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NOTE 12 - INCOME TAXES | 12 Months Ended
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Jun. 30, 2012
Income Tax Disclosure [Abstract] |
NOTE 12 - INCOME TAXES | NOTE 12 - INCOME TAXES Effective January 1, 2007, the Company adopted the provisions of ASC topic 740 (formerly FASB Interpretation No. 48/FASB Statement No. 109, “Accounting for Uncertainty in Income Taxes”). ASC topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a corporate tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits”. A liability is recognized (or amount of net operating loss carryforward or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC topic 740. In accordance with ASC topic 740, interest costs related to unrecognized tax benefits are required to be calculated (if applicable) and would be classified as “Interest expense, net”. Penalties if incurred would be recognized as a component of “Selling, general and administrative” expenses. The Company files corporate income tax returns in the United States (federal) and in various state and local jurisdictions. In most instances, the Company is no longer subject to federal, state and local income tax examinations by tax authorities for years prior to 2008. As of June 30, 2012, no liability for unrecognized tax benefits was required to be recorded. The Company does not expect its unrecognized tax benefit position to change during the next 12 months. The ultimate realization of deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers projected future taxable income and tax planning strategies in making this assessment. At present, the Company does not have a sufficient history of income or knowledge of future effects on our business of healthcare reform legislation, the Deficit Reduction Act, the tax on sales of medical equipment and the general economic and business climate to conclude that it is more-likely-than-not that the Company will be able to realize any of its tax benefits in the near future and therefore a valuation allowance was established for the full value of the deferred tax asset. A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of any portion or all of the valuation. Should the Company become profitable in future periods with supportable trends, the valuation allowance will be reversed accordingly. Components of the current provision for income taxes are as follows:
|  | Years Ended June 30,
|  | 2012 |  | 2011
Current: Federal |  | $ | 112,000 |  |  | $ | 75,000 |
State |  |  | 29,125 |  |  |  | 475 |
|  | $ | 141,125 |  |  | $ | 75,475 |
A reconciliation of the federal statutory income tax rate to the Company's effective tax rate as reported is as follows:
|  | Years Ended June 30,
|  | 2012 |  | 2011
Taxes at federal statutory rate |  |  | (34.0 | )% |  |  | (34.0 | )%
State and local income benefit, net of federal benefit |  |  | (6.0 | ) |  |  | (6.0 | )
Permanent differences |  |  | 1.2 |  |  |  | 1.9 |
Decrease in the valuation allowance and true ups |  |  | 40.8 |  |  |  | 40.3 |
Effective income tax rate |  |  | 2.0 | % |  |  | 2.2 | %
As of June 30, 2012, the Company has net operating loss (“NOL’s”) carryforwards of approximately $154,431,000 that will be available to offset future taxable income. The NOLs are due to expire during the years ending from June 30, 2019 to June 30, 2031. The utilization of certain of the NOLs is limited by separate return limitation year rules pursuant to Section 1502 of the Internal Revenue Code. The Company has, for federal income tax purposes, research and development tax credit carryforwards aggregating $4,323,000, which are accounted for under the flow-through method. In addition, for New York State income tax purposes, the Company has tax credit carryforwards, aggregating approximately $1,103,000, which are accounted for under the flow-through method. The tax credit carryforwards expire during the years ending June 30, 2013 to June 30, 2031. The Company also has $210,000 in alternative minimum tax credits. Significant components of the Company's deferred tax assets and liabilities at June 30, 2012 and 2011 are as follows:
|  | June 30,
|  | 2012 |  | 2011
Deferred tax assets: Allowance for doubtful accounts |  | $ | 4,656,468 |  |  | $ | 4,256,391 |
Accrued liabilities |  |  | 221,897 |  |  |  | 273,497 |
Net operating carryforwards |  |  | 61,772,391 |  |  |  | 65,464,211 |
Tax credit carryforward |  |  | 5,769,943 |  |  |  | 5,559,462 |
Property and equipment |  |  | 1,990,284 |  |  |  | 1,742,367 |
|  |  | 74,410,983 |  |  |  | 77,295,928 |
Valuation allowance |  |  | (73,754,414 | ) |  |  | (76,468,787 | )
Net deferred tax assets |  |  | 656,569 |  |  |  | 827,141 |
Deferred tax liabilities: Inventory |  |  | (51,109 | ) |  |  | (42,793 | )
Capitalized software development costs |  |  | (605,460 | ) |  |  | (784,348 | )
Gross deferred tax liabilities |  |  | (656,569 | ) |  |  | (827,141 | )
Net deferred tax liabilities |  | $ | — |  |  | $ | — |
The net change in the valuation allowance for deferred tax assets decreased by approximately $2,433,000 and $632,000 during the years ended June 30, 2012 and 2011, respectively, which primarily represents the tax benefit from the utilization of the net operating loss carryforward.

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- 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 Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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=6881521&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 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: 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 7: 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 8: 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
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