Income Taxes

The provision for (benefit from) income taxes consists of the following:

	2015		2014		2013
Current:
Federal	$	-	$	-	$	-
State		16,596		12,933		17,661
Total current		16,596		12,933		17,661

Deferred:
Federal		(552,167)		(1,050,750)		(698,712)
State		(66,542)		(102,199)		(58,987)
Valuation Allowance		618,709		800,203		-
Total deferred		-		(352,746)		(757,699)
	$	16,596	$	(339,813)	$	(740,038)

A reconciliation of income taxes, with the amounts computed at the statutory federal rate is as follows:

	2015		2014			2013

Computed tax at federal statutory rate	$	(598,643)	$	(1,069,547)	$	(678,916)
State income taxes, net of federal tax (benefit) provision		(29,799)		(62,712)		(32,502)
Non deductible expenses		14,683		18,141		20,162
Federal research credit		(6,738)		(15,328)		(43,095)
Other, net		18,384		(10,570)		(5,687)
Valuation Allowance		618,709		800,203		-
Total	$	16,596	$	(339,813)	$	(740,038)

The deferred tax assets and deferred tax liabilities recorded on the balance sheet as of June 30, 2015 and 2014 are as follows:

	2015				2014
			Deferred Tax		Deferred Tax		Deferred Tax
	Deferred Tax Assets		Liabilities		Assets		Liabilities

Current:
Bad debts	$	40,000	$	—	$	40,000	$	—
Prepaid expenses		—		20,093		—		22,971
Accrued liabilities		352,469		—		304,747		—
Inventory		—		1,140,283		—		1,152,722
		392,469		1,160,376		344,747		1,175,693

Non Current:
Depreciation		—		470,768		—		535,510
Net operating loss and credit carryforwards		3,522,219		—		2,987,082		—
Intangible assets		2,471		—		1,306		—
Accrued pension liability		27,656		—		29,700		—
Stock options		321,845		—		363,385		—
Other		—		94,639		—		49,327
		3,874,191		565,407		3,381,473		584,837
Valuation Allowance		(1,418,912)		—		(800,203)		—
Total deferred taxes	$	2,847,748	$	1,725,783	$	2,926,017	$	1,760,530

At June 30, 2015, there were $9.1 million dollars of federal net operating loss carryforwards which will expire in 2031 through 2035. In addition, the Company has state tax net operating losses of approximately $7.4 million that expire in varying years from 2029 through 2035.

The Company files a federal and multiple state income tax returns. The Company’s federal and state income tax returns are open for fiscal years ending after June 30, 2012.

Management of the Company is not aware of any additional needed liability for unrecognized tax benefits at June 30, 2015 and 2014.