Income Taxes

12 Months Ended

Jun. 30, 2023

Income Taxes

Income Taxes [Text Block]

Note 8. Income Taxes

As of June 30, 2023 and June 30, 2022 there was no U.S. federal, state, or local income tax benefit.

The components of the Company's income tax benefit are as follows for the years ended June 30:

		2023			2022
Expected tax benefit	$	1,044,407		$	838,554
State taxes, net of federal tax benefit		156,392			125,854
Valuation allowance		(1,173,848	)		(939,878	)
Incentive stock options		(22,330	)		(23,551	)
Other, net		(4,621	)		(978	)
	$	-		$	-

The Company's deferred income tax assets and (liabilities) related to the tax effects of temporary differences are as follows as of June 30:

		2023			2022
Net deferred income tax assets (liabilities):
Inventory capitalization for income tax purposes	$	43,155		$	72,773
Inventory reserve		120,153			91,016
Accrued employee benefit reserve		43,088			60,773
Warranty reserve		28,016			47,321
Accrued bonus and deferred payroll tax		-			136,384
Interest expense limitation		233,416			203,342
Allowance for doubtful accounts and other		85,351			114,130
Property and equipment, principally due to differences in depreciation		27,883			(34,830	)
Research and development credit carryover		574,022			467,701
Deferred gain on sale lease-back		224,777			258,790
Operating loss carry forwards		4,719,831			3,585,760
Valuation allowance		(6,104,053	)		(5,003,159	)
Capitalized research and development		4,361			-
Total deferred income tax assets (liabilities)	$	-		$	-

Quarterly, the Company assesses the likelihood by jurisdiction that its net deferred income tax assets will be recovered. Based on the weight of all available evidence, both positive and negative, the Company records a valuation allowance against deferred income tax assets when it is more-likely-than-not that a future tax benefit will not be realized. When there is a change in judgment concerning the recovery of deferred income tax assets in future periods, a valuation allowance is recorded into earnings during the quarter in which the change in judgment occurred. As of June 30, 2023 and 2022, the Company has established a full valuation allowance.

As of June 30, 2023, the Company had federal and state operating loss carryforwards of $19.2 million and $8.7 million, respectively. The federal net operating loss carryforwards have carryforward periods that are indefinite or begin to expire in 2037. The state net operating loss carryforwards have carryforward periods that are indefinite or have various expirations. The Company has no uncertain tax positions as of June 30, 2023.