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Procyon Corporation
0000812306
10-Q
2012-09-30
false
--06-30
No
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Yes
Smaller Reporting Company
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2013
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<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"><b>NOTE A -
SUMMARY OF ACCOUNTING POLICIES</b></font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">The
interim financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements
prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted as allowed
by such rules and regulations. The Company believes that the disclosures are adequate to make the information presented not misleading.
These financial statements should be read in conjunction with the Company’s audited financial statements dated June 30,
2012. The results for interim periods are not necessarily indicative of results that may be expected for any other interim period
or for the full year.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">Management
of the Company has prepared the accompanying unaudited condensed financial statements prepared in conformity with generally accepted
accounting principles, which require the use of management estimates, contain all adjustments (including normal recurring adjustments)
necessary to present fairly the operations and cash flows for the period presented and to make the financial statements not misleading.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt">STOCK-BASED
COMPENSATION</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">Stock
based compensation is accounted for in accordance with Topic 718 - Compensation -Stock Compensation in the Accounting Standards
Codification. Pursuant to Topic 718, all share-based payments to employees, including grants of employee stock options, are to
be recognized in the statement of operations based upon their fair values. Topic 718 rescinds the acceptance of pro forma disclosure.
In December 2009, our shareholders approved the adoption of a new stock option plan, providing the Company a continued means of
offering stock-based compensation.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">On
September 30, 2012, there were no outstanding options to purchase shares of our common stock. Therefore, the adoption of Topic
718 does not have a material impact on our statement of operations for period ending September 30, 2012.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">The
fair value of a stock option is determined using the Black-Scholes option-pricing model, which values options based on the stock
price at the grant date, the expected life of the option, the estimated volatility of the stock, the expected dividend payments,
and the risk-free interest rate over the life of the option. There were no options granted during the quarters ended September
30, 2012 and 2011.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">The
Black-Scholes option valuation model was developed for estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. Because option valuation models require the use of subjective assumptions, changes in these assumptions
can materially affect the fair value of the options. Our options do not have the characteristics of traded options, therefore,
the option valuation models do not necessarily provide a reliable measure of the fair value of our options.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> EARNINGS
PER SHARE</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">Basic
earnings per share (EPS) is computed by dividing income available to common stockholders by the weighted-average number of common
shares outstanding for the period. Diluted EPS reflects the potential dilution that would occur if dilutive securities such as
stock options and other contracts to issue Common Stock were exercised or converted into Common Stock or resulted in the issuance
of Common Stock that then shared in earnings. We use the treasury stock method to compute potential common shares from stock options
and the as-if-converted method to compute potential common shares from Preferred Stock.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">The
interim financial statements included herein have been prepared by the Company without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements
prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted as allowed
by such rules and regulations. The Company believes that the disclosures are adequate to make the information presented not misleading.
These financial statements should be read in conjunction with the Company’s audited financial statements dated June 30,
2012. The results for interim periods are not necessarily indicative of results that may be expected for any other interim period
or for the full year.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">Management
of the Company has prepared the accompanying unaudited condensed financial statements prepared in conformity with generally accepted
accounting principles, which require the use of management estimates, contain all adjustments (including normal recurring adjustments)
necessary to present fairly the operations and cash flows for the period presented and to make the financial statements not misleading.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt">STOCK-BASED
COMPENSATION</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">Stock
based compensation is accounted for in accordance with Topic 718 - Compensation -Stock Compensation in the Accounting Standards
Codification. Pursuant to Topic 718, all share-based payments to employees, including grants of employee stock options, are to
be recognized in the statement of operations based upon their fair values. Topic 718 rescinds the acceptance of pro forma disclosure.
