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, 2016

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,
	2016		2015

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

Deferred tax benefit
Federal		5,065,733		3,774,110
State		339,091		432,092
Change in valuation allowance		(5,404,824)		(4,206,202)
		-		-
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, 2016 and 2015:

	As of June 30,
	2016		2015

Deferred tax assets
Net operating loss carryforward	$	10,602,681	$	5,170,221
Start-up and organizational expenses		577,110		614,059
Stock-based compensation		4,395,306		3,080,604
Other		265,809		412,783
Total deferred tax assets		15,840,906		9,277,667

Deferred tax liabilities
Fixed Assets		1,072,872		83,360
Federal Beneft for state deferred taxex		601,808		432,905
Total deferred tax liabilities		1,674,680		516,265

Valuation allowance		(14,166,226)		(8,761,402)
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 $27,446,000 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, 2016, 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 income for the following periods, due to the following:

	Year Ended June 30,
	2016		2015

Computed "expected" tax expense (benefit)	$	(5,078,084)	$	(3,863,260)
Change in income taxes from:
State taxes net of federal benefit		(339,091)		(432,092)
Permanent differences		12,351		229,209
Prior period adjustment		-		(140,059)
Change in valuation allowance		(5,404,824)		4,206,202
	$	-	$	-