Income Taxes

12 Months Ended

Jun. 30, 2021

Income Taxes

Note 13. Income Taxes

Pre-tax loss consists of the following jurisdictions (in thousands):

	Years Ended June 30,
	2021			2020			2019
	(As Restated)
Domestic	$	(41,306	)	$	(47,172	)	$	(16,819	)
Foreign		—			—			—
Pre-tax loss	$	(41,306	)	$	(47,172	)	$	(16,819	)

The reconciliation of income tax computed at the U.S. federal statutory tax rates to income tax expense is as follows (in thousands):

	Years Ended June 30,
	2021						2020						2019
	$			%			$			%			$			%
	(As Restated)
Tax benefit at U.S. statutory rates	$	8,674			21	%	$	9,906			21	%	$	3,532			21	%
State tax		(99	)		0	%		9			0	%		86			1	%
Warrant liability costs		3,806			9	%		(4,803	)		(10	)%		5,803			35	%
Equity compensation		(6	)		0	%		(2	)		0	%		138			1	%
Increase in valuation allowance		(10,536	)		(26	)%		(4,473	)		(10	)%		(9,082	)		(54	)%
Other		(1,847	)		(4	)%		(638	)		(1	)%		(478	)		(3	)%
	$	(8	)		0	%	$	(1	)		0	%	$	(1	)		0	%

Deferred tax liabilities and assets are comprised of the following (in thousands):

	June 30,
	2021			2020
	(As Restated)
Deferred tax assets (liabilities):
Deferred revenue	$	16,637		$	17,568
Fixed and intangible assets		15,924			18,832
Share-based payments		4,182			3,834
Tax losses carried forward		16,104			2,214
Compensation accruals		727			709
Consultant and other accruals		22			20
Right-of-use assets		(1,633	)		—
Lease liabilities		1,742			—
Charitable contributions		1			—
Total deferred tax assets (liabilities)		53,706			43,177
Valuation allowance for deferred tax assets		(53,706	)		(43,177	)
Net deferred tax assets and liabilities	$	—		$	—

We evaluate the recoverability of the deferred tax assets and the amount of the required valuation allowance. Due to the uncertainty surrounding the realization of the tax deductions in future tax returns, we have recorded a valuation allowance against our net deferred tax assets as of June 30, 2021 and 2020. At such time as it is determined that it is more likely than not that the deferred tax assets will be realized, the valuation allowance would be reduced.

We had federal and state net operating loss carryforwards of approximately $70.8 million and $17.7 million as of June 30, 2021. The federal net operating loss will carry forward indefinitely subject to an 80% taxable income limitation. The state net operating loss carryforwards will begin to expire in 2030 unless previously utilized.

Our ability to utilize our net operating loss carryforwards may be substantially limited due to ownership changes that have occurred or that could occur in the future under Section 382 of the Internal Revenue Code and similar state laws. During 2021, we completed a study to analyze whether one or more ownership changes had occurred and determined that two such ownership changes did occur. While the ownership changes do limit the amount of net operating loss we are able to use each year, all of our net operating losses are expected to be available for utilization prior to expiring.

None of our prior income tax returns have been selected for examination by a major taxing jurisdiction; however, the statutes of limitations for various filings remain open. The oldest filings subject to potential examination for federal and state purposes are 2018 and 2017, respectively. If we utilize a net operating loss related to a closed tax year, the tax year in which the loss was incurred is subject to adjustment up to the amount of the net operating loss.

We have not reduced any tax benefit on our financial statements due to uncertain tax positions as of June 30, 2021 and we are not aware of any circumstance that would significantly change this result through the end of fiscal year 2021. To the extent we incur income-tax related penalties or interest, we will recognize them as additional income tax expense.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES” Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating loss carryforwards generated in taxable years beginning after December 31, 2017, to offset 100% of taxable income for taxable years beginning before January 1, 2021, and 80% of taxable income in taxable years

beginning after December 31, 2020. In addition, the CARES Act allows net operating losses incurred in taxable years beginning after December 31, 2017, and before January 1, 2021, to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The CARES Act also temporarily increased the business interest expense limitation from 30% of adjusted taxable income (“ATI”) to 50% of ATI for tax years 2019 and 2020, and allowed taxpayers to elect to use their 2019 ATI to compute their 2020 limitation. The legislation also included a technical correction related to qualified improvement property. The impact of the CARES Act was not material to our financial statements.