15. INCOME TAXES

12 Months Ended

Jun. 30, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

The provision (benefit) for income taxes consists of the following:

	Year ended June 30,
	2015			2014
Current	$	(86,455	)	$	(82,411	)
Deferred		-			-
Provision (benefit) for income taxes	$	(86,455	)	$	(82,411	)

The Company accounts for income taxes using an asset and liability approach which generally requires the recognition of deferred income tax assets and liabilities based on the expected future income tax consequences of events that have previously been recognized in the Company’s financial statements or tax returns.  In addition, a valuation allowance is recognized if it is more likely than not that some or all of the deferred income tax assets will not be realized in the foreseeable future.  Deferred income tax assets are reviewed for recoverability based on historical taxable income, the expected reversals of existing temporary differences, tax planning strategies and projections of future taxable income.  As a result of this analysis, the Company has provided for a valuation allowance against its net deferred income tax assets as of June 30, 2015 and June 30, 2014.

The Company’s combined effective income tax rate differed from the U.S. federal statutory income rate as follows:

	Year ended June 30,
	2015			2014
Income tax expense/(benefit) computed at the U.S. federal statutory rate		-34	%		-34	%
Settlement of uncertain tax positions		-1	%		0	%
Foreign tax expense/(benefit)		0	%		-1	%
Write-off of expired net operating loss carryforwards		68	%		0	%
Change in valuation allowance		-34	%		34	%
Total		-1	%		-1	%

Significant components of the Company’s net deferred income tax assets as of June 30, 2015 and June 30, 2014 were as follows:

	As of June 30,
	2015			2014
Federal net operating loss carryforwards	$	11,780,604		$	22,238,624
Federal - other		2,783,304			2,737,404
Wisconsin net operating loss carryforwards		1,748,976			2,747,275
Australia net operating loss carryforwards		1,497,779			1,497,779
Deferred income tax asset valuation allowance		(17,810,663	)		(29,221,082	)
Total deferred income tax assets	$	-		$	-

The Company has U.S. federal net operating loss carryforwards of approximately $34.6 million as of June 30, 2015, that expire at various dates between June 30, 2017 and 2034.  The Company also has $8.2 million in other federal deferred tax assets comprised of charitable contributions carryforwards and intangible amortization.  The Company has U.S. federal research and development tax credit carryforwards of approximately $247,000 as of June 30, 2015 that expire at various dates through June 30, 2033.  As of June 30, 2015, the Company has approximately $36.9 million of Wisconsin net operating loss carryforwards that expire at various dates between June 30, 2015 and 2028.  As of June 30, 2015, the Company also has approximately $5.0 million of Australian net operating loss carryforwards available to reduce future taxable income of its Australian subsidiaries with an indefinite carryforward period.

A reconciliation of the beginning and ending balance of unrecognized income tax benefits is as follows:

	As of June 30,
	2015			2014
Beginning balance	$	196,583		$	193,097
Lapses of statutes of limitations	$	(161,344	)	$	-
Effect of foreign currency translation		(35,239	)		3,486
Ending balance	$	-		$	196,583

The Company’s issuance of additional shares of common stock has constituted an ownership change under Section 382 of the Internal Revenue Code which places an annual dollar limit on the use of net operating loss (“NOL”) carryforwards and other tax attributes that may be utilized in the future.  The calculation of the annual limitation of usage is based on a percentage of the equity value immediately after any ownership change.  The annual amount of tax attributes that may be utilized after the change in ownership is limited.  Previous issuances of additional shares of common stock also resulted in ownership changes and the annual amount of tax attributes from previous years is limited as well.  The estimated U.S. federal net operating loss carryforward expected to expire due to the Section 382 limitation is $44.5 million and the estimated state net operating losses expected to expire due to the limitation is $28.2 million.  The net operating loss deferred tax assets reflect this limitation.