7. INCOME TAXES (Tables)

12 Months Ended

Aug. 31, 2014

Income Tax Disclosure [Abstract]

Components of the income tax provision

	2014		2013
Current
Federal	$	186,052	$	891,153
State		2,858		112,042
		188,910		1,003,195
Deferred
Federal		1,180,655		57,805
State		118,241		309,182
		1,298,896		366,987
Total	$	1,487,806	$	1,370,182

Effective income tax rate

	2014			2013
Income tax computed at federal statutory tax rate		34.0%			34.0%
State taxes, net of federal benefit		5.1			5.2
Meals & Entertainment		0.1			0.1
Other permanent differences		2.6			(0.5	)
Research and development credit		(9.6	)		(11.3	)
Change in prior year estimated taxes		0.8			4.7
Total		33.0%			32.2%

Components of the Company deferred tax assets and liabilities

	2014			2013
Deferred tax assets
Accrued payroll and other expenses	$	88,574		$	82,104
Deferred revenue		12,473			38,225
Deferred rent		–			29,068
Capitalized merger costs		93,306			–
Intellectual property		19,442			30,326
Research and development credit		216,917			–
State taxes		272			45,343
State Tax Deferred		120,575			74,458
Total deferred tax assets		551,558			299,524
Less: Valuation allowance		–			–
		551,558			299,524
Deferred tax liabilities
Property and equipment		(27,178	)		(23,077	)
State Tax Deferred		(5,914	)		–
Intellectual Property		(1,361,535	)		–
Capitalized computer software development costs		(1,417,959	)		(1,238,578	)
Total deferred tax liabilities		(2,812,586	)		(1,261,655	)
Net deferred tax liabilities	$	(2,261,028	)	$	(962,131	)