The Company accounts for income taxes under ASC Topic

740

: “Income Taxes.” Under ASC

740

, the deferred tax provision is determined using the liability method, whereby deferred tax assets and liabilities are recognized based upon temporary differences between the financial statement and income tax bases of assets and liabilities using presently enacted tax rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. In the three and six months ended

December 31, 2018

the Company recorded the tax benefit of losses incurred in the amount of approximately $

201,000

and $

506,000

, respectively. As the realization of the tax benefit of the net operating loss is not assured an additional valuation allowance of a like amount was recorded. For the three and six months ended

December 31, 2017

the Company recorded the tax benefit of losses incurred in the amount of approximately $

75,000

and $

367,000

. As the realization of the tax benefit of the net operating loss is not assured an additional valuation allowance of a like amount was recorded. The total valuation allowance recorded by the Company as of

December 31, 2018

and

2017

was approximately $

2,706,000

and $

1,871,000

, respectively. The Tax Cuts and Jobs Act (“

TCJA

”) was enacted in the U.S. on

December 22, 2017

. The

TCJA

reduces the U.S. federal corporate tax rate from

% to

%. As a result of this reduction in rate in the second quarter of the fiscal year ended

2018

the Company recorded a reduction in its recognized deferred tax assets along with a reduction in the valuation allowance. The impact of these adjustments resulted in a net reduction of recognized deferred tax assets and a resultant income tax expense in the amount of $

136,386

. To the extent that the Company’s losses continue in future quarters, the tax benefit of those losses will be subject to a valuation allowance.