6.	INCOME TAXES

The Company utilizes the liability method of accounting for income taxes. The liability method measures the expected income tax impact of future taxable income and deductions implicit in the Consolidated Balance Sheets. The income tax

(benefit) provision in

2019

and

2018

consisted of the following:

Year Ended June 30,	2019			2018*
Current:
Federal	$	(13,277	)	$	414
State		25			25
Deferred		(13,251	)		3,041,405
Total income tax (benefit) provision	$	(26,503	)	$	3,041,844

*As adjusted for the retrospective adoption of ASC

606

December 22, 2017,

the Tax Cut and Jobs Act (TCJA) was enacted. The TCJA makes broad and complex changes to the U.S. tax code including, among other things, reducing the U.S. Federal Corporate tax rate from

35%

21%

effective

January 1, 2018.

In the

second

quarter of the fiscal year ended

June 30,

2018

, the Company recorded

$713,826

of n

on-cash tax expense for the write-down of deferred income taxes due to the change in federal statutory tax rate.

The

2019

and

2018

tax results in an effective rate different than the federal statutory rate because of the following:

Year Ended June 30,	2019			2018*
Federal income tax liability (benefit) at statutory rate	$	85,599		$	(101,578	)
State income tax liability (benefit), net of federal income tax effect		20			(9,518	)
(Decrease) increase in valuation allowance		(328,541	)		2,266,219
Stock-based compensation		-			91,179
Adjustment to deferred tax assets		189,186			-
Remeasurement of deferred income taxes		-			713,826
Other		27,233			81,716
Total income tax (benefit) provision	$	(26,503	)	$	3,041,844

*As adjusted for the retrospective adoption of ASC

606

Temporary differences which give rise to deferred income tax assets and liabilities at

June 30,

2019

and

June

30,

2018

include:

	2019			2018*
Deferred income tax assets:
Deferred compensation	$	642,424		$	635,936
Stock-based compensation		228,981			420,204
Accrued expenses and reserves		705,828			997,924
Federal and state net operating loss carryforwards		697,621			630,344
Equipment and leasehold improvements		122,714			26,568
Valuation allowance		(2,382,087	)		(2,710,628	)
Total deferred income tax assets		15,481			348

Deferred income tax liabilities:
Other		(2,205	)		(348	)
Net deferred income tax assets	$	13,276		$	-

*As adjusted for the retrospective adoption of ASC

606

and ASC

842

Deferred income tax balances reflect the effects of temporary differences between the tax bases of assets and liabilities and their carrying amounts. These differences are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. The recognition of these deferred tax balances will be realized through normal recurring operations and, as such, the Company has recorded the value of such expected benefits. The Company has federal net operating loss carryforwards totaling

$317,531

which expire in fiscal year

2037

and

$312,272

which can be carried forward indefinitely. The Company has state net operating loss carryforwards totaling approximately

$6,500,000

which expire in fiscal years

2026

through

2039

ASC Topic

740

"Income Taxes" prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. There were

additional significant matters determined to be unrecognized tax benefits taken or expected to be taken in a tax return that have been recorded on the Company’s Consolidated Financial Statements for the year ended

June 30,

2019

Additionally, ASC Topic

740

provides guidance on the recognition of interest and penalties related to income taxes.

interest or penalties related to income taxes has been accrued or recognized as of and for the years ended

June 30,

2019

and

2018

. The Company records interest related to unrecognized tax benefits in interest expense.

The Company does

not

believe it has any unrecognized tax benefits as of

June 30,

2019

and

2018

. Any changes to the Company's unrecognized tax benefits during the fiscal years ended

June 30,

2019

and

2018

would

have impacted

the effective tax rate.

The Company files income tax returns in the United States federal jurisdiction and in several state jurisdictions. The Company’s federal tax returns for tax years beginning

July

2015

or later are open

. For states in which the Company files state income tax returns, the statute of limitations is generally open for tax years ended

June 30, 2014

and forward.

The following are the changes in the valuation allowance, which are net of the impact for the remeasurement due to the TCJA:

	Balance,			Decrease (Increase)
	beginning			in valuation			Balance,
Year Ended June 30,	of year			allowance			end of year
2019	$	(2,710,628	)	$	328,541		$	(2,382,087	)
2018	$	(444,409	)	$	(2,266,219	)	$	(2,710,628	)