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NOTE 11 - INCOME TAXES | 12 Months Ended
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Jun. 30, 2014
Income Tax Disclosure [Abstract] |
NOTE 11 - INCOME TAXES | NOTE 11 - 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 2009. The Company netted a deferred tax asset of $5,740,287 and a deferred tax liability of $583,990 as of June 30, 2014, primarily relating to net operating loss carryforwards of approximately $137,252,000 available to offset future taxable income through 2034. The net operating losses begin to expire in 2019 for federal tax purposes and in 2014 for state income tax purposes. 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 have a sufficient history of income and anticipates profitability in the coming years and has concluded that it is more-likely-than-not that the Company will be able to realize a portion of its tax benefits in the near future and therefore a valuation allowance was established for the partial value of the deferred tax asset. A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of the remainder of the valuation. Should the Company continue to remain profitable in future periods with supportable trends, the valuation allowance will be reversed accordingly. Components of the current (benefit) provision for income taxes are as follows:
|  | Years Ended June 30,
|  | 2014 |  | 2013
Current: |  |  |  |  |  |  |  |
Federal |  | $ | 310,000 |  |  | $ | 125,000 |
State |  |  | 24,093 |  |  |  | 71,001 |
Deferred taxes |  |  | (2,682,405 | ) |  |  | (2,473,892 | )
|  | $ | (2,348,312 | ) |  | $ | (2,277,891 | )
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,
|  | 2014 |  | 2013
Taxes at federal statutory rate |  |  | 34.0 | % |  |  | 34.0 | %
State and local income taxes (benefit), net of federal benefit |  |  | 6.0 | % |  |  | 6.0 | %
Permanent differences |  |  | (0.9 | )% |  |  | 0.6 | %
(Decrease) increase in the valuation allowance and true ups |  |  | (68.3 | )% |  |  | (76.2 | )%
Effective income tax rate |  |  | (29.2 | )% |  |  | (35.6 | )%
As of June 30, 2014, the Company has net operating loss (“NOL”) carryforwards of approximately $137,252,000 that will be available to offset future taxable income. 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 $3,742,000, which are accounted for under the flow-through method. The Company also has $578,000 in alternative minimum tax credits. In addition, for New York State income tax purposes, the Company has tax credit carryforwards, aggregating approximately $1,133,000, which are accounted for under the flow-through method. The tax credit carryforwards expire during the years ending June 30, 2014 to June 30, 2029. Significant components of the Company's deferred tax assets and liabilities at June 30, 2014 and 2013 are as follows:
|  | June 30,
|  | 2014 |  | 2013
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for doubtful accounts |  | $ | 6,961,016 |  |  | $ | 6,139,291 |
Non-deductible accruals |  |  | 65,108 |  |  |  | 264,062 |
Net operating carryforwards |  |  | 54,900,136 |  |  |  | 58,052,831 |
Tax credits |  |  | 5,644,097 |  |  |  | 5,873,204 |
Property and equipment and depreciation |  |  | 195,408 |  |  |  | 1,070,291 |
Inventory |  |  | 130,822 |  |  |  | 84,136 |
|  |  | 67,896,587 |  |  |  | 71,483,815 |
Valuation allowance |  |  | (62,156,300 | ) |  |  | (68,548,065 | )
Total deferred tax assets |  |  | 5,740,287 |  |  |  | 2,935,750 |
Deferred tax liabilities: Inventory |  |  | — |  |  |  | — |
Capitalized software development costs |  |  | (583,990 | ) |  |  | (461,858 | )
Total deferred tax liabilities |  |  | (583,990 | ) |  |  | (461,858 | )
Net deferred tax asset |  | $ | 5,156,297 |  |  | $ | 2,473,892 |
The valuation allowance for deferred tax assets decreased by approximately $6,392,000 during the year ended June 30, 2014 and decreased by approximately $5,206,000 during the year ended June 30, 2013.

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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 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
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