Note 9. Income Taxes

12 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Text Block]

9.      INCOME TAXES:

The reconciliation between the expected federal income tax benefit computed by applying the Federal statutory rate to loss before income taxes and the actual benefit for taxes on loss for the years ended June 30, 2012 and 2011 is as follows:

	2012			2011
Expected income tax benefit at statutory rate	$	(2,198,000	)	$	(2,379,000	)
State taxes, net of federal benefit		(198,000	)		(214,000	)
Permanent differences		12,000			6,000
Expiration of NOLs		280,000			1,346,000
Change in valuation allowance		2,104,000			1,241,000
Income tax benefit	$	-		$	-

The Company has net operating loss carry-forwards (“NOLs”) for tax purposes of approximately $42,802,000 as of June 30, 2012.  These NOLs expire on various dates through 2032.

The utilization of the NOLs may be limited under Section 382 of the Internal Revenue Code.

The Company’s deferred tax assets for the years ended June 30, 2012 and 2011, are estimated as follows:

	2012			2011
NOLs - noncurrent	$	16,265,000		$	15,886,000
Stock-based compensation - current		3,102,000			1,619,000
Deferred compensation - noncurrent		395,000			153,000
		19,762,000			17,658,000
Valuation allowance		(19,762,000	)		(17,658,000	)
Net deferred tax assets	$	-		$	-

The Company has provided a valuation allowance of 100% of its net deferred tax asset due to the uncertainty of generating future profits that would allow for the realization of such deferred tax assets.