(9) Income Taxes

12 Months Ended

Jun. 30, 2012

Notes

(9) Income Taxes

(9)        Income Taxes

Income tax benefit (provision) for the years ended June 30 consists of:

			Current	Deferred	Total
2012:
	U.S. federal	$	-	159,921	159,921
	State and local		-	6,785	6,785
		$	-	166,706	166,706
2011:
	U.S. federal	$	61,449	(209,689)	(148,240)
	State and local		(100)	364	264
		$	61,349	(209,325)	(147,976)

The actual income tax benefit (provision) differs from the “expected” tax benefit (provision) computed by applying the U.S. federal corporate income tax rate of 34% to income (loss) before income taxes for the years ended June 30, are as follows:

		2012	2011
Expected tax benefit (provision)	$	64,682	(142,414)
State taxes, net of federal tax benefit		4,478	(12,650)
R&D tax credit		75,000	-
Other, net		22,546	7,088
Income tax (benefit) provision	$	166,706	(147,976)

Deferred income tax assets and liabilities related to the tax effects of temporary differences are as follow as of June 30:

				2012	2011
Net deferred income tax assets – current:
	Inventory capitalization for income tax purposes		$	75,127	73,812
	Inventory reserve			114,270	131,721
	Warranty reserve			70,590	72,245
	Accrued product liability			29,835	26,389
	Allowance for doubtful accounts			78,526	114,440
		Total deferred income tax assets – current	$	368,348	418,607

			2012	2011
Net deferred income tax assets (liabilities) – non-current:
	Property and equipment, principally due to differences in depreciation	$	(268,839)	(266,858)
	Research and development credit carryover		328,927	212,161
	Other intangibles		(126,640)	(144,047)
	Operating loss carry forwards		197,992	113,219
Total deferred income tax assets (liabilities) – non-current		$	131,440	(85,525)

In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the years in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred income tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences.