Annual report pursuant to Section 13 and 15(d)

DEFERRED INCOME TAXES

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DEFERRED INCOME TAXES
 12 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
DEFERRED INCOME TAXES

NOTE 9 - DEFERRED INCOME TAXES

The Company calculates its deferred tax assets based upon its consolidated net operating loss (NOL) carryovers available to offset future taxable income, net of other tax credit(s) or tax deferred liabilities, if any. No deferred tax assets for the years ended September 30, 2021 and 2020 have been recorded since any available deferred tax assets are fully offset by increases in its valuation allowances. The Company increased its valuation allowance based on its history of consolidated net losses. At September 30, 2021, the Company has an adjusted net operating loss carryforward of approximately $14,210,000 that expire through 2038. Should a cumulative change in the ownership of more than 50% occur within a three-year period, there could be an annual limitation on the use of the net operating loss carryforwards.

Deferred income taxes reflect the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes plus any available consolidated, net deferred tax credits. Significant components of the Company's net deferred income tax assets at September 30, 2021 and 2020, respectively are as follows:

2021

2020

Depreciation

$

2,746

$

-

Allowance for doubtful account

12,332

9,797

Net operating loss carryforward

3,601,402

3,693,736

Net deferred income tax asset

3,616,480

3,703,533

Less: valuation allowance

(3,616,480)

(3,703,533)

Total deferred income tax assets

$

-

$

-

A reconciliation of the Federal and respective State income tax rate as a percentage of income before taxes is as follows:

2021

2020

Federal statutory taxes

$

71,660

$

32,798

State income taxes, net of federal benefit

19,860

9,090

Change in tax estimates

(5,901)

427,325

Less: Valuation allowance, non-deductible items

1,434

445

Change in valuation allowance

(87,053)

(469,658)

$

-0-

$

-0-

 

 

2021

2020

Federal statutory Income tax rate

21.00%

21.00%

State taxes, net of federal benefit

4.35%

4.35%

Effective rate of deferred tax asset

25.35%

25.35%

Less: Valuation allowance

(25.35%)

(25.35%)

Effective income tax rate

0.00%

0.00%

Management has determined that it is more likely than not that the Company will not use the NOL carryforward and has a 100% valuation allowance against the deferred asset. The reserve is based on historical experience of the Company's operations as it has not recognized net income in its current incarnation and there is no indication of any events or conditions that would show that trend will not continue due to the Company's current expectation of expense requirements.