AMERICAN BATTERY TECHNOLOGY Co Income Taxes Disclosure

 

17.	Income Taxes

 

The Company has not recognized any income tax provisions for the fiscal years ended June 30, 2025 and 2024. The U.S. federal corporate statutory rate of 21.0% is the applicable corporate tax rate used for fiscal years ended June 30, 2025 and 2024. The statutory rate differs from the Company’s computed expected tax recovery rate due to the following adjustments for the fiscal years ended June 30:

Schedule of Federal Income Tax provision 

		2025				2024
Net loss before taxes		$	(46,762,625	)		$	(52,501,819	)
Statutory Rate			21	%			21	%
Computed expected tax recovery			(9,839,003	)			(11,025,382	)
State income tax (benefit), net of federal benefit			(1,080,844	)			(315,287	)
Section 162(m) adjustments			-				71,043
Other permanent tax differences			537,794				(121,985	)
Share-based compensation – RSUs/PSUs			1,351,909				701,362
Uncertain tax positions			-				(219,450	)
Tax credit			(11,697	)			-
Deferred adjustments and other			(501,191	)			(518,766	)
Change in valuation allowance			9,543,032				11,428,465
Total income tax provision		$	-			$	-

 

The significant components of deferred income tax assets and liabilities at June 30, after applying the statutory corporate income tax rate, are as follows for the fiscal years ended June 30:

 Schedule of Deferred Income Tax Assets and Liabilities  

		2025				2024
Net operating losses		$	30,864,583			$	25,676,852
Stock-based compensation			4,097,550				2,472,597
Section 174 capitalization			2,328,383				1,938,732
Other temporary differences			420,994				390,384
Fixed assets and intangibles			4,007,255				1,697,171
Valuation allowance			(41,718,765	)			(32,175,736	)
Net deferred tax asset		$	-			$	-

 

We believe that it is more likely than not that the benefit from our net deferred tax assets will not be realized. At June 30, 2025 and 2024, respectively, we have provided a valuation allowance of $41.7 and $32.2 million against our deferred taxes. If our assumptions change and we determine that we will be able to realize these deferred tax asset amounts, the Company will adjust its disclosures appropriately.

 

As of June 30, 2025, the Company has accumulated federal and state net operating loss carryforwards of approximately $141.8, and $15.6 million, respectively. If unused, $2.5 million of our federal net operating loss carryforwards will expire in 2032, and $139.2 million will carry forward indefinitely. $2.6 million of our state net operating loss carryforwards will begin to expire in 2041 and $13.0 million will carryforward indefinitely. In addition, under the Tax Cuts and Jobs Act (Tax Act) the amount of federal net operating losses generated in taxable periods beginning after December 31, 2017, that we are permitted to deduct in any taxable year is limited to 80% of our taxable income in such year, where taxable income is determined without regard to the net operating loss deduction itself. The Tax Act generally eliminates the ability to carry back any net operating loss to prior taxable years, while allowing post-2017 unused net operating losses to be carried forward indefinitely. The Company also has $66.2 thousand of federal Research and Development Credit carryforwards will expire in 2042.

 

Utilization of net operating losses, credit carryforwards, and certain deductions may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The tax benefits related to future utilization of federal and state net operating losses, tax credit carryforwards, and other deferred tax assets may be limited or lost if cumulative changes in ownership exceeds 50% within any three-year period. Additional limitations on the use of these tax attributes could occur in the event of possible disputes arising in examinations from various taxing authorities. Any net operating loss or credit carryforwards that will expire prior to utilization as a result of such limitations will be removed from deferred tax assets.

 

The Company has recorded uncertain tax positions (“UTP”) that result in unrecognized tax benefits recorded on the books of the Company. The unrecognized tax benefits for the Company are as follows as of June 30:

 Schedule of Unrecognized Tax Benefits 

		2025				2024
Unrecognized tax benefits, beginning of period		$	-			$	219,450
Decrease during the period			-				(219,450	)
Increase during the period			-
Unrecognized tax benefits, end of period		$	-			$	-

 

 

The Company does not have an accrual for interest or penalties related to uncertain tax positions as of June 30, 2025.

 

The Company files U.S. income tax returns with varying statutes of limitations. The tax returns for fiscal years ended September 30, 2016, to June 30, 2025, remain open to examination due to the carryover of unused NOL carryforwards and tax credits. The Company is not under examination by any tax authority as of June 30, 2025.