NOTE 13 - INCOME TAXES

12 Months Ended

Jun. 30, 2022

Notes

NOTE 13 - INCOME TAXES

NOTE 13 - INCOME TAXES

The Company has had no income tax expense or benefit since July 1, 1997, because of operating losses. Deferred tax assets and liabilities are determined based on the estimated future tax effect of differences between the financial statement and tax reporting basis of assets and liabilities, as well as for net operating loss carry forwards, given the provisions of existing tax laws. The Company files income tax returns in the U.S. and state jurisdictions and there are open statutes of limitations for taxing authorities to audit the Company’s tax returns for fiscal years ended after June 30, 2016.

The approximate income tax benefit is computed by applying the current revised U.S. federal income tax rate of 21% to net income (loss) before taxes for the fiscal years ended June 30, 2020 and prior tax years at the revised tax rate of 21% . New Mexico revised their tax rate to 6.2 % for 2017 and 5.9 % in 2019 and the approximate income tax benefit is computed by applying the current revised New Mexico revised tax rate of 5.9% to net income (loss) before taxes for the fiscal year ended after June 30, 2013.

The components of the income tax benefit provision are as follows:

		Fiscal Year Ended June 30,
		2022			2021 (Restated)
Tax (benefit) at the federal statutory rate	$	(282,861	)	$	(251,748	)
State tax (benefit)		(79,471	)		(70,729	)
Reduction in Federal and/or State tax rates		1,313,873			288,776
Decrease (increase) in valuation allowance		(951,541	)		33,701
Income tax expense	$	---		$	---

The components of the deferred tax assets at June 30, 2022 and 2021 are as follows:

Deferred Tax Asset

	Fiscal Year Ended June 30,
		2022			2021 (Restated)
Federal net operating loss carry forwards	$	21,112,513		$	22,143,525
State net operating loss carry forwards		2,204,335			2,124,864
Valuation allowance		(23,316,848	)		(24,268,389	)
Net deferred tax asset	$	---		$	---

In assessing the realizability of estimated deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. Due to the Company’s history of losses, the deferred tax assets are fully offset by a valuation allowance as of June 30, 2022 and 2021.

At June 30, 2022, the Company had estimated federal tax basis net operating loss carry forwards for federal income tax purposes of approximately $114.3 million. Under the Tax Cuts and Jobs Act (“TCJA”) passed on December 22, 2017, provides that net operating losses (“NOL”) arising in tax years beginning after December 31, 2017, the TCJA limits NOL deduction to 80% of taxable income.

For tax years beginning after December 31, 2017, the TCJA eliminated the two-year carryback period but allows for an infinite carryforward.

For NOL’s generated in tax years beginning prior to December 31, 2017, the prior tax law still applies, and the 80 percent limitation does not apply, and the NOL’s can be carried forward for 20 years. The Company has an approximate NOL under the old tax law of $104.96 million. The NOL’s under the old tax law expire in varying amounts between 2023 and 2038.

At June 30, 2022, the Company had estimated state tax basis NOL carryforwards for state income tax purposes of approximately $36.2 million. Net operating losses for state income tax purposes beginning with our tax year ended in 2014, may be carried forward for nineteen years. These losses expire in varying amounts from 2033 to 2041.