INCOME TAXES

12 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

The Company did not incur current income tax expense for either of the years ended September 30, 2019 or 2018.

At September 30, 2019, the Company had available approximately $5.2 million of net operating loss (“NOL”) carry forwards which expire in the years 2029 through 2036. However, the use of the net operating loss carryforwards generated prior to September 30, 2011 totaling $0.7 million is limited under Section 382 of the Internal Revenue Code. Section 382 of the Internal Revenue Code of 1986, as amended (the Code), imposes an annual limitation on the amount of taxable income that may be offset by a corporation’s NOLs if the corporation experiences an “ownership change” as defined in Section 382 of the Code. For the year ended September 30, 2019, the Company's NOL was approximately $130,000, which can be carried forward indefinitely. 

Significant components of the Company’s deferred tax assets at September 30, 2019 and 2018 are as follows:

	2019			2018
Net operating loss carry forwards	$	1,224,993		$	1,191,194
Unrealized loss		807,975			807,975
Stock based compensation		8,322			27,070
Accrued expenses		777,330			620,460
Total deferred tax assets		2,818,620			2,646,699
Valuation allowance		(2,818,620	)		(2,646,699	)
Net deferred tax assets	$	—		$	—

Due to the uncertainty of their realization, a valuation allowance has been established for all of the income tax benefit for these deferred tax assets.

The following is a reconciliation of the Company’s income tax rate using the federal statutory rate to the actual income tax rate as of September 30, 2019 and 2018:

	2019			2018
Federal tax rate		(21	)%		(21	)%
Effect of state taxes		(6	)%		(6	)%
Effect of NOL		0	%		1.9	%
Change in valuation allowance		27	%		25.1	%
Total		0	%		0	%

At September 30, 2019 and 2018, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. The Company does not expect that its unrecognized tax benefits will materially increase within the next twelve months. The Company recognizes interest and penalties related to uncertain tax positions in general and administrative expense. As of September 30, 2019, and 2018 the Company has not recorded any provisions for accrued interest and penalties related to uncertain tax positions.

The Company files its federal and state income tax returns under a statute of limitations. The tax years ended September 30, 2016 through September 30, 2019 generally remain subject to examination by federal tax authorities.