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Income Taxes
 6 Months Ended
Dec. 31, 2023
Income Taxes [Abstract]  
INCOME TAXES

13. INCOME TAXES

 

For the three and six months ended December 31, 2022 and 2023 income (loss) before income taxes by major taxing jurisdiction consists of:

 

   Three months ended
December 31,		   Six months ended
December 31,		 
   2022   2023   2022   2023 
HK  $2,893,624   $2,538,994   $4,103,951   $5,691,070 
U.S.   (2,505,554)   (5,994,080)   (5,450,234)   (9,936,111)
Malaysia   
-
    (215,058)   
-
    (303,673)
Total  $388,070   $(3,670,144)  $(1,346,283)  $(4,548,714)

 

Income taxes recorded for the three and six months ended December 31, 2022 and 2023, were estimated using the discrete method. Income taxes are based on the Company’s financial results through the end of the period, as well as the related change in the valuation allowance on deferred tax assets. The Company is unable to estimate the annual effective tax rate with sufficient precision for purposes of the effective tax rate method, which requires the Company to consider a projection of full-year income and the expected change in the valuation allowance. The estimated annual effective tax rate method was not reliable due to its sensitivity to small changes to forecasted annual pre-tax earnings and the effect of the valuation allowance, which create results with significant variations in the customary relationship between income tax expense and pre-tax income for the interim periods. As a result, the Company determined that using the discrete method is more appropriate than using the annual effective tax rate method.

 

The Company’s effective tax rate for the three and six months ended December 31, 2022 and 2023, was different from the Hong Kong statutory income tax rate due primarily to the U.S. subsidiary being in a loss position. No tax benefit has been recognized for this current loss and the related carryforward losses of this subsidiary, as a full valuation allowance has been established against the deferred tax asset arising from the losses.

 

As at June 30, 2023, income tax payable of $63,853 was from income generated during the year ended June 30, 2023. As at December 31, 2023, there was no income tax payable as the tax position was prepaid provisional tax from Hong Kong operation of $440,094. All income tax payables or prepaid amounts arose solely from Hong Kong operation.

 

As at December 31, 2023, there were unrecognized deferred tax assets of $6,016,774, out of which $4,854,545 were net operating loss carryforwards in the U.S. that may result in future income tax benefits, resulting from net operating losses of $23,116,882 from Aspire North America LLC. The amount of the valuation allowance as of December 31, 2023 was $6,016,774, resulting from an addition of $1,516,330 to the valuation allowance of $4,500,444 as of June 30, 2023.