Note 7 - Income Taxes

12 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

7

. Income Taxes

The components of the provision for income taxes consists of the following:

	For the fiscal year
	ended June 30,
	2020			2019
Current - Federal	$	(40	)	$	36
Current - State and local		369			287
Deferred - Federal and state		549			621
Change in valuation allowance		(1,898	)		(590	)
Income tax (benefit) expense, net	$	(1,020	)	$	354

In the fiscal year ended

June 30, 2020

the Company recognized an income tax benefit of

$1,020

and in the fiscal year ended

June 30, 2019,

a provision for income taxes of

$354.

A reconciliation of the statutory tax rate to the effective tax rate is as follows:

	For the fiscal year
	ended June 30,
	2020			2019
Statutory federal income tax rate		21.0	%		21.0	%
Statutory state income tax rate		9.5	%		7.0	%
Effective state income tax rate		2.5	%		7.0	%
Change in valuation allowance		(69.0	)%		(20.7	)%
Other temporary differences		2.9	%		2.0	%
Non-deductible expenses		0.1	%		1.0	%
Effective income tax rate		(33.0	)%		17.3	%

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial accounting purposes and the amounts used for income tax reporting. Significant components of the Company's net deferred tax assets are as follows:

	June 30,
	2020			2019
Deferred Tax Assets
Net operating loss	$	7,047		$	7,642
Capital loss carryover		258			16
Valuation adjustment on investment in iBio, Inc.		254			512
Depreciation		(204	)		(225	)
Inventory		142			104
Other		34			31
Valuation allowance		(5,648	)		(7,546	)
Total deferred tax asset, net	$	1,883		$	534

The Company has net operating losses (“NOL”) of approximately

$30,019

for federal purposes which expire beginning in

2025.

State NOL's of approximately

$7,845

which expire beginning in

2020

through

2035.

The Company also has capital loss carryforwards of

$1,229

of which

$77

will expire in

2020

and

$1,152

in

2025.

The Company files a consolidated U.S. federal income tax return; however, the various state tax returns were filed on a stand-alone basis for the Company and its subsidiaries until this fiscal year ended

June 30, 2020,

which state income tax return will be filed on a combined basis.  MDC has fully utilized its state NOL's resulting in taxable income on a state level basis for the combined group.

Realization of the NOL carryforwards and other deferred tax temporary differences is contingent on future taxable earnings. The Company's deferred tax asset was reviewed for expected utilization using a “more likely than

not”

approach by assessing the available positive and negative evidence surrounding its recoverability. Accordingly, a valuation allowance has been recorded against the Company's deferred tax asset, as it was determined based upon past taxable losses and inconsistent taxable income in the past few years, that it was “more likely than

not”

that the Company's deferred tax assets would

not

be realized. As of

June 30, 2020

and

2019,

management determined that certain of the Company's deferred tax assets were “more likely than

not”

to be realizable and the Company recognized deferred tax benefits related to the release of the valuation allowance on those assets of approximately

$1,898

 and

$455,

respectively.

The Company will continue to assess and evaluate strategies that will enable the deferred tax asset, or portion thereof, to be utilized, and will reduce the valuation allowance appropriately at such time when it is determined that the “more likely than

not”

criteria is satisfied.

There were

no

significant uncertain tax positions taken, or expected to be taken, in a tax return that would be determined to be an unrecognized tax benefit taken or expected to be taken in a tax return that should have been recorded on the Company's consolidated financial statements for the year ended

June 30, 2020.

Additionally, there were

no

interest or penalties outstanding as of or for each of the fiscal years ended

June 30, 2020

and

2019.

The latest

three

years of Federal and

four

years of state tax returns filed for the fiscal years ended through

June 30, 2019

are currently open except for the State of New Jersey tax filings for MDC which have been reviewed for the tax periods of

2014,

2015,

2016

and

2017.

The tax returns for the year ended

June 30, 2020

will be filed by

March 15, 2021.