13. Income Taxes

12 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

13 Income Taxes

We file income tax returns in the United States federal jurisdiction and in various state and local jurisdictions. In the normal course of business, we are subject to examination by taxing authorities. The tax years ending 2018 through 2020 remain subject to examination for federal tax purposes and remain subject to examination in significant state tax jurisdictions. The Company has yet to file their income tax return for the year ended June 30, 2021

As of June 30, 2021, the Company had federal and state net operating loss carry forwards of $20,036,664 that may be offset against future taxable income which will begin to expire in 2038 through 2041.

The reconciliation of income tax expense computed at the U.S. federal statutory rate to the income tax provision for the years ended June 30, 2021 and 2020 is as follows:

	2021			2020
Current:
Federal	$	–		$	–
State		2,400			–
Foreign		–			–
		2,400			–
Deferred:
Federal		(1,607,556	)		(522,084	)
State		(446,626	)		(145,050	)
		(2,054,182	)		(667,134	)
Valuation allowance		2,054,182			667,134
Total provision for income taxes	$	2,400		$	–

The provision for income tax for the year ended June 30, 2021 is included in selling, general and administrative expenses.

Deferred income taxes reflect the net tax effects of: (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes; and (b) operating loss and tax credit carry-forwards. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. Significant components of deferred tax assets as of June 30, 2021 and 2020 were as follows:

	2021			2020
Depreciation & Amortization	$	1,521		$	450
Reserves and Accruals		250,907			118,071
Net Operating Loss Carryforwards		2,688,360			768,085
Gross Deferred Tax Assets		2,940,788			886,606
Valuation Allowance		(2,940,788	)		(886,606	)
Net Deferred Tax Assets	$	–		$	–

Reconciliation of the statutory federal income tax to the Company's effective tax:

	2021		2020
Tax at Federal Statutory Rate		21.0 %		21.0 %
State, Net of Federal Benefit		(36,423)%		5.9 %
Payroll Tax Interest		(155,721)%		10.5 %
Gain on Expiration of Accrued Tax Liability		10,224 %		(6.6)%
Stock Based Compensation		13,788%		(3.7)%
Change in Tax Rate		(168,111)%		0.0 %
Change in Valuation Allowance		168,522 %		(27.0)%
Provision for Taxes		196.6 %		0.0 %

The difference in the effective rate and the statutory rate is due to permanent differences, primarily deductibility of penalties and interest on accrued payroll tax liabilities and the gains related to the expiration of the statute of limitations for accrued payroll tax liabilities.