In December 2009, our shareholders approved the adoption of a new stock option plan, providing the Company a continued means of
offering stock-based compensation.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">On
September 30, 2012, there were no outstanding options to purchase shares of our common stock. Therefore, the adoption of Topic
718 does not have a material impact on our statement of operations for period ending September 30, 2012.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">The
fair value of a stock option is determined using the Black-Scholes option-pricing model, which values options based on the stock
price at the grant date, the expected life of the option, the estimated volatility of the stock, the expected dividend payments,
and the risk-free interest rate over the life of the option. There were no options granted during the quarters ended September
30, 2012 and 2011.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">The
Black-Scholes option valuation model was developed for estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. Because option valuation models require the use of subjective assumptions, changes in these assumptions
can materially affect the fair value of the options. Our options do not have the characteristics of traded options, therefore,
the option valuation models do not necessarily provide a reliable measure of the fair value of our options.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> EARNINGS
PER SHARE</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">Basic
earnings per share (EPS) is computed by dividing income available to common stockholders by the weighted-average number of common
shares outstanding for the period. Diluted EPS reflects the potential dilution that would occur if dilutive securities such as
stock options and other contracts to issue Common Stock were exercised or converted into Common Stock or resulted in the issuance
of Common Stock that then shared in earnings. We use the treasury stock method to compute potential common shares from stock options
and the as-if-converted method to compute potential common shares from Preferred Stock.</font></p>
0
0
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> <b>NOTE
B - INVENTORIES</b></font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 10pt"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td>Inventories consisted of the following:</td><td> </td>
<td colspan="3"> </td><td> </td>
<td colspan="3"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="3" style="text-align: center">September 30,</td><td> </td>
<td colspan="3" style="text-align: center">June 30,</td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">2012</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: left">Finished Goods</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">114,470</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">71,634</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt">Raw Materials</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">145,300</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">123,282</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">259,770</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">194,916</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td>Inventories consisted of the following:</td><td> </td>
<td colspan="3"> </td><td> </td>
<td colspan="3"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td colspan="3" style="text-align: center">September 30,</td><td> </td>
<td colspan="3" style="text-align: center">June 30,</td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">2012</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: left">Finished Goods</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">114,470</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">71,634</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt">Raw Materials</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">145,300</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">123,282</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">259,770</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">194,916</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
145300
123282
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"><b>NOTE C - STOCKHOLDERS’ EQUITY</b></font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt">	</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt">During January
1995, the Company's Board of Directors authorized the issuance of up to 4,000,000 shares of Series A Cumulative Convertible Preferred
Stock (“Series A Preferred Stock”). The preferred stockholders are entitled to receive, as and if declared by the
board of directors, quarterly dividends at an annual rate of $.10 per share of Series A Preferred Stock per annum. Dividends will
accrue without interest and will be cumulative from the date of issuance of the Series A Preferred Stock and will be payable quarterly
in arrears in cash or publicly traded common stock when and if declared by the Board of Directors. As of September 30, 2012, no
dividends have been declared. Dividends in arrears on the outstanding preferred shares total $297,954 as of September 30, 2012.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt">Holders of the
Preferred Stock have the right to convert their shares of Preferred Stock into an equal number of shares of Common Stock of the
Company. In addition, Preferred Stock holders have the right to vote the number of shares into which their shares are convertible
into Common Stock. Such preferred shares will automatically convert into one share of Common Stock at the close of a public offering
of Common Stock by the Company provided the Company receives gross proceeds of at least $1,000,000, and the initial offering price
of the Common Stock sold in such offering is equal to or in excess of $1 per share. The Company is obligated to reserve an adequate
number of shares of its common stock to satisfy the conversion of all the outstanding Series A Preferred Stock. There were no
shares converted during the reporting period.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt">The Board of
Directors of the Company approved a plan on December 8, 2007 to repurchase shares of Procyon Corporation's outstanding common
stock. The repurchase plan authorizes management to repurchase from time to time up to 10% of the total outstanding shares of
common stock as of December 8, 2007, subject to applicable SEC regulations and compliance with the Company's trading window policies.
The Board's authorization is based on its belief that Procyon's common stock is underpriced at times given the Company's working
capital, liquidity, assets, book value and future prospects. The shares may be repurchased from time to time in the open market,
through block purchases or in privately negotiated transactions depending upon market conditions and other factors, in accordance
with SEC Rule 10b-18. Procyon has no commitment or obligation to purchase all or any portion of the authorized shares. All shares
purchased are canceled and returned to the status of authorized but unissued common stock. The plan does not have an expiration
date. As of September 30, 2012, no shares of common stock had been repurchased by the Company pursuant to its repurchase plan.</font></p>
0
0
297954
0
0
0
0
0
0
10
4000000
0
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"><b>NOTE D - INCOME TAXES AND AVAILABLE
CARRYFORWARD</b></font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt">As of September
30, 2012, the Company had consolidated income tax net operating loss ("NOL") carryforward for federal income tax purposes
of approximately $2,122,000. The NOL will expire in various years ending through the year 2022. The utilization of certain of
the loss carryforwards are limited under Section 382 of the Internal Revenue Code.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt">The components
of the provision for income tax benefits (expense) attributable to continuing and discontinued operations are as follows:</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Three Months 09/30/2012</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Three Months 09/30/2011</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 6pt">Current</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 56%; padding-left: 6pt">Federal</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 6pt">State</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt">Deferred</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 6pt">Federal</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">11,555</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(4,600</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt; padding-left: 6pt">State</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,978</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(787</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 6pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">13,533</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">(5,387</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 6pt">Total Income Tax Benefit (Expense)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">13,533</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(5,387</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt">Deferred income taxes reflect the
net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities
are as follows:</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: center; padding-bottom: 1pt"></td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Current</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Non-Current</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 6pt">Deferred tax assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: left; padding-left: 10pt">NOL and contribution carryforwards</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">119,119</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">679,414</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Allowance for doubtful accounts</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(376</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">118,743</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">679,414</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 6pt">Deferred tax (liabilities)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Excess of tax over book depreciation</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(7,992</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">118,743</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">671,422</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 6pt">Net deferred tax asset (liability)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">118,743</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">671,422</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt">The Change in valuation allowance
is as follows:</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 52%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 30%; padding-left: 2.5pt"> June 30, 2012</td><td style="width: 10%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">—  </td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt; padding-left: 2.5pt"> September 30, 2012</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 5.4pt; padding-bottom: 2.5pt">Change in valuation allowance</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; padding-bottom: 2.5pt; border-bottom: Black 2.5pt double">—  </td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> 	</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt">Management believes
it is more likely than not that it will realize the benefit of the NOL carryforward, because of its continuing trend of earnings.
