Note 10 - Income Taxes

12 Months Ended

Jun. 30, 2015

Notes to Financial Statements

Income Tax Disclosure [Text Block]

10. Income Taxes

The components of income from continuing operations before income taxes are as follows:

	Years ended
	June 30, 2015			June 30, 2014
Domestic	$	6,764,000		$	7,008,000
Foreign		(449,000	)		1,917,000
Total	$	6,315,000		$	8,925,000

The components of the income tax provision (benefit) are as follows:

	Years ended
	June 30, 2015		June 30, 2014
Federal tax	$	2,344,000	$	(341,000	)
State tax		406,000		(798,000	)
Total	$	2,750,000	$	(1,139,000	)

	Years ended
	June 30, 2015		June 30, 2014
Current	$	2,336,000	$	2,326,000
Deferred		414,000		(3,465,000	)
Total	$	2,750,000	$	(1,139,000	)

Significant components of the Company’s deferred tax assets and liabilities are as follows:

	Years ended
	June 30, 2015			June 30, 2014
Deferred tax assets:
Net operating loss carryforwards	$	13,283,000		$	14,681,000
Capital loss carryforwards		—			1,674,000
Accrued expenses		237,000			193,000
Expenses not currently deductible		88,000			100,000
Excess of book over tax depreciation		62,000			642,000
Excess of book over tax amortization		855,000			899,000
Other asset		3,000			3,000
Foreign tax benefit		—			82,000
Total deferred tax assets		14,528,000			18,274,000
Deferred tax liabilities:
Intangible assets		2,061,000			2,194,000
Excess of tax over book depreciation		—			185,000
Other liabilities		16,000			15,000
Total deferred tax liabilities		2,077,000			2,394,000
Deferred tax assets, net of liabilities	$	12,451,000		$	15,880,000
Valuation allowance		(8,014,000	)		(11,029,000	)
Net deferred tax asset	$	4,437,000		$	4,851,000

The Company’s provision for income taxes resulted in effective tax rates attributable to loss from continuing operations that varied from the statutory federal income tax rate of 34%, as summarized in the table below.

	Years ended
	June 30, 2015			June 30, 2014
Expected federal income tax expense from continuing operations at 34%	$	2,147,000		$	3,035,000
Expenses not deductible for income tax purposes		208,000			101,000
Amendment of prior year return		—			(60,000	)
State income taxes, net of federal benefit		406,000			399,000
Difference in conversion rate		—			(46,000	)
Other		(11,000	)		(1,000	)
Change in valuation allowance for deferred tax assets		—			(4,567,000	)
Income tax (benefit) expense	$	2,750,000		$	(1,139,000	)

As of June 30, 2015, the Company had U.S. federal net operating loss carryforwards available to reduce future taxable income of approximately $27.1 million; however, $23.3 million of these carryforwards were not recognized because they are subject to annual limitations under Internal Revenue Code Section 382 and are expected to expire before being utilized. For tax year June 30, 2015, it is projected that approximately $560,000 of net operating loss carryforwards will be utilized to offset taxable income.

In addition, as of June 30, 2015, the Company had foreign net operating loss carryforwards of approximately $13.0 million available to reduce future taxable income. Approximately $4.0 million of the prior year net operating losses expired December 31, 2014, which had a valuation allowance. The balance of the net operating losses will expire between 2028 and 2031.

The Company maintains a valuation allowance of $8.0 million for its United States subsidiaries due to the expiration of net operating losses carryforward prior to utilization and a portion of state net operating loss carryforwards. The valuation allowances are evaluated quarterly to determine the appropriate allowance amount.