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Income Taxes | 12 Months Ended
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Jun. 30, 2024
Income Taxes [Abstract] |
Income Taxes | 7. INCOME TAXES The Company utilizes the liability method of accounting for income taxes. The liability method measures the expected income tax impact of future taxable income and deductions implicit in the Consolidated Balance Sheets. The income tax (benefit) provision in 2024 and 2023 consisted of the following:
Years Ended June 30, |  | 2024 |  | 2023
Current: |  |  |  |  |  |
Federal |  | $ | (81,278) |  | $ | 230,139
State |  |  | 7,674 |  |  | 87,238
Deferred |  |  | — |  |  | —
Total income tax (benefit) provision |  | $ | (73,604) |  | $ | 317,377
The 2024 and 2023 tax results in an effective rate different than the federal statutory rate because of the following:
Years Ended June 30, |  | 2024 |  | 2023
Federal income tax (benefit) liability at statutory rate |  | $ | (214,457) |  | $ | 1,803,000
State income tax liability, net of federal income tax effect |  |  | (41,386) |  |  | 323,565
Utilization of net operating loss carryforwards |  |  | — |  |  | (1,720,747)
Increase (decrease) in valuation allowance |  |  | 270,679 |  |  | (44,841)
Stock option (deduction) |  |  | (243) |  |  | (24,218)
All other permanent items |  |  | (45,299) |  |  | (41,701)
R&D credit |  |  | (25,459) |  |  | (19,340)
Return-to-provision |  |  | (81,738) |  |  | (54,414)
Deferred adjustment related to payroll tax withholding on disqualifying disposition of incentive stock options |  |  | 110,906 |  |  | —
State tax rate change |  |  | (55,248) |  |  | 83,094
Uncertain tax position |  |  | 2,593 |  |  | 25,269
Other |  |  | 6,048 |  |  | (12,290)
Total income tax (benefit) provision |  | $ | (73,604) |  | $ | 317,377
During the year ended June 30, 2024, a federal tax benefit of $81,278 was recorded as a result of the return-to-provision (RTP) adjustments recorded in the period identified. The adjustments were identified when the prior year tax returns were filed in the third quarter of fiscal year 2024. State income tax expense of $7,674, which represented only the required minimum estimated state tax payments due, offset the federal tax benefit for a total income tax benefit of $73,604. For the year ended June 30, 2023, as a result of additional income generated by licensing fees, partially offset by related legal fees and expenses, taxable income for the period was generated. For NOLs arising in tax years beginning after December 31, 2017, the Tax Cuts and Jobs Act (“TCJA”) limits the NOL deduction to 80 percent of taxable income. As such, the utilization of the Company’s net operating loss carryforwards from fiscal years after 2018 is limited to 80 percent of the resulting taxable income whereas NOL carryforwards from fiscal 2017 and 2018 could be utilized to offset taxable income at 100 percent. The utilization of net operating loss carryforwards significantly reduced the taxable income for the year ended June 30, 2023, resulting in federal and state tax provisions of $230,139 and $87,238, respectively. ‎ Temporary differences which give rise to deferred income tax assets and liabilities at June 30, 2024 and 2023 include:
|  | 2024 |  | 2023
Deferred income tax assets: |  |  |  |  |  |
Deferred compensation |  | $ | 523,785 |  | $ | 491,608
Stock-based compensation |  |  | 76,532 |  |  | 117,607
Accrued expenses and reserves |  |  | 501,736 |  |  | 571,719
Deferred revenue |  |  | 102,519 |  |  | 138,665
Federal and state net operating loss carryforwards |  |  | 8,508,548 |  |  | 8,216,671
IRC Section 174 research and development costs |  |  | 116,204 |  |  | 63,855
Credit carryforwards |  |  | 184,406 |  |  | 169,552
Equipment and leasehold improvements |  |  | 159,648 |  |  | 136,294
Operating lease liability |  |  | 696,026 |  |  | 744,431
Valuation allowance |  |  | (10,176,697) |  |  | (9,906,018)
Total deferred income tax assets |  |  | 692,707 |  |  | 744,384
Deferred income tax liabilities: |  |  |  |  |  |
Operating right-of-use asset |  |  | (692,028) |  |  | (742,386)
Other |  |  | (679) |  |  | (1,998)
Total deferred income tax liabilities |  |  | (692,707) |  |  | (744,384)
Net deferred income tax assets |  | $ | — |  | $ | —