Therefore, a valuation allowance is not considered necessary.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt">	Income taxes for the periods
ended September 30, 2012 and 2011 differ from the amounts computed by applying the effective income tax rates of 37.63%, to income
taxes as a result of the following:	</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-size: 12pt; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-size: 12pt; text-align: center; border-bottom: Black 1pt solid"><p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 10pt">Three Months</font></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 10pt">Sep. 30, 2012</font></p></td><td style="font-size: 12pt; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-size: 12pt; text-align: center; border-bottom: Black 1pt solid"><p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 10pt">Three Months</font></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 10pt">Sep. 30, 2011</font></p></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: left; padding-left: 6pt">Expected benefit (provision) at US statutory rate</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">13,862</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(1,433</td><td style="width: 1%; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 6pt">State income tax net of federal benefit (provision)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,480</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(153</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 6pt">Nondeductible Expense</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(989</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(858</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 6pt">Change in estimates in available NOL carryforwards</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(820</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(2,943</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 6pt">Income Tax Benefit (Expense)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">13,533</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(5,387</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt">The earliest
tax year still subject to examination by a major taxing jurisdiction is fiscal year end June 30, 2010.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt">  </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt">The Company made
a comprehensive review of its portfolio of uncertain tax positions in accordance with applicable standards of the Financial Accounting
Standards Board ("FASB"). In this regard, an uncertain tax position represents the Company's expected treatment of a
tax position taken in a filed tax return, or planned to be taken in a future tax return, that has not been reflected in measuring
income tax expense for financial reporting purposes. As a result of this review, the Company concluded that at this time there
are no uncertain tax positions, and there has been no cumulative effect on retained earnings.</font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Three Months 09/30/2012</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Three Months 09/30/2011</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 6pt">Current</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 56%; padding-left: 6pt">Federal</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">0</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 6pt">State</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">0</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">0</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">0</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt">Deferred</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 6pt">Federal</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">11,555</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">(4,600</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt; padding-left: 6pt">State</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,978</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(787</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1pt; padding-left: 6pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">13,533</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">(5,387</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 6pt">Total Income Tax Benefit (Expense)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">13,533</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(5,387</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
</table>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: center; padding-bottom: 1pt"></td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Current</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Non-Current</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 6pt">Deferred tax assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: left; padding-left: 10pt">NOL and contribution carryforwards</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">119,119</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">679,414</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Allowance for doubtful accounts</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(376</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">118,743</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">679,414</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 6pt">Deferred tax (liabilities)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Excess of tax over book depreciation</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(7,992</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">118,743</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">671,422</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 6pt">Net deferred tax asset (liability)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">118,743</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">671,422</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 52%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 30%; padding-left: 2.5pt"> June 30, 2012</td><td style="width: 10%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 10%; text-align: right">—  </td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt; padding-left: 2.5pt"> September 30, 2012</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">—  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 5.4pt; padding-bottom: 2.5pt">Change in valuation allowance</td><td style="padding-bottom: 2.5pt"> </td>
<td style="text-align: left; border-bottom: Black 2.5pt double">$</td><td style="text-align: right; padding-bottom: 2.5pt; border-bottom: Black 2.5pt double">—  </td><td style="text-align: left; padding-bottom: 2.5pt"> </td></tr>
</table>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="font-size: 12pt; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-size: 12pt; text-align: center; border-bottom: Black 1pt solid"><p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 10pt">Three Months</font></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 10pt">Sep. 30, 2012</font></p></td><td style="font-size: 12pt; padding-bottom: 1pt"> </td>
<td colspan="3" style="font-size: 12pt; text-align: center; border-bottom: Black 1pt solid"><p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 10pt">Three Months</font></p> <p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font-size: 10pt">Sep. 30, 2011</font></p></td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 56%; text-align: left; padding-left: 6pt">Expected benefit (provision) at US statutory rate</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">13,862</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">(1,433</td><td style="width: 1%; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 6pt">State income tax net of federal benefit (provision)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,480</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(153</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-left: 6pt">Nondeductible Expense</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(989</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(858</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 6pt">Change in estimates in available NOL carryforwards</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(820</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(2,943</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 2.5pt; padding-left: 6pt">Income Tax Benefit (Expense)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">13,533</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(5,387</td><td style="padding-bottom: 2.5pt; text-align: left">)</td></tr>
</table>
2122000
will expire in various years ending through the year 2022.
