Note 8. Income Taxes

The income tax (benefit) provision is as follows for the year ended June 30, 2025 and June 30,2024:

		Current		Deferred		Total
2025:
U.S. federal	$	-	$	-	$	-
State and local		12,161		-		12,161
	$	12,161	$	-	$	12,161
2024:
U.S. federal	$	-	$	-	$	-
State and local		-		-		-
	$	-	$	-	$	-

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

		2025			2024
Expected tax benefit	$	2,289,444		$	566,521
State taxes, net of federal tax benefit		404,341			97,884
Valuation allowance		(802,322	)		(664,480	)
Impairment		(1,758,432	)		-
Incentive stock options		-			1,657
Other, net		(145,192	)		(1,582	)
	$	(12,161	)	$	-

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

		2025			2024
Net deferred income tax assets (liabilities):
Inventory capitalization for income tax purposes	$	21,864		$	28,642
Inventory reserve		136,671			145,227
Accrued employee benefit reserve		31,067			40,164
Warranty reserve		26,108			29,720
Interest expense limitation		441,908			339,509
Allowance for credit losses and other		47,931			35,918
Property and equipment, principally due to differences in depreciation		(144,592	)		(13,672	)
Intangible assets		400,613			121,697
Research and development credit carryover		574,022			574,022
Deferred gain on sale lease-back		154,891			191,436
Operating loss carry forwards		5,993,596			5,388,117
Valuation allowance		(7,686,550	)		(6,884,228	)
Capitalized research and development		2,471			3,448
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, 2025 and 2024, the Company has established a full valuation allowance.

As of June 30, 2025, the Company had federal and state operating loss carryforwards of approximately $24.7 million and $12.6 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, 2025.