 10,295,547  
Exploration costs     (1,156,312 )     (1,110,135 )
Oil and natural gas leases     1,337,094       2,336,776  
IDC     (1,689,664 )     (1,215,096 )
Stock based compensation     666,202       567,406  
Accrued interest and expenses not paid     579,349       386,685  
Derivative financial instrument     224,816     69,120  
Differences in book/tax depreciation     10,392       9,191  
Net deferred tax asset   $ 13,739,192     $ 11,339,494  
Valuation allowance     (13,739,192 )     (11,339,494 )
NET DEFERRED TAXES   $     $  

 

The Company’s valuation allowance increased $2,399,698 during the year ended September 30, 2020 and increased $2,879,685 during the year ended September 30, 2019.

 

At September 30, 2020, the Company had approximately $65.6 million of net operating losses (“NOL”), approximately $32.1 million of which will expire from 2032 to 2038, and approximately $33.5 million of which can be carried forward indefinitely. All of the Company’s NOLs are allowable as a deduction against 100 percent of future taxable income since they were generated prior to the effective date of limitations imposed by the Tax Cut and Jobs Act (TCJA) of 2017 and Coronavirus Aid, Relief, and Economic Security Act (CARES) of 2020.

 

The tax years ended September 30, 2017 through 2020 are open for examination for federal income tax purposes and by other major taxing jurisdictions to which we are subject.