Pure Cycle Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

INCOME TAXES (Tables)

12 Months Ended

Aug. 31, 2019

Significant components of the Company’s deferred tax assets as of August 31 are as follows:

	For the Fiscal Years Ended August 31,
	2019			2018
Deferred tax assets (liabilities):
Net operating loss carryforwards	$	609,439		$	2,009,800
AMT credit carryforward		—			282,000
Accrued compensation		113,559			—
Deferred revenues		149,895			28,600
Depreciation and depletion		(46,408	)		(104,900	)
NQ stock options		410,633			—
Other		46,128			80,500
Valuation allowance		—			(2,014,000	)
Net deferred tax asset	$	1,283,246		$	282,000

Income Tax Reconciliation

Income taxes computed using the federal statutory income tax rate differs from the Company’s effective tax rate primarily due to the following for the fiscal years ended August 31:

	For the Fiscal Years Ended August 31,
	2019			2018
Expected benefit from federal taxes at statutory rate of 21% and 34% for the years 2019 and 2018	$	740,870		$	34,100
State taxes, net of federal benefit		129,123			4,600
Permanent and other differences		10,388			97,800
Change in tax rate		—			1,196,464
NOL true up		225,067			17,589
Temporary difference true up		—			240,352
NQ stock options adjustment		(348,441	)		—
AMT credit carryforward		—			(282,000	)
Other		(26,202	)		(17,705	)
Change in valuation allowance		(2,014,000	)		(1,573,200	)
Total income tax expense / (benefit)	$	(1,283,195	)	$	(282,000	)