v3.26.3
Income Taxes
 12 Months Ended
Jun. 30, 2026
Income Taxes [Abstract]  
INCOME TAXES

Note 14. INCOME TAXES

 

On March 27, 2020, the CARES Act was enacted and signed into law and includes, among other things, refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods and alternative minimum tax credit refunds. The Company does not at present expect the provisions of the CARES Act to have a material impact on its tax provision given the amount of net operating losses currently available.

 

For the years ended June 30, 2026 and 2025, total pre-tax income, disaggregated by U.S. and foreign sources, is presented below:

 

    For the Years Ended June 30,  
    2026     2025  
Pre-tax loss from U.S, operations   $ (5,667,830 )   $ (2,935,846 )
Pre-tax loss from PRC operations     (242,801 )     (348,455 )
Net loss before income tax expenses   $ (5,910,631 )   $ (3,284,301 )

 

The Company’s income tax expenses for years ended June 30, 2026 and 2025 are as follows:

 

    For the Years Ended June 30,  
    June 30,     June 30,  
    2026     2025  
Current            
U.S.     -     $ 30,230  
PRC     -       -  
Total income tax expenses     -     $ 30,230  

 

Total cash payments for income taxes, disaggregated by taxing jurisdiction for the respective fiscal years, are as follows:

 

    For the Years Ended June 30,  
    2026     2025  
Federal income tax paid (U.S.)     -     $ 21,000  
State income tax paid (U.S.)     -       9,230  
Foreign (PRC) income tax paid     -       -  
Total cash income tax paid     -     $ 30,230  

 

No U.S. federal or U.S. state income tax payments were made for the year ended June 30, 2026, as the U.S. entities recorded operating losses with no taxable U.S.-source income generated. No PRC income tax payments were made for both fiscal years, as the PRC entities recorded operating losses with no taxable PRC-source income generated.

 

The following table reconciles the expected income tax expense calculated by applying the U.S. federal statutory corporate tax rate of 21% to the Company’s consolidated pre-tax profit, to the actual total income tax expense recorded in the statements of operations for the respective periods:

 

    For the Years Ended June 30,  
    2026     2026     2025     2025  
    Dollar     Effective     Dollar     Effective  
    Amount     tax rate     Amount     tax rate  
US Statutory tax rate   $ (1,241,134 )     21.0 %   $ (822,804 )     21.0 %
Change in valuation allowance     1,371,736       (23.3 %)     834,566       (19.8 %)
Rate differential in foreign jurisdiction     (130,602 )     2.3 %     18,468       (0.3 %)
Total     -       -     $ 30,230       0.9 %

 

The Company’s deferred tax assets are comprised of the following:

 

    As of     As of  
    June 30,     June 30,  
    2026     2025  
Allowance for credit losses                
PRC   $ 389,000     $ 368,000  
                 
Net operating loss                
U.S.     23,506,000       22,932,000  
PRC     307,000       222,000  
Total deferred tax assets     24,202,000       23,522,000  
Valuation allowance     (24,202,000 )     (23,522,000 )
Deferred tax assets, net - long-term     -       -  

 

As of June 30, 2026 and 2025, the Company incurred a cumulative U.S. federal net operating loss (“NOL”) of approximately $112.1 million and $109.5 million, which may be available for reducing future taxable income.

 

As of June 30, 2026 and 2025, the Company’s operations in China incurred a cumulative NOL of approximately $1.2 million and approximately $0.9 million, which may be available for reducing future taxable income.

 

The Company periodically evaluates the likelihood of the realization of deferred tax assets (“DTA”) and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Management considers new evidence, both positive and negative, that could affect the Company’s future realization of deferred tax assets including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevant factors. The Company determined that it is more likely than not that its deferred tax assets could not be realized due to uncertainty on future earnings as a result of the company’s reorganization and venture into new businesses. The Company provided a 100% allowance for its DTA as of June 30, 2026.

 

The Company’s taxes payable consists of the following:

 

    As of     As of  
    June 30,     June 30,  
    2026     2025  
Corporate income tax payable   $ 2,267,124     $ 2,151,691  
VAT tax payable     1,105,775       1,046,456  
Other taxes payable     54,964       52,326  
Total   $ 3,427,863     $ 3,250,473