NOTE D - INCOME TAXES AND AVAILABLE CARRYFORWARD

As of

December 31, 2019,

the Company had consolidated income tax net operating loss ("NOL") carryforwards for federal income tax purposes of approximately

$1,353,000.

The NOL will expire in various years ending through the year

2035.

The utilization of certain loss carryforwards are limited under Section

382

of the Internal Revenue Code.

The components of the provision for income tax (expense) attributable to continuing operations are as follows:

	Six Months 12/31/2019			Six Months 12/31/2018
Current
Federal	$	0		$	0
State		0			0
	$	0		$	0

Deferred
Federal	$	(29,764	)	$	(25,260	)
State		(6,158	)		(5,226	)
	$	(35,922	)	$	(30,486	)

Total Income Tax (Expense)	$	(35,922	)	$	(30,486	)

Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:

	Non-Current
Deferred tax assets
NOL and contribution carryforwards	$	342,799
Accrued compensated absences		5,787
Accrued bonus		-
Allowance for doubtful accounts		1,703
Total deferred tax assets		350,289


Deferred tax (liabilities)
Excess of tax over book depreciation		(6,549	)
Total deferred tax (liabilities)		(6,549	)


Total deferred tax asset		343,740
Valuation Allowance		(171,381	)
Net Deferred Tax Asset	$	172,359

The change in the valuation allowance is as follows:

June 30, 2019	$	(171,381	)
December 31, 2019	$	(171,381	)
	$	-

Management believes it is more likely than

not

that the tax benefit of approximately

$618,000

of NOL carryforwards will

not

be realized because management estimates that they will expire prior to their utilization. Therefore, management provided a valuation allowance of

$171,381

against its deferred tax asset. Management will continue to evaluate its operating results each reporting period and assess whether it will be able to utilize all available NOL carryforwards before expiration.

The accounting for the effects of the rate change on deferred tax balances is complete and

provisional amounts were recorded for this item.

Income taxes for the

three

months ended

December 31, 2019

and

2018

differ from the amounts computed by applying the effective income tax rate of

25.35%

to income before income taxes as a result of the following:

	Six Months			Six Months
	December 31, 2019			December 31, 2018
Expected (provision) at US statutory rate	$	(24,879	)	$	(10,436	)
State income tax net of federal (provision)		(5,148	)		(2,159	)
Nondeductible Expense		(3,329	)		(3,833	)
Change in estimates of loss carryforward		(2,567	)		(563	)
Change in valuation allowance		-		$	(10,481	)
Other		-		$	(3,014	)
Income Tax (Expense)	$	(35,922	)	$	(30,486	)

The earliest tax year still subject to examination by a major taxing jurisdiction is fiscal year end

June 30, 2017.

The Company performed a review for uncertain tax positions in accordance with Accounting Standards Codification ASC

740

"Uncertainty in Income Taxes". In this regard, an uncertain tax position represents the Company's expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return, that has

not

been reflected in measuring income tax expense for financial reporting purposes. As a result of this review, the Company concluded that at this time there are

uncertain tax positions, and there has been

cumulative effect on retained earnings.