v3.26.3
Deferred Tax Benefit
 12 Months Ended
Jun. 30, 2026
Deferred Tax Benefit [Abstract]  
DEFERRED TAX BENEFIT
12. DEFERRED TAX BENEFIT

 

The Company files income tax returns in the U.S. Federal jurisdiction, and the state of California. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2022. 

 

Deferred income taxes have been provided by temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. To the extent allowed by GAAP, we provide valuation allowances against the deferred tax assets for amount when the realization is uncertain. Included in the balance at June 30, 2026 and 2024, are no tax positions for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility.  Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.  

 

The Company’s policy is to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the year ended June 30, 2026 and 2025, the Company did not recognize interest or penalties. 

 

At June 30, 2026, the Company had net operating loss carry-forward of approximately $14,525,770, which expires in future years. No tax benefit has been reported in the June 30, 2026 and 2025 financial statements, since the potential tax benefit is offset by a valuation allowance of the same amount. 

 

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the years ended June 30, 2026 and 2025 due to the following: 

 

    6/30/2026     6/30/2025  
Book income (loss)   $ (1,371,620 )   $ (1,727,524 )
Non-deductible expenses     250,033       143,419  
Depreciation and amortization     (73 )     (1,310 )
Valuation Allowance     1,121,660       1,585,415  
                 
Income tax expense   $ -     $ -  

 

Deferred taxes are provided on a liability method, whereby deferred tax assets are recognized for deductible differences and operating loss and tax credit carry-forward and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the difference between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 

 

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 

 

Net deferred tax liabilities consist of the following components as of June 30, 2026 and 2025: 

 

    6/30/2026     6/30/2025  
Deferred tax assets:            
NOL carryover   $ 3,050,412     $ 6,430,334  
Depreciation and amortization     (1,313 )     11  
Deferred tax liabilities:     -       -  
                 
Less Valuation Allowance   $ (3,049,099 )   $ (6,430,345 )
Income tax expense   $ -     $ -  

 

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry-forward for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry-forward may be limited as to use in future years. 

 

The Company’s tax returns for the previous three years remain open for audit by the respective tax jurisdictions.