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INCOME TAXES
 12 Months Ended
Jun. 30, 2012
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

8. INCOME TAXES

 

The income tax benefit for the years ended June 30, 2012 and June 30, 2011 are as follows:

 

    For the years ended June 30,  
    2012     2011  
             
Current                
USA   $ (29,768 )   $ 5,412  
China     -       -  
      (29,768 )     5,412  
Deferred                
Allowance for doubtful accounts     58,000       (12,000 )
Stock-based compensation     92,000       84,000  
Net operating loss carryforward     240,000       41,000  
Valuation allowance     (240,000 )     (41,000 )
Net deferred     150,000       72,000  
Total   $ 120,232     $ 77,412  

  

As of June 30, 2012, the Company recognized deferred tax assets of $800,000 including current deferred tax assets of $175,000 and non-current tax assets of $625,000. The valuation allowance balance increased by $240,000 and $41,000 during the years ended June 30, 2012 and 2011, respectively. The Company has deferred tax assets of approximately $240,000 resulting from operating loss carryforwards of $557,618 for United States taxes in 2012 which may be utilized to reduce future taxable income through 2032. Management believes that the realization of the full deferred tax benefits appears uncertain due to the Company’s recent tax losses in its United States company. Accordingly, the Company has provided partial valuation allowance of $281,000 on the deferred tax asset to reflect the tax effect of the benefit which may not be realizable. Management reviews this valuation allowance periodically and makes adjustments accordingly.

 

Income tax benefit for the years ended June 30, 2012 and 2011 varied from the amount computed by applying the statutory income tax rate to loss before taxes. A reconciliation between the expected federal income tax rate using the federal statutory tax rate of 35 percent to the Company’s effective income tax rate is as follows:

 

    For the years ended June 30,  
    2012     2011  
    %     %  
             
U.S. expected federal income tax benefit     (35.00 )     (35.00 )
                 
U.S. state, local tax net of federal (benefit) expense     (10.87 )     15.95  
                 
U.S. permanent difference     0.78       0.60  
                 
U.S. temporary difference     28.89       15.35  
                 
Permanent difference related to other countries     9.50       3.15  
                 
Other     2.60       (5.87 )
                 
Total tax benefit     (4.10 )     (5.82 )