INCOME TAXES

12 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 8 - INCOME TAXES

For the year ended June 30, 2022, net loss was $506,000,  as compared to a net loss of $1,091,000 for the year ended June 30, 2021. For the years ended June 30, 2022 and 2021, no provision for income taxes was recorded. 

Reconciliation between the expected federal income tax rate and the actual tax rate is as follows:

	Years Ended June 30,
	2022			2021
Federal statutory tax rate		21	%		21	%
State tax, net of federal benefit		6	%		6	%
Total tax rate		27	%		27	%
Allowance		(27	)%		(27	)%
Effective tax rate		—	%		—	%

The following is a summary of the deferred tax assets:

	Years Ended June 30,
	2022			2021
Net operating loss carryforwards	$	3,982,000		$	3,846,000
Deferred tax assets before valuation allowance		3,982,000			3,846,000
Valuation allowance		(3,982,000	)		(3,846,000	)
Net deferred tax asset	$	—		$	—

The Company has provided a valuation allowance on the deferred tax assets at June 30, 2022 and 2021 to reduce such asset to zero, since there is no assurance that the Company will generate future taxable income to utilize such asset. Management will review this valuation allowance requirement periodically and make adjustments as warranted. The net change in the valuation allowance for the year ended June 30, 2022, was an increase of $136,000.

Veritec has net operating loss carryforwards of approximately $14,749,000 for federal purposes available to offset future taxable income that expires in varying amounts through 2042. The ability to utilize the net operating loss carryforwards could be limited by Section 382 of the Internal Revenue Code which limits their use if there is a change in control (generally a greater than 50% change in ownership). The Company is subject to examination by tax authorities for all years for which a loss carryforward is utilized in subsequent periods.

The Company follows FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This guidance also provides guidance on derecognition, classification, interest, and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of June 30, 2022 and 2021, the Company did not have a liability for unrecognized tax benefits, and no adjustment was required at adoption.

The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of June 30, 2022 and 2021, the Company has no accrued interest or penalties related to uncertain tax positions.