Income Taxes

12 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

10. Income Taxes

Open tax years related to federal and state income tax filings are for the years ended June 30, 2009, 2010, 2011 and 2012. The Company files state tax returns in New York and Colorado. The Company's foreign subsidiaries, Misonix Ltd. and Misonix Urology Services Limited (formerly, UKHIFU Limited) filed tax returns in the United Kingdom. In general, open years related to the United Kingdom for filing are June 30, 2010, 2011, and 2012. As of June 30, 2012 and 2011, the Company has no material unrecognized tax benefits and no accrued interest and penalties.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:

	June 30,
	2012			2011
Deferred tax liabilities:
Depreciation and amortization	$	(237,291	)	$	(169,095	)
Total deferred tax liabilities		(237,291	)		(169,095	)
Deferred tax assets:
Bad debt reserves		36,535			23,120
Accruals and allowances		13,506			13,732
Inventory valuation		286,527			276,453
License fee income		55,653			72,090
Stock-based compensation		225,823			229,607
Deferred gain — HIFU and Labcaire		211,263			198,145
Tax credits		475,386			424,664
Net operating loss carry forwards		4,745,221			4,608,441
Capital loss carryover		-			387,112
Other		5,993			8,468
Total deferred tax assets		6,055,907			6,241,832
Valuation allowance		(5,818,616	)		(6,072,737	)
Net deferred tax asset	$	-		$	-
Recorded as:
Current deferred tax asset	$	-		$	-
Non-current deferred tax liability, net		-			-
	$	-		$	-

As of June 30, 2012, the valuation allowance was determined by estimating the recoverability of the deferred tax assets. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. In making this assessment, the ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and tax planning strategies. Based on these considerations, management concluded that it is more likely than not that its deferred tax assets will not be fully realized. The reduction in the valuation allowance is primarily due to the gain from the sale of discontinued operations.

As of June 30, 2012, the Company had approximately $12,000,000 U.S. federal net operating loss carryforwards which expire in tax years between 2026 and 2031.  Of the net operating loss carryforwards, approximately $3,900,000 is subject to the separate return loss rules under the Internal Revenue Code of 1986, as amended (the “Code”).  The Company has approximately $397,000 of research and development tax credit carryforwards which expire in the tax years between 2026 and 2031.  In addition, the Company has approximately $78,000 of alternative minimum tax credit which has an indefinite carryforward period.

Significant components of the income tax expense (benefit) attributable to continuing operations are as follows:

	Year ended June 30,
	2012			2011
Current:
Federal	$	(181,016	)	$	33,100
State		(13,766	)		31,116
Total current		(194,782	)		64,216
Deferred:
State		-			-
Total deferred		-			-
	$	(194,782	)	$	64,216

The reconciliation of income tax expense (benefit) computed at the Federal statutory tax rates to income tax expense (benefit) is as follows:

	Year ended June 30,
	2012			2011
Tax at federal statutory rates	$	(273,206	)	$	(799,394	)
State income taxes, net of federal benefit		(9,086	)		20,519
Research credit		(50,722	)		(168,495	)
Capital loss		-			(375,323	)
Stock-based compensation		116,541			80,320
Rate change		24,093			-
Valuation allowance		(21,306	)		1,295,045
Travel and entertainment		22,099			15,084
Other		(3,195	)		(3,540	)
	$	(194,782	)	$	64,216