MOVING iMAGE TECHNOLOGIES INC. Income Taxes Disclosure
NOTE 9 — INCOME TAXES
The following table summarizes the components of deferred tax assets and deferred tax liabilities:
| ($ in Thous.) | Deferred Tax Assets (Liabilities) | |||||||
| For the Year Ended June 30 | ||||||||
| 2025 | 2024 | |||||||
| Inventory reserve | $ | 395 | $ | 309 | ||||
| Accumulated depreciation | (3 | ) | (6 | ) | ||||
| Accumulated goodwill amortization | 57 | 63 | ||||||
| Accumulated intangible amortization | 121 | 125 | ||||||
| Unrealized loss on investments | - | - | ||||||
| Deferred rent | - | 2 | ||||||
| ROU Asset | (304 | ) | - | |||||
| ROU Liability | 321 | - | ||||||
| Warranty reserve | 10 | 9 | ||||||
| Stock compensation | 68 | 68 | ||||||
| Net operating loss carryforward | 997 | 1,481 | ||||||
| Tax credits | 86 | - | ||||||
| Allowance for doubtful accounts | 66 | 106 | ||||||
| Net | 1,814 | 2,157 | ||||||
| Valuation allowance | (1,814 | ) | (2,157 | ) | ||||
| Total | $ | - | $ | - | ||||
| $ in Thousands | For the Year Ended | |||||||
| June 30 | ||||||||
| 2025 | 2024 | |||||||
| Net loss before tax | $ | (948 | ) | $ | (1,372 | ) | ||
| United States corporate tax rate | 21 | % | 21 | % | ||||
| Tax Benefit at statutory rate | (199 | ) | (288 | ) | ||||
| Differences due to: | ||||||||
| State taxes | — | 121 | ||||||
| Other, permanent differences | 542 | 193 | ||||||
| Change in valuation allowance | (343 | ) | (602 | ) | ||||
| Income Tax (Benefit) Expense | $ | — | $ | — | ||||
| Effective Tax Rate | 0 | % | 0 | % | ||||
The income tax expense differs from the amount computed by applying the statutory income tax rates to the loss before income tax.
At June 30, 2025 the Company has approximately $6,241,000 of U.S. Federal and State NOL carryforwards, which will be available for future use to offset taxable income.
The Company recognized a valuation allowance of $1,814,000 and $2,157,000 as of June 30, 2025 and 2024, respectively, as all U.S. Federal and state deferred tax assets have been determined to be not more likely than not realizable. Management does believe that it had any significant uncertain tax positions at June 30, 2025 and 2024, is this expected to change within the next twelve months due to the settlement and expiration of statutes of limitation.
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.