Income Taxes

12 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

The provision for income taxes for the years ended June 30, 2021 and 2020 consists of the following:

	2021		2020
Current income tax provision
Federal	$	—	$	—
State	—		—
	—		—
Deferred income tax provision
Federal	(51,366)		(8,061)
State	(14,676)		(2,303)
Change in valuation allowance	66,042		10,364
	—		—
Income tax expense (benefit)	$	—	$	—

Income tax expense (benefit) as a percentage of loss for the years ended June 30, 2021 and 2020 differ from statutory federal income tax rate due to the following:

	2021		2020
Statutory federal income tax rate	21.00	%	21.00	%
Permanent differences	0.00	%	0.00	%
Valuation allowance	(21.00)	%	(21.00)	%
Effective income tax rate	0.00	%	0.00	%

The components of the net deferred income tax assets and liabilities as of June 30, 2021 and 2020 are as follows:

	2021		2020
Deferred income tax assets:
Net operating loss carryforward	$	7,352,719	$	7,212,393
Executive post retirement costs	—		—
General business credit	—		207,698
Allowance for doubtful accounts	21,100		25,728
Accrued vacation	49,336		43,741
Inventory reserve	69,432		69,432
Accelerated depreciation	65,432		69,196
Warranty reserve	6,736		6,736
Total deferred income tax assets	7,564,755		7,634,924
Valuation allowance	(7,543,251)		(7,609,293)
	21,504		25,631
Deferred income tax liabilities:
Accelerated depreciation	(21,504)		(25,631)
Total deferred income tax liabilities	(21,504)		(25,631)
	$	—	$	—

As of June 30, 2021, the Company has a valuation allowance of $7,543,251, which primarily relates to the federal net operating loss carryforwards. During the year ended June 30, 2021, the valuation allowance decreased by $66,042 and during the year ended June 30, 2020, the valuation decreased by $10,364. The valuation allowance is a result of management evaluating its estimates of the net operating losses available to the Company as they relate to the results of operations of acquired businesses subsequent to their being acquired by the Company. The Company evaluates a variety of factors in determining the amount of the valuation allowance, including the Company’s earnings history, the number of years the Company’s operating loss and tax credits can be carried forward, the existence of taxable temporary differences, and near-term earnings expectations. Future reversal of the valuation allowance will be recognized either when the benefit is realized or when it has been determined that it is more likely than not that the benefit will be realized through future earnings. The Company has available federal and state net operating loss carry forwards of approximately $33,528,000 and $3,267,000, respectively, of which $19,623,000 and $2,808,000, respectively, will expire over the next ten years, $12,242,000 and $459,000, respectively, will expire in years eleven through twenty, and $1,662,000 and $0, respectively, which will not expire.

The Company continues to monitor the realization of its deferred tax assets based on changes in circumstances, for example, recurring periods of income for tax purposes following historical periods of cumulative losses or changes in tax laws or regulations. The Company’s income tax provision and management’s assessment of the realizability of the Company’s deferred tax assets involve significant judgments and estimates. If taxable income expectations change, in the near term the Company may be required to reduce the valuation allowance which would result in a material benefit to the Company’s results of operations in the period in which the benefit is determined by the Company.

Fiscal year ended June 30, 2018 and subsequent years remain open to tax examination. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses were generated and carried forward, and make adjustments up to the amount of the net operating loss amount. At June 30, 2021, the Company did not have any significant unrecognized tax positions. The Company has provided what it believes to be an appropriate amount of tax for

items that involve interpretation to the tax law. However, events may occur in the future that will cause the Company to reevaluate the current provision and may result in an adjustment to the liability for taxes.