Note 11 – Income Tax Provision

Deferred Tax Assets/(Liabilities)

The Company has no current tax expense due to its losses.

The income tax expense for the years ended June 30, 2017, 2016, and 2015 differed from the amounts computed by applying the U.S. federal income tax rate of 34% as follows:

	For the Year Ended
	June 30, 2017			June 30, 2016			June 30, 2015
Federal Statuary Rate		-34.00	%		-34.00	%		-34.00	%
Permanent Differences		-			-			-37.00	%
Research and Development Credit		6.87	%		-6.10	%		-
State Tax Rate		4.95	%		-6.18	%		-
Valuation Allowance		45.82	%		46.28	%		71.00	%
Effective Tax Rate		-			-			-

The significant components of the Company’s deferred tax assets and liabilities at June 30, 2017 and 2016 are as follows:

	June 30, 2017		June 30, 2016
Net Operating losses	$	23,839,852	$	20,782,598
Research and Development Credit		6,217,612		5,105,024
Other		10,336,196		8,349,142

Total gross deferred tax assets		40,393,660		34,326,764

Less Valuation Allowance		(40,393,660)		(34,326,764)

Net deferred tax assets	$	-	$	-

At June 30, 2017 and 2016, the Company has recorded a full valuation allowance against its net deferred tax assets of $40,393,660 and $34,326,764, respectively. The change in the valuation allowance during the year ended 2017 was $6,066,896 and a full valuation allowance has been recorded since, in the judgment of management, these assets are not more likely than not to be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences and carry forwards become deductible or are utilized.

As of June 30, 2017, the Company has approximately $59,000,000 of gross net operating loss carryforwards. As of June 30, 2017, credit carryforwards for federal and state purposes are $5,871,124 and $346,491 respectively. The net operating loss and credit carryforwards begin to expire in 2025.

Due to the change in ownership provisions of the Internal Revenue Code, the availability of the Company’s net operating loss carry forwards could be subject to annual limitations against taxable income in future periods, which could substantially limit the eventual utilization of such carry forwards. The Company has not analyzed the historical or potential impact of its equity financings on beneficial ownership and therefore no determination has been made whether the net operating loss carry forward is subject to any Internal Revenue Code Section 382 limitation. To the extent there is a limitation, there could be a reduction in the deferred tax asset with an offsetting reduction in the valuation allowance.

The Company applies the elements of FASB ASC 740-10 “Income Taxes - Overall” regarding accounting for uncertainty in income taxes. This clarifies the accounting for uncertainty in income taxes recognized in financial statements and required impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. As of June 30, 2017 the Company did not have any unrecognized tax benefits and has not accrued any interest or penalties through 2017. The Company does not expect to have any unrecognized tax benefits within the next twelve months. The Company’s policy is to recognize interest and penalties related to tax matters within the income tax provision.