Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.21.4
INCOME TAXES
12 Months Ended
Sep. 30, 2021
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, 2021 and 2020:

 

    2021     2020  
 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, 2021 and 2020, respectively:

 

    2021     2020  
Expected provision (based on statutory rate of 21%)   $ (467,527 )   $ (507,379 )
Effect of:                
Increase (decrease) in valuation allowance     (661,812 )     2,399,698  
Non-Allowable (income) expenses           (233,063 )
Prior year true-ups to return and other, net     1,129,339       (1,659,256 )
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, 2021 and 2020, the Company did not recognize any interest or penalties, nor did we have any interest or penalties accrued as of September 30, 2021 and 2020 relating to unrecognized benefits. Deferred income tax assets and liabilities at September 30, 2021 and 2020, respectively, consist of the following:

DEFERRED TAX ASSETS (LIABILITIES)   2021     2020  
               
Net operating losses   $ 13,028,326     $ 13,767,315  
Exploration costs     (1,299,327 )     (1,156,312 )
Oil and natural gas leases     1,337,094       1,337,094  
IDC     (1,559,306 )     (1,689,664 )
Stock based compensation     686,545       666,202  
Accrued interest and expenses not paid     632,087       579,349  
Derivative financial instrument     252,348       224,816  
Differences in book/tax depreciation     (387 )     10,392  
Net deferred tax asset     13,077,380       13,739,192  
Valuation allowance     (13,077,380 )     (13,739,192 )
NET DEFERRED TAXES   $     $  

 

 

The Company’s valuation allowance decreased $661,812 during the year ended September 30, 2021 and increased $2,399,698 during the year ended September 30, 2020.

 

At September 30, 2021, the Company had approximately $62.0 million of net operating losses (“NOL”), approximately $0.1 million of which will expire from 2024 to 2031, approximately $33.2 million of which will expire from 2032 to 2038, and approximately $28.7 million of which can be carried forward indefinitely. $33.4 million 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. $28.6 million of the Company’s NOLs are allowable as a deduction against 80 percent of future taxable income.

 

The tax years ended September 30, 2018 through 2021 are open for examination for federal income tax purposes and by other major taxing jurisdictions to which we are subject.