Rezolute, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes

Income Taxes

12 Months Ended

Jun. 30, 2017

Note 12 Income Taxes

Taxing jurisdictions related to income taxes are the Unites States Federal Government, the State of Colorado and the State of California. The provision for income taxes is as follows:

	Year Ended June 30,
	2017		2016

Current tax benefit
Federal	$	-	$	-
State		-		-
		-		-

Deferred tax benefit
Federal		5,542,631		5,065,733
State		618,192		339,091
Change in valuation allowance		(6,160,823)		(5,404,824)
		-		-
Total tax expense	$	-	$	-

Deferred taxes are a result of differences between income tax accounting and GAAP with respect to income and expenses. The following is a summary of the components of deferred taxes recognized in the financial statements as of June 30, 2017 and 2016:

	As of June 30,
	2017		2016

Deferred tax assets
Net operating loss carryforward	$	15,358,843	$	10,602,681
Start-up and organizational expenses		540,221		577,110
Stock-based compensation		5,111,766		4,395,306
Other		529,096		265,809
Total deferred tax assets		21,539,926		15,840,906

Deferred tax liabilities
Fixed Assets		349,346		1,072,872
Federal Beneft for state deferred taxex		863,531		601,808
Total deferred tax liabilities		1,212,877		1,674,680

Valuation allowance		(20,327,049)		(14,166,226)
Net deferred taxes	$	-	$	-

The valuation allowance was established because the Company had not reported earnings in order to support the recognition of the deferred tax asset. The Company has net operating loss carryforwards of approximately $40,009,000 for federal and state income tax purposes. Federal and state net operating loss carryforwards, to the extent not used, will expire starting in 2031. Under provisions of the Internal Revenue Code, substantial changes in the Company’s ownership may result in limitations on the amount of net operating loss carryforwards that can be utilized in future years. As of June 30, 2017, approximately $6,281,000 of the net operating loss carryforwards are subject to IRS limitations. The Company is no longer subject to income tax examinations for federal income taxes before 2011 and for Colorado before 2010.

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate of 34% to pretax loss for the following periods, due to the following:

	Year Ended June 30,
	2017		2016

Computed "expected" tax expense (benefit)	$	(6,894,226)	$	(5,078,084)
Change in income taxes from:
State taxes net of federal benefit		(617,139)		(339,091)
Permanent differences		18,150		12,351
Return to provision		(205,794)		-
Stock option expirations		1,538,186		-
Change in valuation allowance		6,160,823		5,404,824
	$	-	$	-