v3.21.2
Income Taxes
 12 Months Ended
Jun. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

Note 9 – Income Taxes

The Company’s effective tax rate differed from the federal statutory income tax rate for the years ended June 30, 2021 and 2020 as follows:

Federal statutory rate

21%

State tax, net of federal tax effect

5.5%

Valuation allowance

27%

Effective tax rate

0%

The Company had no federal or state income tax (benefit) for the years ended June 30, 2021 and 2020.

F-23

The Company’s deferred tax assets and liabilities as of June 30, 2021 and 2020, are summarized as follows:

2021

2020

Federal

Deferred tax assets

$

10,226,700

$

4,825,100

Less valuation allowance

(10,226,700)

(4,825,100)

Deferred tax liabilities

-

-

 

-

-

State

Deferred tax assets

2,730,800

1,290,900

Less valuation allowance

(2,730,800)

(1,290,900)

Deferred tax liabilities

-

-

 

-

-

Net Deferred Tax Assets

$

-

$

-

The Company’s policy is to provide for deferred income taxes based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates that will be in effect when the differences are expected to reverse. The Company has not generated taxable income and has not recorded any current income tax expense at June 30, 2021 and 2020.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred taxes is dependent upon the generation of future taxable income during the periods in which those temporary differenced become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment.

The Company’s deferred tax assets are primarily comprised of net operating losses (“NOL”) that give rise to deferred tax assets. The NOL carryforwards expire over a range from 2021 to 2037, with certain NOL carryforwards that have no expiration. There is no tax benefit for goodwill impairment, which is permanently non-deductible for tax purposes. Additionally, due to the uncertainty of the utilization of NOL carry forwards, a valuation allowance equal to the net deferred tax assets has been recorded.

The significant components of deferred tax assets as of June 30, 2021 and 2020, are as follows:

2021

2020

Net operating loss carryforwards

$

12,579,200

$

5,767,000

Valuation allowance

(12,957,500)

(6,116,000)

Property and equipment

(20,400)

(10,500)

Goodwill

251,600

278,900

Intangible assets

72,900

35,800

Development costs

27,900

-

Inventory allowance

17,800

17,800

Warranty accrual

28,500

27,000

Net Deferred Tax Assets

$

-

$

-

As of June 30, 2021, the Company does not believe that it has taken any tax positions that would require the recording of any additional tax liability nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next twelve months. As of June 30, 2021, the Company’s income tax returns generally remain open for examination for three years from the date filed with each taxing jurisdiction.