XML 91 R17.htm IDEA: XBRL DOCUMENT
v2.4.0.8

INCOME TAXES | 12 Months Ended
--- | ---
Jun. 30, 2014
Income Tax Disclosure [Abstract] |
INCOME TAXES | 10. INCOME TAXES The Company has significant deferred tax assets, a substantial amount of which result from operating loss carryforwards. The Company routinely evaluates its ability to realize the benefits of these assets to determine whether it is more like than not that such benefit will be realized. In periods prior to the year ended June 30, 2014, the Company’s evaluation of its ability to realize the benefit from its deferred tax assets resulted in a full valuation allowance against such assets. Based upon earnings performance that the Company has achieved currently and in the recent past along with the belief that such performance will continue into future years, the Company has determined that it is more likely than not that a substantial portion of its deferred tax assets will be realized and has reduced its valuation allowances recorded in prior years by $27,255,398, which includes $40,245 of deferred tax liabilities recorded as of June 30, 2013 (as described hereinafter) reversing in the current year . In addition to recent periods’ performance, the evaluation of the amount of deferred tax assets expected to be realized involves forecasting the amount of taxable income that will be generated in future years. The Company has forecasted future results using estimates that management believes to be conservative. The number of connections added in a service year are a key metric, which in the Company’s recurring revenue service model become an important ingredient in driving future growth and earnings. The forecasts the Company used assumed that significantly fewer net connections would be added to its service year than what it has historically achieved during each of its previous five fiscal years. With respect to its forecasts, the Company also took into account several industry analysts who have projected that demand for technology and services similar to the Company’s will continue to grow in the markets the Company serves. Using these forecasts, the Company estimated that it was more likely than not that approximately $64 million of its operating loss carryforwards would be utilized to offset corresponding future taxable income. If in future periods the Company demonstrates its ability to grow future taxable income in excess of the forecasts described above, it will re-evaluate the need to keep some, or all, of the remaining valuation allowances of $22,833,685 on its deferred tax assets. The reduction of the $27,255,398 in valuation allowances is reflected as an income tax benefit in the provision for income taxes for the year ended June 30, 2014 and is net of amounts that otherwise would have been recorded for current federal income taxes of $21,021, deferred federal income taxes of $52,533, deferred state income taxes of $21,343 and $24,847 credited to common stock related to excess tax benefits from stock-based compensation. The provision for income taxes for the years ended June 30, 2013 and 2012 were $27,646 and $12,599, respectively, comprised of deferred federal income taxes of $20,842 and $9,498, respectively, and deferred state income taxes of $6,804 and $3,101, respectively. These deferred income taxes were recorded for the future potential income tax effects for basis differences between financial reporting and income tax purposes for indefinite life intangible assets and goodwill that are being amortized for income tax purposes but not for financial reporting. Because there was a full valuation allowance reflected against deferred tax assets as of June 30, 2013 and June 30, 2012, the potential future income tax effects associated with such indefinite life assets were not subject to offset deferred tax assets with finite lives. For the year ended June 30, 2014, an income tax provision of $93,586 at the federal statutory rate of 34% is indicated based upon the income before provision for income taxes. In recording the benefit from income taxes, the reduction in valuation allowances of $27,255,398 had the effect of negating the effects for state income taxes net of federal benefit of $17,989 and permanent differences of $8,168. For the year ended June 30, 2013 an income tax provision of $299,801 at the federal statutory rate of 34% is indicated based upon the income before provision for income taxes. In recording the provision for income taxes the indicated provision was reduced for the effects of decreases in the valuation allowances of $205,266 for federal income taxes associated with deferred tax assets, decreased for the effects of permanent differences of $71,379 and increased by state income taxes net of federal benefit of $4,490. For the year ended June 30, 2012 an income tax benefit of $1,767,537 at the federal statutory rate of 34% is indicated based upon the income before provision for income taxes. In recording the provision for income taxes the indicated benefit was reduced for the effects of increases in the valuation allowances of $2,372,354 for federal income taxes associated with deferred tax assets, increased for the effects of permanent differences of $594,264 and reduced by state income taxes net of federal benefit of $2,046. At June 30, 2014 the Company had operating loss carryforwards of $165,566,973 to offset future taxable income expiring through approximately 2034. The timing and extent to which the Company can utilize operating loss carryforwards in any year may be limited by provisions of the Internal Revenue Code regarding changes in ownership of corporations (i.e. IRS Code Section 382). The changes in ownership limitations under IRS Code Section 382 have had the effect of limiting the maximum amount of operating loss carryforwards as of June 30, 2014 available for use to offset future years’ taxable income to $127,362,276. Those operating loss carryforwards start to expire June 30, 2022. The net deferred tax assets arose primarily from net operating loss carryforwards, as well as the use of different accounting methods for financial statement and income tax reporting purposes as follows:
|  | June 30, |
|  | 2014 |  |  | 2013 |
Deferred tax assets: |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 47,776,042 |  |  | $ | 49,534,732 |
Deferred research and development costs |  |  | 710,640 |  |  |  | 135,189 |
Intangibles |  |  | 907,274 |  |  |  | 1,132,471 |
Stock-based compensation |  |  | 250,426 |  |  |  | 230,452 |
Deferred gain on assets under sale-leaseback transaction |  |  | 460,902 |  |  |  | - |
Other |  |  | 740,040 |  |  |  | 671,947 |
|  |  | 50,845,324 |  |  |  | 51,704,791 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Intangibles and goodwill |  |  | (67,459 | ) |  |  | (40,245 | )
Fixed Assets |  |  | (683,159 | ) |  |  | (585,889 | )
Deferred tax assets, net |  |  | 50,094,706 |  |  |  | 51,078,657 |
Valuation allowance |  |  | (22,833,685 | ) |  |  | (51,118,902 | )
Deferred tax assets (liabilties), net of allowance |  |  | 27,261,021 |  |  |  | (40,245 | )
Less current portion |  |  | 907,691 |  |  |  | - |
Deferred tax assets (liabilties), non-current |  | $ | 26,353,330 |  |  | $ | (40,245 | )

X
- Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration