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Income Taxes | 12 Months Ended
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Nov. 30, 2012
Income Taxes [Abstract] |
INCOME TAXES | NOTE 6 - INCOME TAXES. The Company recorded the following income tax provision for the years ended November 30, 2012 and 2011.
|  | 2012 |  |  | 2011 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |
State |  |  | — |  |  |  | — |
Foreign |  |  | 169,000 |  |  |  | 172,000 |
Subtotal |  |  | 169,000 |  |  |  | 172,000 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | 1,561,700 |  |  |  | — |
State |  |  | 157,300 |  |  |  | — |
Foreign |  |  | — |  |  |  | — |
Subtotal |  |  | 1,719,000 |  |  |  | — |
Income Tax Provision |  | $ | 1,888,000 |  |  | $ | 172,000 |
As of November 2012 and 2011 the tax effects of temporary differences that give rise to the deferred tax assets are as follows:
|  | 2012 |
|  | Current |  |  | Non-current |  |  | Total |
Tax Assets: |  |  |  |  |  |  |  |  |  |  |  |
Deferred income (Net of Discounts) |  | $ | 214,000 |  |  | $ | 3,366,000 |  |  | $ | 3,580,000 |
NOL’s, credits, and other carryforward items |  |  | — |  |  |  | 3,284,000 |  |  |  | 3,284,000 |
Tax over book basis in unconsolidated affiliate |  |  | — |  |  |  | 1,227,000 |  |  |  | 1,227,000 |
Accrued payroll |  |  | 41,000 |  |  |  | — |  |  |  | 41,000 |
Reserves and other accruals |  |  | 1,232,000 |  |  |  | — |  |  |  | 1,232,000 |
Stock compensation |  |  | — |  |  |  | 383,000 |  |  |  | 383,000 |
Depreciation and Amortization |  |  | — |  |  |  | 37,000 |  |  |  | 37,000 |
RSA Buy-out |  |  | — |  |  |  | 1,163,000 |  |  |  | 1,163,000 |
Total Assets: |  |  | 1,487,000 |  |  |  | 9,460,000 |  |  |  | 10,947,000 |
Less: Valuation Allowance |  |  | (1,487,000 | ) |  |  | (9,460,000 | ) |  |  | (10,947,000 | )
Net Deferred Tax Asset |  | $ | — |  |  | $ | — |  |  |  | — |
|  | 2011 |
|  | Current |  |  | Non-current |  |  | Total |
Tax Assets: |  |  |  |  |  |  |  |  |  |  |  |
Deferred income (Net of Discounts) |  | $ | 215,000 |  |  | $ | 3,811,000 |  |  | $ | 4,026,000 |
NOL’s, credits, and other carryforward items |  |  | — |  |  |  | 3,223,000 |  |  |  | 3,223,000 |
Tax over book basis in unconsolidated affiliate |  |  | — |  |  |  | 1,247,000 |  |  |  | 1,247,000 |
Accrued payroll |  |  | 28,000 |  |  |  | — |  |  |  | 28,000 |
Reserves and other accruals |  |  | 890,000 |  |  |  | — |  |  |  | 890,000 |
Deferred compensation |  |  | — |  |  |  | 27,000 |  |  |  | 27,000 |
Stock compensation |  |  | — |  |  |  | 77,000 |  |  |  | 77,000 |
Total Assets: |  |  | 1,133,000 |  |  |  | 8,385,000 |  |  |  | 9,518,000 |
Tax Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Depreciation and amortization |  | $ | — |  |  | ($ | 43,000 | ) |  | ($ | 43,000 | )
Less: Valuation Allowance |  |  | (923,000 | ) |  |  | (6,833,000 | ) |  |  | (7,756,000 | )
Net Deferred Tax Asset (Liability) |  | $ | 210,000 |  |  | $ | 1,509,000 |  |  | $ | 1,719,000 |
A valuation allowance covering the deferred tax assets of the Company for November 30, 2012 and November 30, 2011, has been provided as the Company does not believe it is more likely than not that all of the future income tax benefits will be realized. The valuation allowance increased by approximately $3,191,000 and $784,000, respectively, for the years ended November 30, 2012 and 2011. The 2012 increase was a result of a full valuation allowance being applied against the deferred tax assets as management had concluded in the second quarter of 2012 to fully reserve the deferred income tax assets as it is more likely than not that the deferred tax assets will not be realized. The decision resulted in a charge to income tax expense of $1,719,000 for the year ended November 30, 2012. The 2011 increase was predominantly a result of an increased deferred tax asset related to accrued expenses and foreign tax credits. The Company has unused net operating losses available for carryforward as of November 30, 2012 of approximately $5,654,000 to offset future federal taxable income. The net operating loss carryfowards expire during 2022 through 2030. The Tax Reform Act of 1986 contains provisions that limit the utilization of net operating losses if there has been an “ownership change”. Such an “ownership change” as described in Section 382 of the Internal Revenue code may limit the Company’s utilization of its net operating loss carryforwards. Management has completed an internal analysis of potential ownership changes and has concluded that no ownership changes have occurred through November 30, 2012 which would potentially limit the utilization of the net operating losses. A reconciliation of the income tax provision with the amount of tax computed by applying the federal statutory rate to pretax income follows:
|  | For the Years Ended November 30, 2012 |
|  | 2012 |  |  | % |  |  | 2011 |  |  | % |
Tax at Federal Statutory Rate |  |  | (1,560,000 | ) |  |  | (34.0 | ) |  |  | (712,000 | ) |  |  | (34.0 | )
State Income Tax Effect |  |  | (167,000 | ) |  |  | (3.6 | ) |  |  | (76,000 | ) |  |  | (3.6 | )
Increase in valuation allowance |  |  | 3,191,000 |  |  |  | 69.5 |  |  |  | 784,000 |  |  |  | 37.4 |
Permanent Disallowances |  |  | 424,000 |  |  |  | 9.2 |  |  |  | 176,000 |  |  |  | 8.4 |
Capital loss expirations |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Foreign tax credits |  |  | (169,000 | ) |  |  | (3.7 | ) |  |  | (172,000 | ) |  |  | (8.2 | )
Foreign tax withholding |  |  | 169,000 |  |  |  | 3.7 |  |  |  | 172,000 |  |  |  | 8.2 |
Other |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total income taxes |  | $ | 1,888,000 |  |  |  | 41.1 |  |  | $ | 172,000 |  |  |  | 8.2 |
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. For the years ended November 30, 2012 and 2011, the Company had no uncertain tax positions and therefore there are no provisions for interest or penalties related to uncertain tax positions. The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state jurisdictions. The table below summarizes the open tax years and ongoing tax examinations in major jurisdictions as of November 30, 2012:
Jurisdiction |  | Open Tax Years |  | Examinations in Process
United States – Federal Income Tax |  | 2008 - 2011 |  | N/A
United States – Various States |  | 2007 - 2011 |  | N/A

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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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