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

13.  INCOME TAXES

 

There was no provision for federal or state income taxes for the years ended June 30, 2012 and 2011 due to the Company’s operating losses and a full valuation reserve on deferred tax assets.  In addition, AccelPath, LLC (the accounting acquirer) was treated as a partnership for federal and state income taxes from inception until the reverse acquisition was completed.  A partnership’s income or loss is allocated directly to the partners for income tax purposes.

 

The income tax benefit differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income for the years ended June 30, 2012 and 2011 due to the following:

 

 

 

2012

 

 

2011

 

Computed “expected” tax benefit

 

 

(35

)%

 

 

(35

)%

Increase (decrease) in income taxes resulting from:

 

 

 

 

 

 

 

 

State taxes, net of federal benefit

 

 

(3

)%

 

 

(3

)%

Tax reporting differences due to the reverse acquisition

 

 

—

%

 

 

8

%

Goodwill impairment and other permanent differences

 

 

(9

)%

 

 

15

%

Increase in the valuation reserve

 

 

47

%

 

 

15

%

 

 

 

0

%

 

 

0

%

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities at June 30, 2012 and 2011 are as follows:

 

 

 

2012

 

 

2011

 

Deferred tax assets:

 

 

 

 

 

 

 

 

Net operating loss carryforward

 

$

4,129,000

 

 

$

3,993,000

 

Stock-based compensation

 

 

383,000

 

 

 

174,000

 

Intangibles

 

 

344,000

 

 

 

385,000

 

Miscellaneous accruals

 

 

53,000

 

 

 

140,000

 

Property and equipment

 

 

8,000

 

 

 

7,000

 

Valuation allowance

 

 

(4,917,000

)

 

 

(3,941,000

)

Deferred tax assets

 

 

—

 

 

 

758,000

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Accrued interest

 

 

—

 

 

 

(356,000

)

Deferred gain on sale of EOIR

 

 

—

 

 

 

(402,000

)

Deferred tax liabilities

 

 

—

 

 

 

(758,000

)

 

 

 

 

 

 

 

 

 

Net deferred tax asset (liability)

 

$

—

 

 

$

—

 

 

At June 30, 2012 and 2011, the Company had valuation allowances of $4,917,000 and $3,941,000, respectively.  The Company has recorded a valuation allowance against deferred tax assets as management has determined certain net operating loss carryforwards will not be available due to Internal Revenue Code Section 382 ownership changes and the utilization of other net operating loss carryforwards is uncertain.  The Company carried forward its deferred tax assets, liabilities and valuation reserve after the reverse acquisition because for tax purposes the Company acquired AccelPath, LLC as a subsidiary.  Accordingly, in the year ended June 30, 2011, the valuation allowance increased by $441,000 from the amount previously reflected in the Company’s June 30, 2010 financial statements.  The increases in the valuation allowance for the years ended June 30, 2012 and 2011was due to the Company’s net operating losses.  At June 30, 2012, the Company has net operating loss carryforwards not subject to IRC Section 382 limitations of approximately $4,600,000 which begin to expire in 2024.

 

During the years ended June 30, 2012 and 2011, the Company did not recognize any interest and penalties. Tax years subsequent to 2004 are subject to examination by federal and state authorities.