v3.26.3
Income Taxes
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes

Note 15 – Income Taxes

 

In addition to corporate income taxes in the United States, upon completion of the acquisition of Anivia in February 2022, the Company is subject to corporate income taxes in People’s Republic of China (“PRC”). Anivia and its subsidiaries are subject to BVI or Hong Kong income taxes but did not have any operations in those jurisdictions for the year ended June 30, 2022. The Company’s subsidiary in China, Dayourenzai (Shenzhen) Technology Co., Ltd. (“WFOE”), is subject to the Global Intangible Low-Taxed Income (or GILTI) Tax. WFOE is subject to 5% tax rate in PRC until December 31, 2027. Since WFOE had losses during the years ended June 30, 2026 and 2025, no GILTI tax was recorded as of June 30, 2026 and 2025. The Company is not eligible for the GILTI high-tax exclusion.

 

For the years ended June 30, 2026 and 2025, the Company had income tax benefit of $3,079,172 and $1,348,313, respectively.

 

The Company is subject to U.S. federal income tax as well as state income tax in certain jurisdictions. The tax years 2023 to 2025 remain open to examination by the major taxing jurisdictions to which the Company is subject. The following is a reconciliation of income tax expenses at the effective rate to income tax at the calculated statutory rates:

Schedule of income tax reconciliation                      
    For the Year Ended June 30,
    2026  2025
    Amount    %  Amount     %
Statutory tax rate                          
Federal   $ 3,462,659     21.00 %   $ 1,406,463      21.00 % 
State (net of federal benefit)     887,101     5.38 %     377,184      5.63 % 
Foreign tax     (49,467 )   (0.3)%     (249,815 )    (3.73)% 
Permanent differences     (705,723 )   (4.28)%     –      – % 
Others     (515,398 )   (3.13)%     (185,519 )    (2.77)% 
Effective tax rate   $ 3,079,172     18.67 %   $ 1,348,313      20.13 % 

 

As of June 30, 2026, prepaid income taxes to US tax authorities was $99,954. As of June 30, 2025, prepaid income taxes to US tax authorities and income tax payable to Chinese tax authorities was $19,073 and $280,155, respectively.

 

The tax effects of temporary differences which give rise to significant portions of the deferred taxes are summarized as follows:

          
   June 30, 2026   June 30, 2025 
Deferred tax assets          
263A calculation  $–   $256,568 
Inventory reserve   75,001    83,180 
State taxes   3,797    4,844 
Accrued expenses   21,745    21,750 
ROU assets / liabilities   71,926    95,711 
Net operating loss   4,627,370    2,962,954 
Disallowed interest expense   403,565    311,662 
Stock-based compensation   524,891    336,394 
Unrealized gain/loss   230,654    – 
Allowance for credit loss   720,427    512,289 
Discount on note receivable   131,767    – 
Total deferred tax assets   6,811,143    4,585,352 
           
Deferred tax liabilities          
Depreciation   (29,280)   (56,648)
Intangible assets acquired   (632,907)   (804,242)
Total deferred tax liabilities   (662,187)   (860,890)
           
Net deferred tax assets  $6,148,956   $3,724,462 

 

The Company assesses the realizability of deferred tax assets based on all available positive and negative evidence, including historical results of operations, projected future taxable income, reversal of existing temporary differences, and available tax planning strategies. Based on its assessment, the Company determined that it is more likely than not that the deferred tax assets will be realized and, accordingly, no valuation allowance was recorded as of June 30, 2026 and 2025.