NOTE 8 - INCOME TAXES

During both 2015 and 2014, the Company incurred a net loss and therefore had no tax liability. The Company does not have any material uncertain income tax positions. As a result of significant losses and uncertainty of future profit, the net deferred tax asset has been fully reserved. As of June 30, 2015, the valuation allowance increased by $171. The cumulative net operating loss carryforward is approximately $48.1 million and $47.7 million at June 30, 2015 and 2014, respectively, and will start expiring in the year ended 2030. The Company has not performed a detailed analysis to determine whether an ownership change under Section 382 of the IRC has occurred. The effect of an ownership change would be the imposition of an annual limitation on the use of net operating loss (“NOL”) carryforwards attributable to periods before the change. Any limitation may result in expiration of a portion of the NOL before utilization.

The tax effects of temporary differences and tax loss carry forwards that give rise to significant portions of deferred tax assets at June 30, 2015 and 2014 are comprised of the following:

	As of June 30,
	2015		2014
Deferred tax asset
Net operating loss carryovers	$	21,869	$	21,698
Stock based compensation		125		125
Total deferred tax assets		21,994		21,823
Valuation Allowance		(21,994)		(21,823)
Deferred tax asset, net of allowance	$	-	$	-

The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follows:

	As of June 30,
	2015			2014
Statutory federal income tax rate		-34.0	%		-34.0	%
State income tax, net of federal benefit		-9.1	%		-11.5	%
Other		7.1	%		0.0	%
Valuation Allowance		36.0	%		45.5	%
Income tax provision (benefit)		0.0	%		0.0	%

The income tax provision consists of the following:

	As of June 30,
	2015		2014
Federal
Current	$	-	$	-
Deferred		(128)		451
State
Current		-		-
Deferred		(43)		153
Change in valuation allowance		171		(604)
Income tax provision (benefit)	$	-	$	-