Annual report pursuant to Section 13 and 15(d)

Income Taxes

v2.4.1.9
Income Taxes
12 Months Ended
Nov. 30, 2014
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 6 - INCOME TAXES.

The Company recorded the following income tax provision for the years ended November 30, 2014 and 2013.

 

     2014      2013  

Current:

     

Federal

   $ —        $ —    

State

     —          —    

Foreign

     123,000         169,000  

Subtotal

     123,000         169,000  

Deferred:

     

Federal

     —          —    

State

     —          —     

Foreign

     —           —     

Subtotal

     —          —    
  

 

 

    

 

 

 

Income Tax Provision

$ 123,000    $ 169,000   
  

 

 

    

 

 

 

 

As of November 2014 and 2013 the tax effects of temporary differences that give rise to the deferred tax assets are as follows:

 

     2014  
     Current      Non-current      Total  

Tax Assets:

        

Deferred income (Net of Discounts)

   $ 217,000      $ 3,934,000      $ 4,151,000  

NOL’s, credits, and other carryforward items

     —          2,260,000         2,260,000  

Tax over book basis in unconsolidated affiliate

     —           1,417,000        1,417,000  

Accrued payroll

     49,000        —           49,000  

Reserves and other accruals

     1,066,000         —           1,066,000  

Stock compensation

     —           391,000         391,000   

Depreciation and Amortization

     —           165,000        165,000  

RSA Buy-out

     —           1,018,000         1,018,000   
  

 

 

    

 

 

    

 

 

 

Total Assets:

  1,332,000     9,185,000     10,517,000  

Tax Liabilities:

Less: Valuation Allowance

  (1,332,000 )   (9,185,000   (10,517,000
  

 

 

    

 

 

    

 

 

 

Net Deferred Tax Asset (Liability)

$ —      $ —        —     
  

 

 

    

 

 

    

 

 

 

 

     2013  
     Current      Non-current      Total  

Tax Assets:

        

Deferred income (Net of Discounts)

   $ 216,000      $ 3,574,000      $ 3,790,000  

NOL’s, credits, and other carryforward items

     —           3,055,000         3,055,000  

Tax over book basis in unconsolidated affiliate

     —           1,285,000        1,285,000  

Accrued payroll

     45,000        —           45,000  

Reserves and other accruals

     1,099,000         —           1,099,000  

Deferred compensation

     —           —           —     

Stock compensation

     —           392,000         392,000   

Depreciation and Amortization

     —           96,000        96,000   

RSA Buy-out

     —           1,090,000         1,090,000   
  

 

 

    

 

 

    

 

 

 

Total Assets:

  1,360,000     9,492,000     10,852,000  

Tax Liabilities:

Less: Valuation Allowance

  (1,360,000 )   (9,492,000   (10,852,000
  

 

 

    

 

 

    

 

 

 

Net Deferred Tax Asset (Liability)

$ —      $ —        —     
  

 

 

    

 

 

    

 

 

 

A valuation allowance covering the deferred tax assets of the Company for November 30, 2014 and November 30, 2013, has been provided as the Company does not believe it is more likely than not that all of the future income tax benefits will be realized. The valuation allowance changed by approximately ($301,000) and ($115,000) during the years ended November 30, 2014 and 2013, respectively. The 2014 change was primarily a result of NOL usage and assets relating to deferred revenue. The 2013 change was primarily a result of increased deferred assets related to foreign tax credits and bad debts.

The Company has unused net operating losses available for carryforward as of November 30, 2014 of approximately $2,133,000 to offset future federal taxable income. The net operating loss carryfowards expire during 2024 through 2033. The Tax Reform Act of 1986 contains provisions that limit the utilization of net operating losses if there has been an “ownership change”. Such an “ownership change” as described in Section 382 of the Internal Revenue code may limit the Company’s utilization of its net operating loss carryforwards.

A reconciliation of the income tax provision with the amount of tax computed by applying the federal statutory rate to pretax income follows:

 

     For the Years Ended November 30, 2014  
     2014      %      2013      %  

Tax at Federal Statutory Rate

   $ 272,000         34.0      $ 67,000        34.0  

State Income Tax Effect

     29,000         3.6        7,000        3.6  

Decrease in valuation allowance

     (301,000 )      (37.7      (115,000 )      (58.4

Permanent Disallowances

     123,000        15.2        210,000        106.6   

Capital loss expirations

     —           —           —           —     

Foreign tax credits

     (124,000      (15.5      (170,000      (86.3

Foreign tax withholding

     124,000         15.5         170,000         86.3   

Other

     —           —          —          —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total income taxes

$ 123,000      15.1   $ 169,000      85.8   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. Increases or decreases to the unrecognized tax benefits could result from management’s belief that a position can or cannot be sustained upon examination based on subsequent information or potential lapse of the applicable statute of limitation for certain tax positions. There were no uncertain tax positions as of November 30, 2014 and 2013.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. For the years ended November 30, 2014 and 2013, the Company had no provisions for interest or penalties related to uncertain tax positions.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state jurisdictions. The table below summarizes the open tax years and ongoing tax examinations in major jurisdictions as of November 30, 2014:

 

Jurisdiction

  

Open Tax Years

  

Examinations in Process

United States - Federal Income Tax    2010 - 2013    N/A
United States - Various States    2009 - 2013    N/A