NOTE 4 – PROVISION FOR INCOME TAXES

The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes. Deferred taxes are provided in the financial statements under FASC 740-20-20 to give effect to the resulting temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, and start-up costs based on the income taxes expected to be payable in future years.

Exploration stage deferred tax assets arising as a result of net operating loss carryforwards have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods based upon management’s evaluation that such losses will more likely than not be utilized in future periods. Operating loss carryforwards generated during the period from May 31, 2006 (date of inception) through June 30, 2017 of approximately $17 million will begin to expire in 2026. Accordingly, deferred tax assets were offset by the valuation allowance that increased by $795,992 and $795,006 during the years ended June 30, 2017 and 2016 respectively.

The Company follows the provisions of uncertain tax positions as addressed in FASC 740 - 10 - 65 - 1. The Company recognized approximately no increase in the liability for unrecognized tax benefits.

The Company has no tax position at June 30, 2017 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the periods presented. The Company had no accruals for interest and penalties at June 30, 2017. The Company’s utilization of any net operating loss carry forward may be unlikely as a result of its intended exploration stage activities. The tax years for June 30, 2016, June 30, 2015, June 30, 2014, and June 30, 2013 are still open for examination by the Internal Revenue Service (IRS).

The utilization of net operating losses may be limited by change of control provisions under IRC section 382 of the Internal Revenue code. Management has not evaluated if a change of control has taken place as of the dates of these statements.