v3.25.1
Income Taxes
 12 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

 

15. Income Taxes

 

We file income tax returns in the United States federal jurisdiction and in various state, local, and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities. The Company is currently on extension and has yet to file their income tax return for the year ended June 30, 2024.

 

As of June 30, 2024 and 2023, the Company had federal and state net operating loss carry forwards of $14,945,830, and $37,237,922, respectively, that may be offset against future taxable income which will begin to expire in 2038 through 2041.

 

The reconciliation of income tax expense computed at the U.S. federal statutory rate to the income tax provision for the years ended June 30, 2024, and 2023 is as follows:

        
   June 30, 
   2024   2023 
Current:          
Federal  $–   $– 
State   –    – 
Foreign   –    – 
Total current income tax expense   –    – 
Deferred:          
Federal   (5,083,865)   (3,267,961)
State   (1,426,068)   (907,392)
Total deferred income tax expense   (6,509,933)   (4,175,893)
           
Valuation allowance   6,509,933    4,175,893 
Total provision for income taxes  $–   $– 

 

The provision for income tax for the year ended June 30, 2024, is included in selling, general and administrative expenses.

 

Deferred income taxes reflect the net tax effects of: (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes; and (b) operating loss and tax credit carryforwards. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. Significant components of deferred tax assets as of June 30, 2024, and 2023 were as follows:

        
   June 30, 
   2024   2023 
         
Depreciation & Amortization  $124,904   $93,044 
Reserves and Accruals   111,487    780,876 
Research & Development Credits   –    – 
Net Operating Loss Carryforwards   16,011,206    9,185,104 
Gross Deferred Tax Assets   16,247,597    10,059,024 
           
Valuation Allowance   (16,247,597)   (10,059,024)
           
Net Deferred Tax Assets  $–   $– 

 

Reconciliation of the statutory federal income tax to the Company's effective tax:

        
   June 30, 
   2024   2023 
         
Tax at Federal Statutory Rate   21.0%    21.0% 
State, Net of Federal Benefit   4.9%    4.3% 
Foreign Tax   0.0%    0.0% 
Tax Exempt Interest Income   0.0%    (0.06)% 
Gain on Expiration of Accrued Tax Liability   0.0%    0.0% 
Stock Based Compensation   (3.7)%    (4.1)% 
Nondeductible Interest   0.0%    (20.1)% 
Change in Valuation Allowance   (22.2)%    (20.6)% 
           
Provision for Taxes   (0.6)%    (0.4)% 

 

The difference in the effective rate and the statutory rate is due to permanent differences, primarily deductibility of penalties and interest on accrued payroll tax liabilities and the gains related to the expiration of the statute of limitations for accrued payroll tax liabilities.