INCOME TAXES

3 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

7.INCOME TAXES

The income tax (provision) benefit is as follows:

	For the three months ended September 30,
	2012			2011
Current
USA	$	(24,200	)	$	(26,879	)
China		-			-
		(24,200	)		(26,879	)
Deferred
USA		(133,000	)		50,000
China		-			-
		(133,000	)		50,000
Total	$	(157,200	)	$	23,121

Operations in the USA have incurred net operating losses which have a cumulative net operating loss carry-forward of approximately $615,000, which may be available to reduce future taxable income. This carry-forward will expire if not utilized by 2032. A deferred tax asset amounting to approximately $249,000 has been recorded for the future benefits of the loss carry-forward. Other deferred tax assets relating to the allowance for doubtful accounts and stock compensation expense totaling approximately $523,000 has been recorded. Management believes that the realization of the deferred tax assets appears to be uncertain due to the Company’s continuing losses in the USA. Accordingly, the Company has increased the deferred tax asset valuation allowance to approximately 50% at September 30 2012. The increase to the valuation allowance resulted in an expense of approximately $130,000.