D eferred income tax balances reflect the effects of temporary differences between the tax bases of assets and liabilities and their carrying amounts. These differences are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. The recognition of these deferred tax balances will be realized through normal recurring operations and, as such, the Company has recorded the value of such expected benefits. The Company has federal net operating loss carryforwards of approximately $32,778,000 which can be carried forward indefinitely and state net operating loss carryforwards totaling approximately $11,242,000 in Wisconsin, which expire in tax years 2029 through 2043, and approximately $15,910,000 in other states. Given a taxable net loss for fiscal year 2024, it is expected that $1,270,000 will be added to the Company’s federal net operating loss carryforwards. The Company's remaining tax loss carryforward as of June 30, 2024 is expected to be approximately $32,778,000 and given recurring taxable losses with the exception of fiscal year 2023 whereby taxable income was generated mainly as a result of non-recurring license proceeds, the future realization of this continues to be uncertain. The valuation allowance was adjusted to continue to fully offset the deferred tax asset as there is sufficient negative evidence to support a full valuation allowance. For the year ended June 30, 2023, the Company utilized federal net operating loss carryforwards of approximately $6,944,000 to offset taxable income. At the state level, net operating loss carryforwards of $4,381,000 in Wisconsin and all other states combined were utilized. The need for a valuation allowance is evaluated each accounting period based on the Company’s evaluation of positive and negative evidence concerning the usage of their deferred tax assets. As of the end of the period, the Company has evaluated all evidence concerning the usage of their deferred tax assets and the determination has been made to maintain a full valuation allowance on the Company’s net deferred tax asset. The need for a valuation allowance is an estimate at period-end, which is subject to change once additional evidence is obtained in future periods.
The following are the changes in the valuation allowance: |  |  |  |  |  |  |  |  |
|  | Balance, |  | Decrease (Increase) |  |  |
|  | beginning |  | in valuation |  | Balance,
Years Ended June 30, |  | of year |  | allowance |  | end of year
2024 |  | $ | (9,906,018) |  | $ | (270,679) |  | $ | (10,176,697)
2023 |  | $ | (11,671,606) |  | $ | 1,765,588 |  | $ | (9,906,018)
Generally accepted accounting principles in the United States (“GAAP”) prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. Due to the non-recurring license proceeds, the Company had positive taxable income for the fiscal year ending June 30, 2023 and was able to use all their federal R&D tax credits, including carryovers, of $132,466. The claim for research and development (R&D) tax credits continues to be a highly scrutinized area by the Internal Revenue Service and, while the Company is confident in its credit claim, it cannot anticipate the impact that future guidance could have on current claims. Due to the costs of defense, the Company may also decide to settle for less than the full amount of the credits used on the returns. As a result, the Company believes that it is more likely than not that upon audit, the realization of the credits used would be 80% and accordingly recorded a liability of approximately $28,000 and $25,000 as a reserve for an uncertain tax position (“UTP”) related to the R&D credits taken at June 30, 2024 and 2023, respectively. The UTP increased during 2024 due to a change in the final credit amount utilized with the fiscal year 2023 tax return. The reserve for UTP was recorded in income taxes payable on the Consolidated Balance Sheets. There were no other matters determined to be unrecognized tax benefits taken or expected to be taken in a tax return that have been recorded on the Company’s Consolidated Financial Statements for the years ended June 30, 2024 and 2023. Additionally, GAAP provides guidance on the recognition of interest and penalties related to income taxes. No interest or penalties related to income taxes has been accrued or recognized as of and for the years ended June 30, 2024 or 2023. The Company records interest related to unrecognized tax benefits, when applicable, in interest expense. The Company files income tax returns in the United States federal jurisdiction and in several state jurisdictions. The Company’s federal tax returns and state income tax returns are open for the standard statutory period.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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