6.	INCOME TAXES

The Company reviewed its ASC 740-10 tax documentation for the periods through June 30, 2014 to ascertain if any changes should be made with respect to tax positions previously taken. In addition, the Company reviewed its income tax reporting through June 30, 2014. Based on the Company’s review of its tax positions as of June 30, 2013 and June 30, 2014, no new uncertain tax positions have been determined; nor has new information become available that would change management’s judgment with respect to tax positions previously taken.

As of June 30, 2014, the Company's net deferred tax assets were nil. No tax benefit was recorded during the year ended June 30, 2014 because future realizability of such benefit was not considered to be more likely than not. At June 30, 2013 and 2014, the Company had gross deferred tax assets of $9.3 million and $10.3 million, respectively, and corresponding valuation allowances of $9.3 million and $10.3 million, respectively.

The Accounting Standards Codification prescribes a recognition and measurement of a tax position taken or expected to be taken in a tax return and provides guidance on derecognition of tax benefits, classification on the balance sheet, interest and penalties, accounting in interim periods, disclosure, and transition.

The Company files income tax returns in the U.S. federal jurisdiction, and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal state or local income tax examinations by tax authorities for years before 2008. The Company has analyzed its filing positions in all of the federal and state jurisdictions where it is required to file income tax returns.

The Company’s provision for, or benefit from, income taxes has been determined as if the Company filed income tax returns on a stand-alone basis.

The Company’s provision for (benefit from) income taxes for the years ended June 30, 2012, 2013 and 2014 consists of the following (in thousands):

	Year Ended June 30,
	2012		2013		2014
Current tax expense:
Federal	$	-	$	13	$	-
State		-		10		3

Total current		-		23		3

Deferred tax (benefit) expense:
Federal		136		(174)		(873)
State		(119)		(43)		(204)
Valuation allowance		(17)		217		1,077
Total deferred		-		-		-

Total provision for income taxes	$	-	$	23	$	3

The composition of the deferred tax assets (liabilities) at June 30, 2012, 2013 and 2014 are listed below:

	2012		2013		2014

Accrued liabilities	$	250,000	$	278,000	$	208,000
Allowance for doubtful accounts		141,000		140,000		97,000
Other		15,000		6,000		7,000
Total current deferred tax assets		406,000		424,000		312,000

Property and equipment		915,000		471,000		979,000
Goodwill and other intangibles		1,268,000		863,000		573,000
State net operating loss carry forward		6,115,000		6,769,000		7,929,000
Other		370,000		764,000		575,000
Valuation allowance		(9,074,000)		(9,291,000)		(10,368,000)
Total non-current deferred tax liabilities		(406,000)		(424,000)		(312,000)

Net deferred tax liability	$	-	$	-	$	-

At the end of each fiscal year, the Company updates its reconciliation of book and tax differences based on the tax return of the previous fiscal year filed with the Internal Revenue Service in the third quarter of the current fiscal year. Any resulting adjustments are reflected in the table above in the fiscal year in which the adjustments were determined.

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. Statutory income taxes rates to income before taxes as a result of the following differences:

	Year Ended June 30,
	2012		2013		2014
Federal tax computed at statutory rate	34	%	34	%	34	%
State taxes, net of federal benefit and net operating loss limitation	6	%	(17)	%	7	%
Permanent difference	(25)	%	0	%	0	%
Excess tax benefit for goodwill	(11)	%	3	%	0	%
Valuation allowance	(8)	%	(21)	%	(41)	%
Other (meals and entertainment)	4	%	(1)	%	0	%

Tax provision	0	%	(2)	%	0	%