v3.22.1
Income Taxes
 9 Months Ended
Mar. 31, 2022
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 nine months ended March 31, 2022 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 nine months ended March 31, 2022 or 2021.

 

The Company's deferred tax assets and liabilities as of March 31, 2022 and June 30, 2021, are summarized as follows:

 

 

 

March 31, 2022

 

June 30, 2021

 

 

 

 

 

Federal

 

 

 

 

Deferred tax assets

 $           7,425,300

 

 $     10,226,700

 

Less valuation allowance

(7,425,300)

 

 (10,226,700)

 

Deferred tax liabilities

  -

 

  -

 

 

  -

 

-

State

 

 

 

 

 

Deferred tax assets

 1,876,400

 

  2,730,800

 

Less valuation allowance

  (1,876,400)

 

  (2,730,800)

 

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 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 March 31, 2022 and 2021, 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 2022 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 March 31, 2022 and June 30, 2021, are as follows:

 

 

March 31, 2022

 

June 30, 2021

Net operating loss carryforwards

 $              9,120,300

 

 $                      12,579,200

Valuation allowance

                (9,301,700)

 

                        (12,957,500)

Goodwill

16,200

 

                           (20,400)

Property and equipment

                    (30,300)

 

                            251,600

Development costs

112,800

 

27,900

Intangible assets

36,900

 

                             72,900

Inventory allowance

                     17,600

 

                             17,800

Warranty accrual and other

28,200

 

28,500

 

 

 

 

    Net Deferred Tax Assets

 $                           -

 

 $                                   -

 

As of March 31, 2022, 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 March 31, 2022, the Company's income tax returns generally remain open for examination for three years from the date filed with each taxing jurisdiction.