v3.26.3
Note 7 - Income Taxes
 12 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

NOTE 7 — INCOME TAXES

 

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 for the year ended June 30, 2026, and applied the new disclosure requirements retrospective basis.  The adoption of ASU2023-09 had no impact on the Company’s balance sheet, statement of operations or cash flow.

 

The following table summarizes the components of deferred tax assets and deferred tax liabilities:

 

$ in Thousands

 

Deferred Tax Assets (Liabilities)

 
  

For the Year Ended June 30,

 
  

2026

  

2025

 

Deferred Tax Assets

        

Inventory reserve

 $422  $395 

Accumulated depreciation

  —   (3)

Accumulated goodwill amortization

  52   57 

Accumulated intangible amortization

  116   121 

Lease liabilities

  257   321 

Warranty reserve

  9   10 

Stock compensation

  68   68 

Net operating loss carryforward

  990   997 

Tax credits

  160   86 

Allowance for credit losses

  83   66 
   2,157   2,118 

Deferred Tax Liability

        

Right-of-use assets

  (239)  (304)

Valuation allowance

  (1,918)  (1,814)

Total

 $—  $— 

 

 

$ in Thousands

 

For the Year Ended

 
  

June 30, 2026

 
  

Amount

  

Percent of Pretax income

 

Net loss before tax

 $(297)    

Tax Benefit at statutory rate

  (62)  21%

Differences due to:

        

State taxes

  —   — 

Federal R&D Credits

  (37)  12%

Other, permanent differences

  44   (15)%

Change in valuation allowance

  55   (19)%

Income Tax (Benefit) Expense

 $—  $— 

Effective Tax Rate

  (0)%  (0)%
         

$ in Thousands

 

For the Year Ended

 
  

June 30, 2025

 
  

Amount

  

Percent of Pretax income

 

Net loss before tax

 $(948)    

Tax Benefit at statutory rate

  (199)  21%

Differences due to:

        

State taxes

  —   — 

Other, permanent differences

  542   (182)%

Change in valuation allowance

  (343)  115%

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. 

 

The Company is subject to taxation in the US and in the state of California

 

At June 30, 2026 the Company has approximately $3,283,000 of U.S. Federal NOL carryforwards and $3,639,000 State NOL carryforwards, which will be available for future use to offset taxable income.

 

The Company recognized a valuation allowance of $1,918,000 and $1,814,000 as of June 30, 2026 and 2025, respectively, as all U.S. Federal and state deferred tax assets have been determined to be not more likely than not realizable. Management does not believe that it had any significant uncertain tax positions at June 30, 2026 and 2025, nor is this expected to change within the next twelve months due to the settlement and expiration of statutes of limitation.