NOTE

14.

INCOME TAXES

The following table summarizes income before income taxes:

	Years Ended June 30,
	2017		2016 As Adjusted
U.S.	$	6,227,200	$	8,505,004
Foreign		548,534		339,005
Income before income taxes	$	6,775,734	$	8,855,867

Income Tax Provision

Provision for income tax as listed on the Consolidated Statements of Operations for the years ended

June 30, 2017

and

2016

are $

1,589,403

and

$3,580,632,

respectively.

Provision for taxes consisted of the following:

	Years Ended June 30,
	2017		2016
US operations	$	1,419,051	$	3,485,411
Foreign operations		170,352		95,221
Total	$	1,589,403	$	3,580,632

Deferred Income Tax Assets and Liabilities

Deferred income tax assets and liabilities arise from temporary differences associated with differences between the financial statements and tax basis of assets and liabilities, as measured by the enacted tax rates which are expected to be in effect when these differences reverse. The Company has adopted ASU

2017

and classifies all deferred tax assets and liabilities as long-term.

The gross deferred tax asset balance as of

June 30, 2017

is approximately $

1,250,748.

$29,077,

or approximately

2.3%,

valuation allowance has been established against the deferred tax assets, as the utilization of the loss carry forward cannot be reasonably assured.

Provisions for income tax consisted of the following as of the years ended:

For the year ended:	June 30, 2017			June 30, 2016

Current:
Federal	$	1,573,044		$	2,929,891
States		138,728			324,111
Foreign		191,948			71,407
Total current		1,903,720			3,325,409
Deferred:
Federal		(173,657	)		70,143
States		(119,064	)		162,220
Foreign		(21,596	)		22,860
Total deferred		(314,317	)		255,223
Total	$	1,589,403		$	3,580,632

The Company records a liability for uncertain tax positions when it is probable that a loss has been incurred and the amount can be reasonably estimated. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. T

he effects of temporary differences and related deferred tax assets and liabilities are as:

For the year ended:	June 30, 2017			June 30, 2016

Deferred tax assets:
Property and equipment and intangible assets - U.S.	$	1,291,927		$	1,132,920
Net operating loss		111,698			1,204,967
Capital loss carryover		-			6,970
Accruals, reserves and other - foreign		31,840			23,724
Accruals, reserves and other - U.S.		73,884			43,403
Gross deferred tax assets		1,509,349			2,411,984
Less valuation allowance		(29,077	)		(1,232,512	)
Total deferred tax assets	$	1,480,272		$	1,179,472

Deferred tax liabilities:
Intangible assets - foreign	$	(258,601	)	$	(272,095	)
Total deferred tax liabilities	$	(258,601	)	$	(272,095	)

Change in Valuation Allowance:

Income tax expense (benefit) for the years ended

June 30, 2017

and

December 31, 2016

differed from the amounts computed by applying the statutory federal income tax rate of

34%

to pretax income (loss) as a result of the following:

For the year ended:	June 30, 2017			June 30, 2016

Federal tax expense (benefit) at statutory rate	$	2,321,442		$	3,006,961
State income taxes		(27,503	)		440,396
Permanent differences		399,639			98,271
Change in valuation allowance		(1,128,464	)		55,999
Foreign rate differential		24,289			(20,995	)
Total tax expense/(benefit)	$	1,589,403		$	3,580,632

For the year ended:	June 30, 2017				June 30, 2016
	%				%
Federal tax expense (benefit) at statutory rate		34.00	%			34.00	%
State income taxes		(0.40	%	)		4.98	%
Permanent differences		5.85	%			1.11	%
Foreign rate differential		(0.36	%	)		(0.24	%)
Change in valuation allowance		(16.53	%	)		0.63	%
Total tax expense/(benefit)		23.28	%			40.48	%

Reconciliation of unrecognized tax benefits per ASC

740

15.a

Balance at June 30, 2016	$	-
Additions based on tax positions taken during a prior period		-
Reductions based on tax positions taken during a prior period		-
Additions based on tax positions taken during the current period		206,046
Reductions based on tax positions taken during the current period		-
Reductions related to settlement of tax matters		-
Reductions related to a lapse of applicable statute of limitations		-
Balance at June 30, 2017	$	206,046