Note 10 - Income Taxes

12 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 10. INCOME TAXES

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Due to the tax rates being changed in 2018 we have used a federal and state blended rate of 26%.

Net deferred tax liabilities consist of the following components at June 30:

	2023			2022
Deferred tax assets:
NOL carryover	$	9,539,700		$	11,506,800
Capital loss carryover		38,600			-
Allowance for bad debts		44,200			53,600
Accrued expenses		199,000			182,400
Operating lease ROU		1,000			-
Depreciation		(247,500	)		(653,900	)
Amortization		(932,100	)		(809,800	)
Valuation allowance		(8,642,900	)		(10,279,100	)
Net deferred tax asset	$	-		$	-

The income tax provision differs from the amounts of income tax determined by applying the US federal income tax rate to pretax income from continuing operations for the years ended June 30, 2023 and 2022 due to the following:

	2023			2022
Book income	$	1,453,475		$	1,036,124
Stock for services		15,824			3,559
Change in accrual		16,586			105,178
Life insurance		14,933			17,626
Meals and entertainment		844			514
Change in allowance		(9,357	)		(7,436	)
Change in depreciation		(181,879	)		(33,288	)
Unrealized gain		2,536			13,383
Operating lease ROU		1,002			-
Excess		-			353,201
Capital loss carryover		-			(38,622	)
NOL utilization		(1,313,964	)		(1,450,239	)
Valuation allowance		-			-
	$	-		$	-

At June 30, 2023, the Company had net operating loss carryforwards of approximately $36,691,234 that may be offset against past and future taxable income from the year 2023 forward. A significant portion of the net operating loss carryforwards began to expire in 2019. No tax benefit has been reported in the June 30, 2023 consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. In January of 2009 the Company acquired Prescient Applied Intelligence, Inc. which had significant net operating loss carryforwards. Due to the change in ownership, Prescient’s net operating loss carryforwards may be limited as to use in future years. The limitation will be determined on a year-to-year basis. In June of 2015 the Company acquired ReposiTrak, which had significant net operating loss carryforwards. Due to the change in ownership, ReposiTrak’s net operating loss carryforwards may be limited as to use in future years. The limitation will be determined on a year-to-year basis.

The Company determines whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, the Company measures the tax position to determine the amount to recognize in the financial statements. The Company performed a review of its material tax positions in accordance with these recognition and measurement standards.

The Company has concluded that there are no significant uncertain tax positions requiring disclosure, and there are not material amounts of unrecognized tax benefits.

The Company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations in the provision for income taxes. As of June 30, 2023, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before June 30, 2020.