v3.21.2
Income Taxes
 3 Months Ended
Sep. 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 three months ended September 30, 2021 as follows:

Federal statutory rate

21

%

State tax, net of federal tax effect

5.04

%

Valuation allowance

-26

%

Effective tax rate

0

%

The Company had no federal or state income tax (benefit) for the three months ended September 30, 2021 or 2020.

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

September 30, 2021

June 30, 2021

Federal

Deferred tax assets

$

10,700,000

$

10,226,700

Less valuation allowance

(10,700,000)

(10,226,700)

Deferred tax liabilities

-

-

 

-

-

State

Deferred tax assets

2,704,300

2,730,800

Less valuation allowance

(2,704,300)

(2,730,800)

Deferred tax liabilities

-

-

 

-

-

Net Deferred Tax Assets

$

-

$

-

-18-

The Company's policy is to provide for deferred income taxes based on the difference between the financial statement and tax basis 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 September 30, 2021 and 2020, respectively.

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 differences 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 September 30, 2021 and June 30, 2021, are as follows:

September 30, 2021

June 30, 2021

 

Net operating loss carryforwards

$

13,007,900

$

12,579,200

Valuation allowance

(13,404,300)

(12,957,500)

Goodwill

243,800

(20,400)

Property and equipment

(19,200)

251,600

Development costs

31,500

27,900

Intangible assets

94,500

72,900

Inventory allowance

17,600

17,800

Warranty accrual and other

28,200

28,500

 

Net Deferred Tax Assets

$

-

$

-

As of September 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 September 30, 2021, the Company's income tax returns generally remain open for examination for three years from the date filed with each taxing jurisdiction.