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Income Taxes
 6 Months Ended
Dec. 31, 2024
Income Taxes [Abstract]  
INCOME TAXES

11. INCOME TAXES

 

For the three and six months ended December 31, 2024 and 2023 loss before income taxes consists of:

 

   Three months ended
December 31,		   Six months ended
December 31,		 
   2024   2023   2024   2023 
HK  $2,601,917   $2,538,994   $5,533,109   $5,691,070 
U.S.   (9,427,325)   (5,963,668)   (17,204,217)   (9,872,671)
Malaysia   (713,204)   (215,058)   (1,005,767)   (303,673)
Total  $(7,538,612)  $(3,639,732)  $(12,676,875)  $(4,485,274)

 

Income taxes recorded for the three and six months ended December 31, 2024 and 2023, were estimated using the discrete method. Income taxes are based on the Company’s financial results through the end of the period, as well as the related change in the valuation allowance on deferred tax assets. The Company is unable to estimate the annual effective tax rate with sufficient precision for purposes of the effective tax rate method, which requires the Company to consider a projection of full-year income and the expected change in the valuation allowance. The estimated annual effective tax rate method was not reliable due to its sensitivity to small changes to forecasted annual pre-tax earnings and the effect of the valuation allowance, which create results with significant variations in the customary relationship between income tax expense and pre-tax income for the interim periods. As a result, the Company determined that using the discrete method is more appropriate than using the annual effective tax rate method.

 

The Company’s effective tax rate from operations was (6.10%) and (9.68%) for the three months ended December 31, 2024 and 2023, respectively. The Company’s effective tax rate from operations was (7.23%) and (18.91%) for the six months ended December 31, 2024 and 2023, respectively. The Company’s effective tax rate differs from the federal statutory rate of 21% in each period primarily due to the Company’s net loss position, nondeductible expenses, and valuation allowance.

 

As of December 31, 2024, income tax expense of $460,031 and $916,784 was from income generated during the three and six months ended December 31, 2024. At December 31, 2023, income tax expense of $352,180 and $848,225 was from income generated during the three and six months ended December 31, 2023. All income tax expenses arose solely from Hong Kong operation.