0.3763
0.3763
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font-size: 10pt">The Company made
a comprehensive review of its portfolio of uncertain tax positions in accordance with applicable standards of the Financial Accounting
Standards Board ("FASB"). In this regard, an uncertain tax position represents the Company's expected treatment of a
tax position taken in a filed tax return, or planned to be taken in a future tax return, that has not been reflected in measuring
income tax expense for financial reporting purposes. As a result of this review, the Company concluded that at this time there
are no uncertain tax positions, and there has been no cumulative effect on retained earnings.</font></p>
0
0
0
0
11555
-4600
1978
-787
0
0
119119
-376
118743
118743
679414
679414
-7992
671422
671422
13862
-1433
1480
-153
-989
-858
-820
-2943
13533
-5387
0
0
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"><b>NOTE E - MORTGAGE PAYABLE</b></font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt">On July 21, 2006,
we entered into a mortgage loan, guaranteed by our C.E.O. Regina W. Anderson, for $508,000 with the Bank of America for the purchase
of our corporate office building which has a net book value of approximately $463,000. The mortgage loan is due in July 2021 with
interest fixed at 7.25%. Interest expense was $1,927 for the three months ended September 30, 2012. As of September 21, 2010,
the interest rate on the mortgage was adjusted to 6.85% for the remainder of the term of the loan.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt">Maturities of
long-term debt associated with the mortgage payable are as follows:</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1pt solid; text-align: center">Year Ending June 30,</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 70%; padding-left: 6pt">9 months 2012</td><td style="width: 10%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">37,075</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 6pt">2013</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">52,482</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 6pt">2014 and thereafter</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">6,939</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">96,496</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 6pt">Less current portion</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">49,861</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 2.5pt; padding-left: 6pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">46,635</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt"></font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1pt solid; text-align: center">Year Ending June 30,</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 70%; padding-left: 6pt">9 months 2012</td><td style="width: 10%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 18%; text-align: right">37,075</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 6pt">2013</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">52,482</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 6pt">2014 and thereafter</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">6,939</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 6pt"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">96,496</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1pt; padding-left: 6pt">Less current portion</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">49,861</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 2.5pt; padding-left: 6pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">46,635</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
96496
508000
0
463000
508000
0
1927
0
0
0.0685
0.0725
0
0
0
0.0685
52482
37075
6939
96496
49861
46635
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"><b>NOTE F - LINE OF CREDIT</b></font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt">The Company has
a $250,000, due-on-demand line of credit with a financial institution, collateralized by the Company’s inventory of $259,770
and net accounts receivable assets of $171,001. The line of credit is renewable annually in April. The C.E.O. of the Company personally
guaranteed the line of credit to the Company. At September 30, 2012, the Company owed $0 on the line of credit. The line of credit
extends terms of cash advances at a variable rate set equal to the prime rate at the time of advance. The interest rate can fluctuate
according to the changes in its published prime rate.</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
250000
250000
259770
171001
0
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> <b>NOTE G - RELATED PARTY TRANSACTIONS</b></font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 22pt"><font style="font-size: 10pt">	Our Chief Executive Officer,
Regina W. Anderson, guaranteed a loan for the Company in the amount of $508,000, issued in connection with our purchase of our
office building in July 2006, as well as the $250,000 line of credit.	</font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"><font style="font-size: 10pt"><b>NOTE H - SUBSEQUENT EVENTS</b></font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt"> </font></p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font-size: 10pt">We have evaluated
subsequent events through November 8, 2012, which is the date the financial statements were available to be issued.</font></p>
0
0
0
0
0
0
-27236
-1172
114470
71634
1000
1000