Note 12. INCOME TAXES

The income tax expense for the three months ended September 30, 2016 and 2015 are as follows:

	For the three months ended
	September 30,
	2016		2015

Current
Hong Kong	$	(6,525)	$	-
China		(65,096)		(259,822)
		(71,621)		(259,822)

Deferred
USA		-		19,000
		-		19,000

Total	$	(71,621)	$	(240,822)

The Company’s deferred tax assets are comprised of the following:

	September 30,		June 30,
	2016		2016

Allowance for doubtful accounts	$	65,000	$	65,000
Stock-based compensation		743,000		735,000
Net operating loss		3,570,000		3,752,000
Total deferred tax assets		4,378,000		4,552,000
Valuation allowance		(4,378,000)		(4,552,000)
Deferred tax assets, net - long-term	$	-	$	-

The Company’s operations in the U.S. have incurred a cumulative net operating loss of approximately $7,966,000 and $8,629,000, respectively, as of September 30, 2016 and June 30, 2016, which may reduce future taxable income. During the three months ended September 30, 2016 the amount of utilization of Federal Net Operating Losses (“NOL”) is $400,144 and the tax benefit derived from such NOL is $136,000, in the corresponding period for the three months ended September 30, 2015 the utilization of NOL is nil and no tax benefit derived from NOL. This carry-forward will expire if not utilized by 2036.

The Company periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. The Company considers many factors when assessing the likelihood of future realization of the deferred tax assets, including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes, and other relevant factors. Part of the Company’s traditional business, such as shipping agency services and shipping & chartering services, is temporarily suspended. In addition, the Company’s new business of mobile application is still in developing stage. Management concluded that the profitability of the Company’s U.S. entities is difficult to be predicted, and accordingly a 100% valuation allowance has been provided against the deferred tax assets balance as of September 30, 2016 based on management’s estimate. The net decrease in the valuation allowance for the three months ended September 30, 2016 was $174,000 and the net increase in the valuation allowance for the same period of 2015 was $171,000, respectively.

The Company’s taxes payable consists of the following:

	September 30,		June 30,
	2016		2016

VAT tax payable	$	486,084	$	475,066
Corporate income tax payable		1,160,477		1,100,380
Others		66,776		61,751
Total	$	1,713,337	$	1,637,197