6. Taxes on Income

12 Months Ended

Jun. 30, 2013

Notes to Financial Statements

Taxes on Income

Deferred tax assets and liabilities as of June 30, 2013 and 2012 consisted of the following:

Deferred Tax assets/(liabilities):	2013			2012
Current
Vacation accrual	$	50,578		$	47,227
Deferred Compensation		4,422			16,080
Inventory reserve		22,081			117,694
Allowance for doubtful accounts		--			--
Prepaids		(9,180	)		(6,928	)
		67,901			174,073
Less valuation allowance		(67,901	)		(174,073	)
Total current deferred tax asset		--			--
Non-current
Pension		349,718			433,958
Depreciation		20,502			9,926
Net operating loss		773,535			739,961
		1,143,755			1,183,845
Less valuation allowance		(1,143,755	)		(1,183,845	)
Total non-current deferred tax Assets		--			--
Total deferred tax assets	$	--		$	--

The Company has provided a valuation allowance against its net deferred taxes as it believes that it is more likely than not that it will not realize the tax attributes. In fiscal 2013, the Company recorded a valuation allowance against its deferred tax assets as it believes that it is more likely than not that it will not realize the tax attributes.

As of June 30, 2013, the Company has approximately $1,900,000 and $2,020,000of federal and state, respectively, net operating loss carry-forwards expiring beginning in 2014 through 2031.

Income Tax expense (benefit) consists of the following:

	Year Ended June 30,
	2013		2012
Federal
Current	$	--	$	--
Deferred		(36,687)		104,189
State:
Current		--		--
Deferred		(6,741)		19,383
		(43,428)		123,572
Change in valuation allowance		43,428		(123,572	)
Income tax expense	$	--	$	--

The reconciliation of the Federal statutory rate with the Company’s effective tax rate is summarized as follows:

	Years ended June 30,
	2013			2012
Federal statutory rate		34.00	%		34.00	%
State tax net of federal benefit		6.31			6.40
Other		3.10			1.04
Change in valuation allowance		(43.41	)		(41.44	)
Effective Rate		0.00	%		0.00	%

The Company adopted ASC Topic 740, which clarifies the accounting for uncertainty in income taxes recognized in the financial statements. This interpretation prescribes a recognition threshold, and a measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. There were no significant matters determined to be unrecognized tax benefits taken or expected to be taken in a tax return that have been recorded on the Company’s financial statements for the years ended June 30, 2013 or 2012.

Additionally, ASC Topic 740 provides guidance on the recognition of interest and penalties related to income taxes. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the years ended June 30, 2013 and 2012.

The Company files corporate tax returns in the United States, both in the Federal jurisdiction and in various state jurisdictions. The Company is subject to tax examination for fiscal tax years of 2009 through 2013.