NOTE 9 — INCOME TAXES The following table summarizes deferred tax assets and liabilities as of the date of the Exchange Agreement and through June 30, 2022: | | | | | | | | | | | | | | | Deferred | | | | | Existing valuation allowance | | | | | | Tax Assets | | Deferred Tax Liabilities | | Prior to business combination | | Net Position | Deferred tax assets | | $ | 910 | | $ | — | | $ | — | | $ | 910 | Deferred tax liabilities | | | — | | | (18) | | | — | | | (18) | Valuation allowance | | | — | | | — | | | (892) | | | (892) | Total MiT Inc. June 30, 2022 | | $ | 910 | | $ | (18) | | $ | (892) | | $ | — | | | | | | | | | | | | | | MiT Inc. | | $ | — | | $ | — | | $ | — | | $ | — | MiT LLC | | | 248 | | | (13) | | | (235) | | | — | Total July 7, 2021 (see note 1) | | $ | 248 | | $ | (13) | | $ | (235) | | $ | — |
The following table summarizes the components of deferred tax assets and deferred tax liabilities: | | | | | | Deferred Tax | | | Assets (Liabilities) | Inventory reserve | | $ | 122 | Accumulated depreciation | | | (6) | Accumulated goodwill amortization | | | (12) | Accumulated intangible amortization | | | 8 | Unrealized loss on investments | | | 68 | Deferred rent | | | 6 | Warranty reserve | | | 5 | Stock compensation | | | 68 | Net operating loss carryforward | | | 594 | Allowance for doubtful accounts | | | 39 | Net | | | 892 | Valuation allowance | | | (892) | Total June 30, 2022 | | $ | — | | | | | Inventory reserve | | $ | 133 | Accumulated depreciation | | | (7) | Accumulated goodwill amortization | | | (6) | Deferred rent | | | 7 | Warranty reserve | | | 8 | Allowance for doubtful accounts | | | 100 | Net | | | 235 | Valuation allowance | | | (235) | Total July 7, 2021 (see note 1) | | $ | — |
NOTE 9 — INCOME TAXES (continued) The income tax expense differs from the amount computed by applying the statutory income tax rates to the loss before income tax. The following table shows the reasons for these differences: | | | | | | | | | | 2022 | | 2021 | | Net loss before tax | | $ | (1,345) | | $ | (645) | | United States corporate tax rate | | | 21 | % | | 21 | % | Tax Benefit at statutory rate | | | 282 | | | 135 | | Differences due to: | | | | | | | | State taxes | | | 119 | | | 58 | | PPP Loan Forgiveness | | | 210 | | | — | | Other, permanent differences | | | 46 | | | 42 | | Change in valuation allowance | | | (657) | | | (235) | | Income Tax (Benefit) Expense | | $ | — | | $ | — | | Effective Tax Rate | | | (0) | % | | (0) | % |
At June 30, 2022 the Company has approximately $2,180,000 of U.S. State and $2,200,000 of U.S. Federal NOL carryforwards, which will not expire and will be available for future use to offset taxable income. The Company recognized a valuation allowance of $892,000 and $235,000 as of June 30, 2022 and 2021, respectively, as all U.S. Federal and state deferred tax assets have been determined to be not more likely than not realizable. Management does not believe that it had any significant uncertain tax positions at June 30, 2022 and 2021, nor is this expected to change within the next twelve months due to the settlement and expiration of statutes of limitation.
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