6. INCOME TAXES (Tables)

12 Months Ended

Aug. 31, 2013

Income Taxes Tables

Components of the income tax provision

	2013		2012
Current
Federal	$	891,153	$	872,907
State		112,042		177,975
		1,003,195		1,050,882
Deferred
Federal		57,805		114,712
State		309,182		(22,901	)
		366,987		91,811
Total	$	1,370,182	$	1,142,693

Effective income tax rate

	2013			2012
Income tax computed at federal statutory tax rate		34.0%			34.0%
State taxes, net of federal benefit		5.2			3.3
Meals & Entertainment		0.1			0.1
Other permanent differences		(0.5	)		0.8
Research and development credit		(11.3	)		(8.4	)
Change in prior year estimated taxes		4.7			(0.9	)
Total		32.2%			28.9%

Components of the Company deferred tax assets and liabilities

	2013			2012
Deferred tax assets
Accrued payroll and other expenses	$	82,104		$	79,922
Deferred revenue		38,225			56,456
Deferred rent		29,068			–
Property and equipment		–			32,916
Intellectual property		30,326			–
Research and development credit		–			261,526
State taxes		45,343			66,902
State Tax Deferred		74,458			–
Total deferred tax assets		299,524			497,722
Less:  Valuation allowance		–			–
		299,524			497,722
Deferred tax liabilities
Property and equipment		(23,077	)		–
State Tax Deferred		(30,663	)		–
Capitalized computer software development costs		(1,238,578	)		(1,062,204	)
Total deferred tax liabilities		(1,261,655	)		(1,092,867	)
Net deferred tax liabilities	$	(962,131	)	$	(595,145	)