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INCOME TAXES | 12 Months Ended
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Jun. 30, 2025
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 provision (benefit) in 2025 and 2024 consisted of the following:
Years Ended June 30, |  | 2025 |  | 2024
Current: |  |  |  |  |  |
Federal |  | $ | 5,570 |  | $ | (81,278)
State |  |  | 11,912 |  |  | 7,674
Deferred |  |  | — |  |  | —
Total income tax provision (benefit) |  | $ | 17,482 |  | $ | (73,604)
‎ The 2025 and 2024 tax results in an effective rate different than the federal statutory rate because of the following:
Years Ended June 30, |  | 2025 |  | 2024
Federal income tax benefit at statutory rate |  | $ | (171,882) |  | $ | (214,457)
State income tax liability, net of federal income tax effect |  |  | (28,359) |  |  | (41,386)
Increase in valuation allowance |  |  | 207,877 |  |  | 270,679
Stock option (deduction) |  |  | (152,407) |  |  | (243)
All other permanent items |  |  | (47,104) |  |  | (45,299)
R&D credit |  |  | (6,999) |  |  | (25,459)
Return-to-provision adjustment |  |  | 3,411 |  |  | (81,738)
Deferred adjustment related to payroll tax withholding on disqualifying disposition of incentive stock options |  |  | 33,665 |  |  | 110,906
State tax rate change |  |  | 43,812 |  |  | (55,248)
Uncertain tax position |  |  | 4,279 |  |  | 2,593
Deferred adjustment related to state net operating loss |  |  | 119,059 |  |  | —
Other |  |  | 12,130 |  |  | 6,048
Total income tax provision (benefit) |  | $ | 17,482 |  | $ | (73,604)
During the year ended June 30, 2025, a federal tax provision of $5,570 was recorded for the uncertain tax position related to research and development (R&D) credits taken in a prior year. State income tax expense of $11,912, which represented only the required minimum estimated state tax payments due, combined with the federal tax expense for a total income tax expense of $17,482. For the year ended June 30, 2024, a federal tax benefit of $81,278 was recorded as a result of the Return-to-Provision (RTP) adjustment. State tax expense of $7,674 was also recorded in that same period for the required minimum state tax payments. For the year ended June 30, 2025, another $1,150,000 was added to the NOL balance as a result of taxable net losses 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. Temporary differences which give rise to deferred income tax assets and liabilities at June 30, 2025 and 2024 include:
|  | 2025 |  | 2024
Deferred income tax assets: |  |  |  |  |  |
Deferred compensation |  | $ | 541,577 |  | $ | 523,785
Stock-based compensation |  |  | 34,315 |  |  | 76,532
Accrued expenses and reserves |  |  | 498,423 |  |  | 501,736
Deferred revenue |  |  | 123,766 |  |  | 102,519
Federal and state net operating loss carryforwards |  |  | 8,697,265 |  |  | 8,508,548
IRC Section 174 research and development costs |  |  | 127,053 |  |  | 116,204
Credit carryforwards |  |  | 173,529 |  |  | 184,406
Equipment and leasehold improvements |  |  | 184,868 |  |  | 159,648
Operating lease liability |  |  | 618,268 |  |  | 696,026
Valuation allowance |  |  | (10,384,574) |  |  | (10,176,697)
Total deferred income tax assets |  |  | 614,490 |  |  | 692,707
Deferred income tax liabilities: |  |  |  |  |  |
Operating right-of-use asset |  |  | (612,516) |  |  | (692,028)
Other |  |  | (1,974) |  |  | (679)
Total deferred income tax liabilities |  |  | (614,490) |  |  | (692,707)
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 $34,000,000 which can be carried forward indefinitely and state net operating loss carryforwards totaling approximately $11,231,000 in Wisconsin, which expire in tax years 2029 through 2044 and approximately $15,367,000 in other states. Given a taxable net loss for fiscal year 2025, it is expected that $1,150,000 will be added to the Company’s federal net operating loss carryforwards 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, 2024, the Company added federal net operating loss carryforwards of approximately $1,270,000 as a result of a taxable net loss for that fiscal year. 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.
|  | Balance, |  | Decrease (Increase) |  |  |
|  | beginning |  | in valuation |  | Balance,
Years Ended June 30, |  | of year |  | allowance |  | end of year
2025 |  | $ | (10,176,697) |  | $ | (207,877) |  | $ | (10,384,574)
2024 |  | $ | (9,906,018) |  | $ | (270,679) |  | $ | (10,176,697)
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 positive taxable income in prior years, a significant portion of the Company’s federal R&D tax credits were taken, including carryovers. 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 as a reserve for an uncertain tax position (“UTP”) related to the R&D credits taken. The UTP balance is $38,100 and $28,200 at June 30, 2025 and 2024, respectively. The UTP increased during 2025 due to an additional credit amount utilized with the fiscal year 2024 tax return. The reserve for UTP is 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, 2025 and 2024. 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, 2025 or 2024. 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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