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INCOME TAXES | 12 Months Ended
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Jun. 30, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES |
(5) | INCOME TAXES
The Company has identified its federal tax return and its state tax return in Massachusetts as “major” tax jurisdictions. The periods subject to examination for its federal and state income tax returns are the years ended in 2017 and thereafter. The Company believes its income tax filing positions and deductions will be sustained on audit and it does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no liabilities for uncertain income tax positions have been recorded. The provision for income taxes in the accompanying consolidated statements of operations consists of the state income tax liability of $952 and $912 for the years ended June 30, 2022, and 2021, respectively. A reconciliation of the federal statutory rate to the Company’s effective tax rate for the fiscal years ended June 30, 2022 and 2021 is as follows:
Schedule of effective income tax rate reconciliation |  |  |  |  |  |  |  |
|  | 2022 |  |  | 2021 |
Income tax expense (benefit) at federal statutory rate |  |  | (21.0)% |  |  |  | (21.0)% |
Increase (decrease) in tax resulting from: |  |  |  |  |  |  |  |
State taxes, net of federal benefit |  |  | (7.1)% |  |  |  | (145.8)% |
Change in valuation allowance |  |  | 22.6% |  |  |  | 182.8% |
Stock based compensation |  |  | 26.9% |  |  |  | 195.0% |
Forgiveness of bank note |  |  | – |  |  |  | (214.9)% |
Revaluation of contingent earn out liability |  |  | (21.8)% |  |  |  | – |
Nondeductible items |  |  | 0.3% |  |  |  | 3.0% |
Effective tax rate |  |  | (0.1)% |  |  |  | (0.9)% |
The components of deferred tax assets and liabilities at June 30, 2022 and 2021 are approximately as follows:
Schedule of deferred tax assets and liabilities |  |  |  |  |  |  |  |
|  | 2022 |  |  | 2021 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carry forwards |  | $ | 2,640,000 |  |  | $ | 2,403,000 |
Tax credit carry forwards |  |  | 164,000 |  |  |  | 186,000 |
Reserves and accruals not yet deducted for tax purposes |  |  | 512,000 |  |  |  | 668,000 |
Total deferred tax assets |  |  | 3,316,000 |  |  |  | 3,257,000 |
Valuation allowance |  |  | (3,316,000 | ) |  |  | (3,257,000 | )
Net deferred tax asset |  | $ | – |  |  | $ | – |
The Company has provided a valuation allowance to reduce the net deferred tax asset to an amount the Company believes is “more likely than not” to be realized. At June 30, 2022, the Company had federal and state net operating loss carry forwards of approximately $10,961,000 and $4,750,000, respectively, which will, if not used, expire at various dates beginning in fiscal year 2023. In addition, the Company had net operating loss carry forwards from its Hong Kong operations of approximately $2,252,000, which carry forward indefinitely.

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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 -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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