Income Taxes

12 Months Ended

Jun. 30, 2020

Note 13. Income Taxes

Pre-tax

loss consists of the following jurisdictions (in thousands):


	Years Ended June 30,
	2020			2019			2018
Domestic	$	(46,016	)	$	(16,819	)	$	(40,068	)
Foreign		—			—			—

Pre-tax loss	$	(46,016	)	$	(16,819	)	$	(40,068	)

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,
	2020						2019						2018
	$			%			$			%			$			%
Tax benefit (expense) at U.S. statutory rates	$	9,663			21	%	$	3,532			21	%	$	11,019			28	%
State tax		9			0	%		86			1	%		(5,370	)		-13	%
Warrant liability costs		(4,803	)		-10	%		5,803			35	%		(3,320	)		-8	%
Equity compensation		(2	)		0	%		138			1	%		(837	)		-2	%
(Increase) decrease in valuation allowance		(4,230	)		-9	%		(9,082	)		-54	%		14,914			37	%
Revaluation of deferred taxes		—			0	%		—			0	%		(15,870	)		-40	%
Other		(638	)		-1	%		(478	)		-3	%		(537	)		-1	%

	$	(1	)		0	%	$	(1	)		0	%	$	(1	)		0	%

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


	June 30,
	2020			2019
Deferred tax assets:
Deferred revenue	$	17,325		$	1,635
Fixed and intangible assets		18,832			15,328
Share-based payments		3,834			3,081
Tax losses carried forward		2,214			18,510
Compensation accruals		709			85
Consultant and other accruals		20			41
Charitable contributions		—			22

Total deferred tax assets		42,934			38,702
Valuation allowance for deferred tax assets		(42,934	)		(38,702	)

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, 2020 and 2019. 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 $4.2 million and $19.1 million as of June 30, 2020.

he federal net operating losses will

carryforward indefinitely until utilized. State net operating loss carryforwards will begin to expire in

2030.

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 2020, 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. The Tax Act limits the deduction of net operating losses to 80% of current year taxable income, however, as a result of the CARES Act, the 80% limitation was temporarily repealed until our fiscal year ending June 30, 2021. Additionally, the CARES Act allows for NOLs arising from taxable years beginning after December 31, 2017 and before January 1, 2021 to be carried back to each of the five years prior to the taxable year of such losses.

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 2016 and 2015, respectively. If we utilize a net operating loss related to a closed year, the stature for the year would

re-open.

We have not reduced any tax benefit on our financial statements due to uncertain tax positions as of June 30, 2020 and we are not aware of any circumstance that would significantly change this result through the end of fiscal year 2020. To the extent we incur

income-tax

related penalties or interest, we will recognize them as additional income tax expense.