XML 27 R14.htm IDEA: XBRL DOCUMENT
v3.5.0.2

8. INCOME TAXES | 12 Months Ended
--- | ---
Aug. 31, 2016
Income Tax Disclosure [Abstract] |
INCOME TAXES | We utilize FASB ASC 740-10, “Income Taxes” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax payable for the period and the change during the period in deferred tax assets and liabilities. The components of the income tax provision for fiscal year 2016 and 2015 were as follows:
|  | 2016 |  |  | 2015 |
Current |  |  |  |  |  |
Federal |  | $ | 2,118,229 |  |  | $ | 1,482,798 |
State |  |  | 171,840 |  |  |  | 236,152 |
Foreign |  |  | 19,428 |  |  |  | 75,099 |
|  |  | 2,309,497 |  |  |  | 1,794,049 |
Deferred |  |  |  |  |  |  |  |
Federal |  |  | 22,936 |  |  |  | (15,036 | )
State |  |  | (46,177 | ) |  |  | 70,955 |
|  |  | (23,241 | ) |  |  | 55,919 |
Total |  | $ | 2,286,256 |  |  | $ | 1,849,968 |
A reconciliation of the expected income tax (benefit) computed using the federal statutory income tax rate to the Company's effective income tax rate is as follows for fiscal year 2016 and 2015:
|  | 2016 |  |  | 2015 |
Income tax computed at federal statutory tax rate |  |  | 34.0 | % |  |  | 34.0 | %
State taxes, net of federal benefit |  |  | 3.4 |  |  |  | 5.0 |
Meals & Entertainment |  |  | 0.1 |  |  |  | 0.1 |
Stock Based Compensation |  |  | 1.3 |  |  |  | 0.3 |
Other permanent differences |  |  | (0.6 | ) |  |  | (0.5 | )
Research and development credit |  |  | (6.3 | ) |  |  | (6.9 | )
Change in prior year estimated taxes |  |  | (0.3 | ) |  |  | 0.5 |
Total |  |  | 31.6 | % |  |  | 32.5 | %
Significant components of the Company's deferred tax assets and liabilities for income taxes for the fiscal years ended August 31, 2016 and 2015 are as follows:
|  | 2016 |  |  | 2015 |
Deferred tax assets |  |  |  |  |  |  |  |
Accrued payroll and other expenses |  | $ | 108,769 |  |  | $ | 97,625 |
Deferred revenue |  |  | 71,009 |  |  |  | 43,703 |
Capitalized merger costs |  |  | 292,693 |  |  |  | 299,965 |
Intellectual property |  |  | 21,205 |  |  |  | 24,221 |
Research and development credit |  |  | 54,427 |  |  |  | 90,365 |
State taxes |  |  | 58,426 |  |  |  | 78,089 |
State Tax Deferred |  |  | 160,391 |  |  |  | 175,044 |
Total deferred tax assets |  |  | 766,920 |  |  |  | 809,012 |
Less: Valuation allowance |  |  | – |  |  |  | – |
|  |  | 766,920 |  |  |  | 809,012 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Property and equipment |  |  | (93,900 | ) |  |  | (159,980 | )
State Tax Deferred |  |  | (9,491 | ) |  |  | (8,445 | )
Intellectual Property |  |  | (2,004,451 | ) |  |  | (2,053,220 | )
Capitalized computer software development costs |  |  | (1,615,284 | ) |  |  | (1,566,815 | )
Total deferred tax liabilities |  |  | (3,723,126 | ) |  |  | (3,788,460 | )
Net deferred tax liabilities |  | $ | (2,956,206 | ) |  | $ | (2,979,447 | )
We follow guidance issued by the FASB with regard to our accounting for uncertainty in income taxes recognized in the financial statements. Such guidance prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities. Our policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties totaled $ -0- and $-0- for fiscal year 2016 and 2015, respectively. We file income tax returns with the IRS and various state jurisdictions and India. Our federal income tax returns for fiscal year 2012 thru 2013 and 2015 are open for audit, and our state tax returns for fiscal year 2011 through 2015 remain open for audit. In addition our California tax return for the fiscal year 2007 and fiscal year 2008 remains open with regard to R&D tax credits as a result of a previous audit for which we received a letter from the California Franchise Tax Board stating that an audit will not be conducted for those years at this time; however it may be subject to future audit. In 2015 the Company was informed that the IRS was auditing the Company’s tax return for 2014. This audit was completed during FY2016; there were no changes as a result of the audit. Our review of prior year tax positions using the criteria and provisions presented in guidance issued by FASB did not result in a material impact on our financial position or results of operations.

X
- References No definition available. + 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 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 2: 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=65882285&loc=d3e32559-109319 Reference 3: 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=65882285&loc=d3e32718-109319 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=65882285&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=65882285&loc=d3e32537-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration