5.	Income Taxes

The provision for (benefit from) income taxes consists of the following:

	2014		2013		2012
Current:
Federal	$	-	$	-	$	-
State		12,933		17,661		11,581
Total current		12,933		17,661		11,581

Deferred:
Federal		(1,050,750)		(698,712)		(252,778)
State		(102,199)		(58,987)		(4,723)
Valuation Allowance		800,203		-		-
Total deferred		(352,746)		(757,699)		(257,501)
	$	(339,813)	$	(740,038)	$	(245,920)

A reconciliation of income taxes, with the amounts computed at the statutory federal rate is as follows:

	2014		2013		2012
Computed tax at federal statutory rate	$	(1,069,547)	$	(678,916)	$	(227,917)
State income taxes, net of federal tax (benefit) provision		(62,712)		(32,502)		(4,982)
Non deductible expenses		18,141		20,162		17,572
Federal research credit		(15,328)		(43,095)		(31,507)
Other, net		(10,570)		(5,687)		914
Valuation Allowance		800,203		-		-
Total	$	(339,813)	$	(740,038)	$	(245,920)

The deferred tax assets and deferred tax liabilities recorded on the balance sheet as of June 30, 2014 and 2013 are as follows:

	2014				2013
	Deferred Tax Assets		Deferred Tax Liabilities		Deferred Tax Assets		Deferred Tax Liabilities

Current:
Bad debts	$	40,000	$	—	$	40,000	$	—
Prepaid expenses		—		22,971		—		16,646
Accrued liabilities		304,747		—		335,744		—
Inventory		—		1,152,722		—		1,204,637
		344,747		1,175,693		375,744		1,221,283

Non Current:
Depreciation		—		535,510		—		479,840
Net operating loss and credit carryforwards		2,987,082		—		1,771,164		—
Intangible assets		1,306		—		143		—
Accrued pension liability		29,700		—		32,840		—
Stock options		363,385		—		368,941		—
Other		—		49,327		—		25,549
		3,381,473		584,837		2,173,088		505,389
Valuation Allowance		(800,203)		—		—		—
Total deferred taxes	$	2,926,017	$	1,760,530	$	2,548,832	$	1,726,672

At June 30, 2014 there were $7.6 million dollars of federal net operating loss carryforwards which will expire in 2031 through 2034. In addition, the Company has state tax net operating losses of approximately $6.6 million that expire in varying years from 2029 through 2034.

The Company files a federal and multiple state income tax returns. The Company’s federal and state income tax returns are open for fiscal years ending after June 30, 2011.

Management of the Company is not aware of any additional needed liability for unrecognized tax benefits at June 30, 2014 and 2013.