INCOME TAXES

12 Months Ended

Jun. 30, 2018

NOTE 15 - INCOME TAXES

The Company had no current or deferred provision (benefit) for income taxes for the years ended June 30, 2018 and June 30, 2017.

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

follows:

	Year ended June 30,
	2018		2017
Income tax benefit computed at the U.S. federal statutory rate		-28%		-34%
Change in valuation allowance		28%		34%
Total		0%		0%

Significant components of the Company’s net deferred income tax assets as of June 30, 2018 and June 30, 2017 were as

follows:

	June 30, 2018			June 30, 2017
Federal net operating loss carryforwards	$	14,209,723		$	18,557,615
Federal - other		2,722,072			3,794,302
Wisconsin net operating loss carryforwards		3,779,643			3,116,946
Australia net operating loss carryforwards		1,280,966			1,334,725
Deferred income tax asset valuation allowance		(21,992,404	)		(26,803,588	)
Total deferred income tax assets	$	-		$	-

The Company has U.S. federal net operating loss carryforwards of approximately $54.7 million as of June 30, 2018 that expire at various dates between 2019 and 2037 and $13.0 million that has an indefinite carryforward period. The Company has U.S. federal research and development tax credit carryforwards of approximately $340,000 as of June 30, 2018 that expire at various dates through 2036. As of June 30, 2018, the Company has approximately $64.3 million of Wisconsin net operating loss carryforwards that expire at various dates between 2026 and 2038. As of June 30, 2018, the Company also has approximately $4.3 million of Australian net operating loss carryforwards available to reduce future taxable income of its Australian subsidiaries with an indefinite carryforward period.

The Company’s issuance of additional shares of Common Stock has constituted an ownership change under Section 382 of the IRC which places an annual dollar limit on the use of net operating loss 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.

On December 22, 2017, the President of the U.S. signed the Tax Act into law. The Tax Act includes several changes to existing tax law, including a permanent reduction in the U.S. federal statutory tax rate from 35% to 21%, further limitations on the deductibility of interest expense and certain executive compensation, repeal of the corporate Alternative Minimum Tax and imposition of a territorial tax system. While some of the new provisions of the Tax Act will impact the Company in fiscal 2019 and beyond, the change in the U.S. federal statutory tax rate was effective January 1, 2018. During the second quarter of fiscal 2018, the Company was required to revalue its U.S. federal deferred tax assets and liabilities at the new U.S. federal statutory tax rate in the period of enactment. As the Company has provided for a full valuation allowance against all of its net deferred income taxes, the revaluation resulted in no charge to income tax expense for the year ended June 30, 2018.