8.	Income Taxes

The Company’s provision for income taxes consists of the following:

	For the three months ended		For the nine months ended
	(As Restated, See Note 2) March 31, 2016		(As Restated, See Note 2) March 31, 2016
Current:
Federal	$	-	$	-
State		7,600		(60)
Total current		7,600		(60)

Deferred
Federal		943,000		943,000
State		67,000		67,000
Total current		1,010,000		1,010,000

Income tax benefit	$	1,017,600	$	1,009,940

In connection with the reverse merger, AEON elected to change from a cash basis tax payer to an accrual basis tax payer. This resulted in a change of accounting methodology which resulted in a built in gain that resulted in a deferred tax liability of approximately $1,498,000 at date of acquisition. The built in gain will be recognized for tax purposes over a four year period. Additionally, AEON elected to change their tax reporting year end from a December 31 year end to a June 30 year end. This change was done to mirror AHC’s tax and reporting year.

Deferred income taxes

The Company’s deferred tax assets and liabilities consist of the following as of March 31, 2016 (in thousands):

Deferred tax assets:

		As Restated
Accounts receivable allowance	$	41
Other liabilities		36
Intangible asset		356
Accrued compensation		395
Net operating loss and other carry forwards		59,959
Total gross deferred assets		60,787
Less: Valuation allowance		21,745
Total deferred tax asset		39,042
Deferred tax liabilities

Depreciation		599
Change in accounting method		649
Total deferred tax liability		1,248

Net Deferred Tax Asset	$	37,794

As of March 31, 2016, the Company has net operating loss carryforwards of approximately $226,159,000. As of March 31, 2016, U.S. Federal net operating loss carryforwards comprise approximately $165,803,000, which expire between 2019 and 2036, and state net operating loss carryforwards are approximately $60,365,000 which expire between 2016 and 2035.

The gross deferred tax asset for these net operating losses is approximately $59,959,000 with recorded valuation allowances of approximately $21,745,000. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company believes that it is more likely than not that it will generate sufficient taxable income to utilize part of its deferred tax asset and has therefore recorded a partial valuation allowance.