Deferred income tax assets and liabilities are recognized for the expected future tax consequences of events that have been reflected in the financial statements. Deferred tax assets and liabilities are determined based on the differences between the book values and the tax bases of particular assets and liabilities and the tax effects of net operating loss and capital loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized as income or expense in the period that included the enactment date.

The Company has incurred operating losses since its inception and therefore no tax liabilities have been incurred for the periods presented. The amount of unused tax losses available for carryforward and to be applied against taxable income in future years totaled approximately $54,078,000 at June 30, 2017. The tax loss carryforwards expire beginning in 2028. Internal Revenue Code Sec. 382 places limitations on the utilization of net operating losses. Due to the potential limitation and the Company’s historical losses, the Company has recorded a full valuation allowance against this deferred tax asset. The valuation allowance increased by approximately $7,047,000 at June 30, 2017 and $5,383,000 at June 30, 2016.

The income tax provision benefit differs from the amount of tax determined by applying the Federal and States statutory rates as follows:

There was no current or deferred provision or benefit for income taxes for the years ended June 30, 2017 and 2016. The components of deferred tax assets as of June 30, 2017 and 2016, at an effective tax rate of 40%, are as follows (rounded to nearest thousand):