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INCOME TAX
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
INCOME TAX

NOTE 16. INCOME TAX

 

The Company computes income taxes using the asset and liability method in accordance with FASB ASC Topic 740, Income Taxes. Under the asset and liability method, we determine deferred income tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities and measure them using currently enacted tax rates and laws. The Company provides a valuation allowance for deferred tax assets that, based on available evidence, when deferred taxes are not more likely than not to be realized. Realization of our net operating loss carryforward was not reasonably assured as of June 30, 2026 and 2025, and the Company has recorded a full valuation allowance against deferred tax assets in excess of deferred tax liabilities.

 

The components of net deferred taxes are as follows:

 

         
    June 30, 2026     June 30, 2025  
Deferred Tax Assets:                
Net Operating Loss - U.S.   $ 5,698,243     $ 5,206,430  
Net Operating Loss - Foreign     8,810,502       7,293,562  
Operating lease liabilities     353,631       18,342  
Employee benefits     274,972       275,950  
Foreign exchange     322,294       (80,599 )
Total deferred tax assets     15,459,642       12,713,685  
Less: valuation allowance     (15,119,454 )     (12,698,469 )
Deferred tax assets after valuation allowance     340,188       15,216  
                 
Deferred Tax Liabilities:                
Operating leases, Right-of-use assets     (340,188 )     (15,216 )
Total deferred tax liabilities     (340,188 )     (15,216 )
Net deferred tax assets   $ -     $ -

 

Reconciliation of U.S. Federal Statutory Income Tax to Income Tax Provision (Benefit)

 

Deferred tax assets and liabilities 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.

 

For the year ended June 30, 2026, the Company adopted ASU 2023-09 on a retrospective basis. The following table depicts the significant components of our deferred tax assets and liabilities and a reconciliation of statutory tax rates to effective tax rates for the years ended June 30, 2026 and 2025: 

 

SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

   Amount   Percentage   Amount   Percentage 
   Year Ended June 30, 
   2026   2025 
   Amount   Percentage   Amount   Percentage 
U.S. federal statutory rate applies to pretax income (loss)  $(2,664,252)   21.0%  $(2,227,026)   21.0%
Different tax rate of subsidiary   (315,441)   2.5%   (82,675)   0.8%
Permanent differences   848,942    (6.7)%   444,887    (4.2)%
Cumulative adjustment to deferred taxes   449,514    (3.5)%   (444,694)   4.2%
Return to provision   (327,516)   2.6%   74,111    (0.7)%
Change in state tax rates and other   (412,232)   3.2%   (41,504)   0.4%
Change in valuation allowance   2,420,985    (19.1)%   2,276,901    (21.5)%
Total income tax provision (benefit) and effective income tax rate  $-    -%  $-    -%

 

 

As of June 30, 2026 and 2025, the Company had federal income tax net operating loss carryforwards of approximately $27,134,492 and $24,792,525, respectively, and foreign income tax net operating loss carryforwards of approximately $41,235,337 and $34,214,143, respectively, which expire at various dates ranging from 2038 through unlimited expiration.

 

The Company is subject to U.S. federal income tax and state income tax. The statute of limitations for assessment by the IRS and state tax authorities is open for the tax years of 2022-2024; currently, no federal or state income tax returns are under examination by the respective taxing authorities.