v3.22.2.2
Income Taxes
 3 Months Ended 12 Months Ended
Sep. 30, 2022
Jun. 30, 2022
Income Tax Disclosure [Abstract]    
Income Taxes

Note 8 - Income Taxes

 

The Company's effective tax rate differed from the federal statutory income tax rate for the three months ended September 30, 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 three months ended September 30, 2022 or 2021.

 

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

 

  

September 30, 2022

 

June 30, 2022

Federal

  

 

 

Deferred tax assets

 $  8,177,800

 $  7,781,500

 

Less valuation allowance

 (8,177,800)

 (7,781,500)

 

Deferred tax liabilities

 -

 -

  

 -

 -

  

 

 

Deferred tax assets

 1,459,400

 1,966,600

 

Less valuation allowance

 (1,459,400)

 (1,966,600)

 

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 September 30, 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 2023 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, 2022 are as follows:

 

 

September 30, 2022

 

June 30, 2022

Net operating loss carryforwards

 $  9,411,900

 

$ 9,539,900

Valuation allowance

 (9,637,200)

 

(9,748,100)

Goodwill

5,800

 

11,000

Property and equipment

 (30,200)

 

(32,000)

Development costs

54,800

 

124,600

Intangible assets

136,400

 

46,100

Inventory allowance

 30,300

 

30,300

Warranty accrual and other

28,200

 

28,200

 

 

 

 

 Net Deferred Tax Assets

 $ -

 

$   -

 

As of September 30, 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 September 30, 2022, the Company's income tax returns generally remain open for examination for three years from the date filed with each taxing jurisdiction.

Note 9 - Income Taxes

 

The Company’s effective tax rate differed from the federal statutory income tax rate for the years ended June 30, 2022 and 2021 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, 2022 and 2021.

 

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

 

Federal

 
2022
   
2021
      

Deferred tax assets

$

7,781,500

$

10,226,700

Less valuation allowance

 

(7,781,500)

  

(10,226,700)

Deferred tax liabilities

 

-

  

-

  

-

  

-

State

     
      

Deferred tax assets

 

1,966,600

  

2,730,800

Less valuation allowance

 

(1,966,600)

  

(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 June 30, 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 2023 to 2038, 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, 2022 and 2021, are as follows:

 

  

2022

2021

Net operating loss carryforwards

$

9,539,900

$ 12,579,200

Valuation allowance

 

(9,748,100)

(12,957,500)

Property and equipment

 

(32,000)

(20,400)

Goodwill

 

11,000

251,600

Intangible assets

 

124,600

72,900

Development costs

 

46,100

27,900

Inventory allowance

 

30,300

17,800

Warranty accrual and other

 

28,200

28,500

Net Deferred Tax Assets

$

 -

$  -  

As of June 30, 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 June 30, 2022, the Company's income tax returns generally remain open for examination for three years from the date filed with each taxing jurisdiction.