Income Taxes

The expense (benefit) for income taxes is as follows (in thousands):



	Year Ended June 30,
	2018		2017		2016
Federal
Current	$	—	$	—	$	—
Deferred	—		—		—
Total Federal	—		—		—
State
Current	2		2		(5,054		)
Deferred	—		—		—
Total State	2		2		(5,054		)
Foreign
Current	154		19		—
Deferred	—		—		—
Total Foreign	154		19		—
Total Expense (Benefit)	$	156	$	21	$	(5,054	)

A reconciliation of the statutory tax rates and the effective tax rates for each of the years ended June 30 is as follows:



	2018		2017		2016
Statutory rate	(28.0	)%	(34.0	)%	(34.0	)%
Foreign income tax	—	%	—	%	—	%
Change in valuation allowance	21.1	%	21.9	%	30.4	%
State income taxes, (net of federal tax benefit)	(4.3	)%	(4.8	)%	(2.8	)%
Permanent differences, (primarily warrant-related expenses)	11.3	%	15.3	%	—	%
Other	—	%	1.6	%	(1.6	)%
Effective rate	0.1	%	—	%	(8.0	)%

The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets as of June 30, 2018 and 2017 are presented below (in thousands):



	2018			2017
Deferred tax assets:
NOL carry forwards	$	90,931		$	134,476
Research and development credits	17,730			14,357
Property and equipment	—			3,406
Liability related to sale of future royalties	49,235			—
Other	3,489			7,335
Total	161,385			159,574
Valuation allowance	(160,540		)	(159,574		)
Net deferred assets	$	845		$	—
Deferred tax liabilities:
Property and equipment	$	(845	)	$	—
Net deferred assets and liabilities	$	—		$	—

A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The valuation allowances for fiscal years 2018 and 2017 have been applied to offset the deferred tax assets in recognition of the uncertainty that such tax benefits will be realized as the Company continues to incur losses. The differences between book income and tax income primarily relate to the temporary differences from depreciation and stock compensation expenses, and deferred book income that is realized for tax.

At June 30, 2018, the Company has available net operating loss carry forwards for federal income tax reporting purposes of approximately $370.4 million and for state income tax reporting purposes of approximately $184.9 million, which expire at various dates between fiscal 2019 and 2037.

At June 30, 2018, the Company did not have any material unrecognized tax benefits and the Company does not anticipate that its unrecognized tax benefits will significantly change in the next twelve months. The Company will recognize potential interest and penalties related to income tax positions as a component of the provision for income taxes on the Consolidated Statements of Comprehensive Loss in any future periods in which the Company must record a liability. The Company is subject to examination for United States Federal and Foreign tax purposes for 2013 and forward and for New Jersey 2014 and forward. The Company conducts business and files tax returns in New Jersey.

For fiscal year 2016, the Company sold certain State of New Jersey State Net Operating Losses (“NOL”) and Research and Development (“R&D”) tax credits through the New Jersey Economic Development Authority Technology Business Tax Certificate Transfer Program. Pursuant to such sale, for the year ended June 30, 2016, the Company recorded a tax benefit of $5.1 million, as a result of its sale of approximately $66.2 million, of New Jersey State NOL and $1.5 million of New Jersey R&D tax credits. There were no sales of NOL or R&D for the 2018 or 2017 fiscal years.

On December 22, 2017, the United States government enacted the 2017 Tax Cuts and Jobs Act (the 2017 Tax Act), The Act reduces the United States federal corporate income tax rate from 35% to 21%. In accordance with ASC 740, companies are required to re-measure deferred tax balances using the new enacted tax rates. The rate change is administratively effective at the beginning of the Company’s fiscal year, resulting in a blended corporate statutory tax rate for fiscal 2018 of 28.0%. As a result of the reduction in the United States corporate income tax rate, the Company revalued its net deferred tax assets resulting in a provisional tax expense of $59.5 million. However, this adjustment was offset by a related change in the valuation allowance. The 2017 Tax Act also imposed a tax for a one-time deemed repatriation of post-1986 unremitted foreign E&P through the year ended December 31, 2017. The Company did not record any provisional tax expense related to the deemed repatriation as it does not expect to have any undistributed foreign earnings. The Global Intangible Low-tax Income (GILTI) provisions of the 2017 Tax Act require the Company to include in its United States income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company expects that it may be subject to incremental United States tax on GILTI income beginning in 2018. The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the period ended June 30, 2018

In response to the Tax Act, the Securities and Exchange Commission (“SEC”) staff issued a Staff Accounting Bulletin No. 118 (“SAB 118”) that provides guidance on accounting for the impact of the Tax Act. SAB 118 allows companies to record provisional amounts while the accounting impact of the Tax Act is still under analysis, not to extend beyond the measurement period of one year from the enactment of the Tax Act. The provisional amounts disclosed in the Company’s footnotes were based on the its present interpretations of the 2017 Tax Act and current available information, including assumptions and expectations about future events, such as its projected financial performance, and are subject to further refinement as additional information becomes available (including the Company’s actual full fiscal 2018 results of operations, as well as potential new or interpretative guidance issued by the FASB or the Internal Revenue Service and other tax agencies) and further analyses are completed. The Company continues to analyze the changes in certain income tax deductions, assess calculations of earnings and profits in certain foreign subsidiaries, including if those earnings which are held in cash or other assets and gather additional data to compute the full impacts on the Company’s deferred and current tax assets and liabilities. Our calculation of the transition tax may be subject to further refinement as more information is gathered from our foreign subsidiaries and estimates used in the calculation are resolved.