v3.26.3
PROVISION FOR INCOME TAXES
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
PROVISION FOR INCOME TAXES

NOTE 13. PROVISION FOR INCOME TAXES

 

The components of loss before provision for income taxes for the years ended June 30, 2026 and 2025 were as follows:

   2026   2025 
   For the Years Ended
June 30,		 
   2026   2025 
         
Loss subject to domestic income taxes  $(15,426,033)  $(1,221,400)
Loss subject to foreign income taxes   -    -
Total loss  $(15,426,033)  $(1,221,400)

 

The Company recorded no provision for foreign income taxes for the years ended June 30, 2026 and 2025.

 

There was no current or deferred income tax provision for the years ended June 30, 2026 and 2025.

 

A reconciliation of the expected tax provision at the statutory federal income tax rate to the Company’s recorded tax provision consisted of the following, subsequent to the adoption of ASU 2023-09:

   Amount   Percent 
   For the Year Ended
June 30, 2026		 
   Amount   Percent 
         
Computed expected tax benefit at U.S. federal tax statutory rate  $(3,239,467)   -21.0%
State benefit, net of federal benefit   (134,895)   -4.2%
Nontaxable or nondeductible items:          
Stock based compensation expense   81,454    25.2%
Goodwill   2,530,654    25.2%
Valuation allowance   762,254    -25.2%
           
Provision for income tax and effective tax rate  $-    0.0%

 

 

A reconciliation of the expected tax provision at the statutory federal income tax rate to the Company’s recorded tax provision consisted of the following, prior to the adoption of ASU 2023-09:

 

   For the Year Ended
June 30, 2025		 
     
Computed expected tax benefit at U.S. federal tax statutory rate  $(256,494)
State benefit, net of federal benefit   (5,238)
Nontaxable or nondeductible items:     
Stock based compensation expense   68,429 
Goodwill   (271,419)
Valuation allowance   464,722 
      
Provision for income tax  $- 

 

There was no cash paid for income taxes for the year ended June 30, 2026 subsequent to the adoption of ASU 2023-09.

 

Net deferred tax asset consisted of the following as of June 30, 2026 and 2025:

   2026   2025 
   As of June 30, 
   2026   2025 
         
Net operating loss carryforwards  $12,215,461   $8,189,759 
Goodwill and intangible asset   2,216,688    3,467,304 
Stock based compensation   399,052    369,595 
Other   -    583,433 
Total deferred tax assets   14,831,201    12,610,091 
Valuation allowance   (14,831,201)   (12,610,091)
Deferred tax asset, net  $-   $- 

 

The Company has established a valuation allowance against the net U.S. deferred tax assets due to uncertainty regarding the ability to utilize these deferred tax assets in the future. As of June 30, 2026, the Company had Federal net operating loss carryforwards (“NOLs”) for the years ending June 30, 2018 and prior of approximately $2.88 million that begin to expire in 2037 and NOLs for the years ending June 30, 2019 through 2026 of approximately $52.46 million that have no expiration date. New York State / New York City NOLs as of June 30, 2026 of approximately $15.26 million and $15.26 million, respectively, have no expiration date. California and Virginia State NOLs as of June 30, 2025 of $17.02 million and $4.97 million, respectively, have no expiration date.

 

Section 382 of the U.S. Internal Revenue Code imposes an annual limitation on the amount of net operating loss carryforwards that may be used to offset taxable income when a corporation has undergone significant changes in stock ownership. The Company has not completed a Section 382 analysis of stock ownership and its effect upon federal and state NOL carryforwards. Consequently, the Company’s NOL carryforwards may be subject to annual limitations under Section 382.

 

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and taxing strategies in making this assessment. As a result of the uncertainty in the realization of the Company’s deferred tax assets, the Company has provided a valuation allowance for the full amount of the deferred tax assets as of June 30, 2026 and 2025.

 

Upon completion of its 2025 (for fiscal year ending June 30, 2026) U.S. income tax return, the Company may identify additional remeasurement adjustments. The Company will continue to assess its provision for income taxes as future guidance is issued, but does not currently anticipate significant revisions will be necessary.

  

Uncertain Tax Positions

 

The following table summarizes the activity related to unrecognized tax benefits for the years ended June 30, 2026 and 2025:

    2026     2025  
    For the Years Ended June 30,  
    2026     2025  
             
Unrecognized tax benefit - beginning of year   $ -     $ 38,588  
Gross increases - prior year tax positions     -       -  
Gross decreases - prior year tax positions     -       (38,588 )
Gross increases - current year tax positions     -       -  
Gross decreases - current year tax positions     -       -  
Statute lapse     -       -  
Total provision for income taxes   $ -     $ -  

 

No interest and penalties were incurred or accrued for the years ended June 30, 2026 and 2025.

 

The Company files U.S., state and foreign tax returns with varying statutes of limitations. No examinations by U.S., state or foreign authorities are currently under way.