Summary of Significant Accounting Policies (Policies)

9 Months Ended

Mar. 31, 2021

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

A)    BASIS OF PRESENTATION

The condensed consolidated balance sheets as of March 31, 2021 and June 30, 2020, the condensed consolidated statements of operations for the three and nine months ended March 31, 2021 and 2020, the condensed consolidated statements of cash flows for the nine months ended March 31, 2021 and 2020, and the condensed consolidated statements of stockholders' equity for the three and nine months ended March 31, 2021 and 2020, have been prepared by the Company in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and have not been audited.    In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for all periods presented have been made.  The operating results for any interim period are not necessarily indicative of the operating results that may be experienced for the full fiscal year.

Certain information and footnote disclosure normally included in consolidated financial statements prepared in accordance with U.S. GAAP  have been condensed or omitted.  These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020.

The preparation of financial statements in conformity with U.S. GAAP requires the company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses. Significant estimates and assumptions are used for, but are not limited to, allowances for doubtful accounts, reserves for excess and obsolete inventories, long-lived and intangible assets, income tax valuation allowance, non-cash stock-based compensation and deferred compensation. Actual results could differ from the Company's estimates.

Income Taxes

B)    INCOME TAXES

A state tax provision of $49 and $4,068 was recorded for the three and nine months ended March 31, 2021, respectively, for states where there is no net operating loss carryforward.  For the three and nine months ended March 31, 2020, the state tax provision was $6,104 and $6,125, respectively.  The federal income tax expense was zero for the three and nine months ended March 31, 2021 and 2020. 

In the three months ended March 31, 2021, stock option exercises resulted in tax deductible compensation expense of approximately $29,300,000.  The deduction of this stock option exercise compensation expense will cause a tax loss in the year ended June 30, 2021, which will be carried forward to future tax years.  The expected tax loss carryforward will create a deferred tax asset of approximately $7,400,000.  The future realization of this deferred tax asset is uncertain.  The valuation allowance was increased to fully offset the deferred tax asset.

Other Income

C)   OTHER INCOME

On November 3, 2020, the Company was notified that the full $506,700 of the SBA Loan (see Note 3) was forgiven.  The loan forgiveness has been treated as other income and shown as a separate line on the Condensed Consolidated Statements of Operations.  The Company followed the debt and debt extinguishment accounting model for the SBA Loan forgiveness.

In the three months ended March 31, 2021, the Company received

$378,805 from a director in settlement of a short sale under Rule 144.