(11) Income Taxes

12 Months Ended

Jun. 30, 2018

Disclosure Text Block [Abstract]

(11) Income Taxes

Income tax benefit (provision) are as follows for the years ended June 30:

	Current			Deferred		Total
2018:
U.S. federal	$	71,930		$	-	$	71,930
State and local		(1,616	)		-		(1,616	)
	$	70,314		$	-	$	70,314
2017:
U.S. federal	$	-		$	-	$	-
State and local		-			-		-
	$	-		$	-	$	-

The components of the Company’s income tax benefit (provision) are as follows for the years ended June 30:

	2018			2017
Expected tax benefit	$	459,957		$	634,574
State taxes, net of federal tax benefit		45,817			57,176
Business tax credits		45,000			40,000
Effect of corporate income tax rate change		(784,860	)		-
Valuation allowance		332,193			(772,288	)
Incentive stock options		(9,977	)		(11,284	)
Other, net		(17,816	)		51,822
	$	70,314		$	-

The Company’s deferred income tax assets and liabilities related to the tax effects of temporary differences are as follows as of June 30:

	2018			2017
Net deferred income tax assets (liabilities):
Inventory capitalization for income tax purposes	$	60,944		$	92,681
Inventory reserve		119,181			157,068
Accrued employee benefit reserve		93,496			-
Warranty reserve		53,522			78,780
Accrued product liability and other		7,949			9,103
Allowance for doubtful accounts		95,522			149,110
Property and equipment, principally due to differences in depreciation		(155,096	)		(103,308	)
Research and development credit carryover		588,707			351,903
Other intangibles		(98,067	)		(45,256	)
Deferred gain on sale lease-back		548,026			846,061
Operating loss carry forwards		1,317,887			1,428,119
Valuation allowance		(2,632,071	)		(2,964,261	)
Total deferred income tax assets (liabilities)	$	-		$	-

Quarterly, the Company assesses the likelihood by jurisdiction that its net deferred income tax assets will be recovered. Based on the weight of all available evidence, both positive and negative, the Company records a valuation allowance against deferred income tax assets when it is more-likely-than-not that a future tax benefit will not be realized. When there is a change in judgment concerning the recovery of deferred income tax assets in future periods, a valuation allowance is recorded into earnings during the quarter in which the change in judgment occurred. As of June 30, 2018 and 2017, the Company has established a full valuation allowance.

The anticipated accumulated net operating loss carry forward from fiscal year 2018 is approximately $3,962,000 that will begin to expire in 2037. The Company has no uncertain tax positions as of June 30, 2018.