7. INCOME TAXES Options to purchase 1,080,532 shares of common stock, at an average purchase price of $5.46 per share, were outstanding at June 30, 2000, but were not included in the computation of diluted EPS because the exercise price of these options were greater than the average market price of the common shares. At June 30, 2001, the Company has approximately $21.8 million of net operating loss carryforwards, which, if unused, will expire during the years 2002 through 2021. The Company’s ability to generate future taxable income to realize the benefits of its tax assets will depend pri- marily on the spot price of gold. Due to the sliding-scale royalties which decrease as the price of gold decreases, the inability of the Company to control the gold pro- duction upon which its royalty is based, and the volatility in the spot price of gold ($255 to $291 per ounce, in fiscal year 2001), a full valuation allowance has been established for the deferred tax asset at June 30, 2001. The components of income tax expense (benefit) for the years ended June 30, 2001, 2000 and 1999, are  as follows: Options to purchase 341,800 shares of common stock, at an average purchase price of $0.28 per share, and 892,498 shares, at an average price of $5.96 per share, were not included in the computation of diluted EPS because the Company experienced a net loss in the year and these options were antidilutive. The tax effects of significant temporary differences  and carryforwards, which give rise to the Company’s deferred tax assets and liabilities at June 30, 2001 and 2000, are as follows: Per- Income Shares Share (Numerator) (Denominator) Amount Basic EPS Income available  to common  stockholders $ 3,952,979 17,528,244 $ 0.23 Effect of dilutive  securities 182,127 Diluted EPS $3,952,979 17,710,371 $ 0.22 Per- Income Shares Share (Numerator) (Denominator) Amount Basic EPS Income (loss) available  to common  stockholders $(8,808,173) 17,160,228 $(0.51) Effect of dilutive  securities — Diluted EPS $(8,808,173) 17,160,228 $(0.51) For The Year Ended June 30, 2000 For The Year Ended June 30, 1999 2001 2000 Net operating loss  carryforwards $ 7,629,710 $ 8,311,261 Mineral property basis 1,188,861 1,273,075 AMT credit carryforward 4,467 155,715 Loss on sale of gold — — Other 61,740 114,926 Total deferred tax assets 8,884,778 9,854,977 Valuation allowance (8,867,171) (9,305,431) Net deferred tax assets 17,607 549,546 Gold inventory (17,607) (549,546) Mineral property basis — — Other — — Total deferred tax liabilities (17,607) (549,546) Total net deferred taxes $ — $ — 2001 2000 1999 Current federal  tax expense $ 23,231 $ 80,738 $ — Deferred tax  expense (benefit) 438,260 2,222,726 (3,464,237) Increase (decrease)  in deferred tax asset valuation  allowance (438,260) (2,222,726) 3,464,237 $ 23,231 $ 80,738 $ — 24