INCOME TAXES

3 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

INCOME TAXES

7. INCOME TAXES

The Company has significant deferred tax assets, a substantial amount of which result from operating loss carryforwards. In periods prior to the quarter ended March 31, 2014, the Company had determined that it was more likely than not that the benefit of its deferred tax assets would not be realized and recorded a full valuation allowance against such assets. As of March 31, 2014 the Company determined that it was more likely than not that it would realize a substantial portion of its deferred tax assets and reduced its valuation allowance accordingly.

For the three months ended September 30, 2014, an income tax benefit of $360,473 was recorded based upon a loss before income tax benefit using an estimated annual effective income tax rate of 56% for the fiscal year ending June 30, 2015.

A provision for income taxes of $6,911 (all income deferred taxes) was recorded for the three months ended September 30, 2013. This provision for income taxes was not a function of nor related to income before income taxes because the Company had significant operating loss carryforwards available to negate any taxable income that would create current liabilities for income taxes. The provision for income taxes related to the amortization of indefinite life intangible assets and goodwill that were being amortized for income tax purposes but not for financial reporting purposes giving rise to a basis difference in such assets between financial and income tax reporting. The resulting deferred tax liabilities related to the amortization of indefinite life assets were not subject to offset against deferred tax assets with finite lives.