Post-effective amendment to a registration statement that is not immediately effective upon filing


12 Months Ended
Jun. 30, 2022
Income Tax Disclosure [Abstract]  



The Company follows ASC 740-10-10, under which an entity recognizes deferred tax assets and liabilities for future tax consequences or for events that were previously recognized in the Company’s financial statements or tax returns. The measurement of deferred tax assets and liabilities is based on enacted tax law provisions. The effects of future changes in tax laws or rates are not anticipated. Through June 30, 2010, the Company operated exclusively in Australia. The Company was wholly subject to Australian income tax laws and regulations, which are administered by the Australian Taxation Office for the years ended June 30, 2010 and all prior years.


On November 23, 2010, the Company was incorporated in the state of Delaware. In January 2011, the Company acquired all of the outstanding shares of Propanc PTY LTD on a one-for-one basis with Propanc PTY LTD becoming a wholly owned subsidiary of the Company. As a result of these transactions, the Company is subject to the income tax laws of both the United States and Australia for the years ended June 30, 2013 through June 30, 2022.


The reconciliation of income tax expense computed at the U.S. federal statutory rate of 21% to the income tax provision for the years ended June 30, 2022 and 2021 is as follows:

    Year Ended  
US   June 30, 2022     June 30, 2021  
Loss before Income taxes   $ (2,658,087 )   $ (2,025,947 )
Taxes under statutory US tax rates   $ (558,198 )   $ (425,449 )
Increase (decrease) in valuation allowance     339,334       1,146,001  
Prior period adjustment     -       (1,063,710 )
Foreign tax rate differential     (64,349 )     (51,169 )
Income tax rate change     272,008       392,767  
Other     11,205       1,559  
Income tax (expense) benefit   $ -     $ -  


The Company reflects a tax benefit on its consolidated statement of operations and comprehensive income (loss) in 2022 and 2021 of $54,977 and $113,415, respectively. These amounts are research and development tax credits and are not considered income tax.


On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.





June 30, 2022 and 2021


Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities consist of the following:


    Year Ended  
    June 30, 2022     June 30, 2021  
Deferred tax assets                
Warrant Derivative Liability   $ 7,403     $ 7,403  
Accrued Expenses     363,873       342,464  
Prepaid Investor Services     427,318       444,411  
Non-cash interest     709,936       687,529  
Intangibles (Intellectual Property and Patent Cost)     293,260       259,743  
Deferred Rent     4,198       4,262  
Formation Expense     6,553       6,815  
Net Operating Loss carryforward     8,759,357       8,546,920  
Foreign Exchange Loss (OCI)     (39,379 )     (39,379 )
Revalue of derivative liability     460,772       439,958  
Stock Based Compensation     84,028       51,481  
Total Deferred tax assets   $ 11,077,318     $ 10,751,607  
Deferred tax liabilities                
R&D   $ (170,435 )   $ (197,604 )
Gain on extinguishment of debt     (259,470 )     (277,614 )
Capital Raising Costs     (352,981 )     (321,291 )
Total deferred tax liabilities   $ (782,886 )   $ (796,509 )
Net deferred tax assets   $ 10,294,432     $ 9,955,098  
Valuation allowance     (10,294,432 )     (9,955,098 )
Net deferred tax assets   $ -     $ -  


At June 30, 2022, the Company had U.S. net operating loss carry forwards of approximately $10,183,947 that may be offset against future taxable income, subject to limitation under IRC Section 382. Of the approximately $10.2 million of net operating loss carryforwards, $7.2 million will begin to expire in 2024 and the remaining $3.0 million will not expire but is subject to annual usage limitations. The Australian tax rate changed from 26% in 2021 to 25% in 2022. At June 30, 2022, the Company had Australia net operating loss carry forwards of approximately $26,482,912 which can be carried forward without expiration. No tax benefit has been reported in the June 30, 2022 and 2021 consolidated financial statements due to the uncertainty surrounding the realizability of the benefit, based on a more likely than not criteria and in consideration of available positive and negative evidence.


The Company applied the “more-likely-than-not” recognition threshold to all tax positions taken or expected to be taken in a tax return, which resulted in no unrecognized tax benefits as of June 30, 2022 and 2021, respectively.


Management has determined that the realization of the net deferred tax asset is not assured and has created a valuation allowance for the entire amount of such benefits.


The Company follows ASC 740-10, which provides guidance for the recognition and measurement of certain tax positions in an enterprise’s financial statements. Recognition involves a determination whether it is more likely than not that a tax position will be sustained upon examination with the presumption that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant information.


The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the consolidated statement of operations. As of June 30, 2022, the Company had no unrecognized tax benefits. There were no changes in the Company’s unrecognized tax benefits during the years ended June 30, 2022 and 2021. The Company did not recognize any interest or penalties during fiscal 2022 or 2021 related to unrecognized tax benefits.


The income tax returns filed for the tax years from inception will be subject to examination by the relevant taxing authorities.