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Income Taxes
 12 Months Ended
Jun. 30, 2014
Income Tax Disclosure [Abstract]  
Income Taxes

8.    Income Taxes

 

Due to the Company’s losses from operations, no provision for income taxes during the years ended June 30, 2014 and 2013. The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are as follows at June 30:

 

   2014  2013
       
Deferred tax  assets:          
Net operating loss and credit carryforwards  $33,098,000   $35,198,000 
Intangible assets   75,000    148,000 
Capital loss and R&D credits   1,454,000    1,442,000 
Research development expenses   639,000    652,000 
Inventory   128,000    100,000 
Accrued expenses and other   —      56,000 
           
Gross deferred tax  assets   35,394,000    37,596,000 
Valuation allowance for deferred tax assets   (35,136,000)   (37,234,000)
           
           
Total deferred tax  assets   258,000    362,000 
Deferred tax liabilities:          
           
Depreciation and other   (258,000)   (362,000)
           
Total deferred tax liabilities   (258,000)   (362,000)
           
Net deferred tax liability  $—     $—   

 

The reconciliation of income tax attributable to operations computed at the United States federal statutory tax rates and the actual tax provision of zero results primarily from the change in the valuation allowance.

 

In assessing the potential future recognition of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. In order to fully realize the deferred tax asset, the Company will need to generate future taxable income of approximately $88.0 million prior to the expiration of net operating loss carry-forwards from 2015 through 2034. Based on the level of historical taxable income, management has provided for a valuation adjustment against the deferred tax assets of $35,136,000 at June 30, 2014, a decrease of approximately $2,098,000 over June 30, 2013.

 

At June 30, 2014, in addition to net operating loss carry forwards, the Company also has research and development credit carry forwards of approximately $1,454,000, of which $38,505 will expire if unused by June 30, 2019. A portion of the net operating loss carry forwards may be subject to certain limitations of the Internal Revenue Code Sections 382 and 383 which would restrict the annual utilization in future periods due principally to changes in ownership in prior periods.