INCOME TAXES

12 Months Ended

Jun. 30, 2025

INCOME TAXES

INCOME TAXES

NOTE 9 — INCOME TAXES

Net Operating Loss Carryforwards

The Company files income tax returns in the U.S. federal jurisdiction and in several states including, but not limited to, California, Colorado, and Oregon. The Company’s federal and state tax returns for the 2022 fiscal year and forward are subject to examination by taxing authorities. Federal and state laws impose substantial restrictions on the utilization of federal net operation loss (“NOL”) carryforwards in the event of an ownership change for income tax purposes, as defined in Section 382 of the Internal Revenue Code (“IRC”). Pursuant to IRC Section 382, annual use of the Company’s NOL carryforwards is limited in the event that a cumulative change in ownership of more than 50% occurs within any rolling three-year period. During the fiscal year ended June 30, 2025, the Company completed an IRC Section 382 analysis and concluded that the Company’s NOL carryforwards are subject to limitations as a result of past and current ownership changes.

As of June 30, 2025, the Company has U.S. federal net operating loss (“NOL”) carryforwards of approximately $201.4 million, of which approximately $33.4 million of NOL carryforwards will never be available for use due to the limitations under IRC section 382 discussed above. The remainder of the Company’s NOL carryforwards of $168.0 million consists of (i) $10.5 million that are currently available to offset taxable income but if not utilized will expire in 2031 through 2035, (ii) $10.8 million that becomes available through 2038 and that expire by June 30, 2038 if not utilized, and (iii) $146.7 million that never expire. It should be noted that there was an ownership change in 2025 that the $201.4 million will be subject to additional limitations going forward. However, the ownership change that occurred in the 2022 fiscal year was more restrictive. It should be noted that with respect to $75.7 million of the $146.7 million of NOL carryforwards that never expire, the $75.7 million are subject to more restrictive prior 382 limitations, and as such will become available in varying annual amounts for an aggregate of approximately $9.9 million through fiscal year 2038, and $1.2 million annually thereafter. The Company also has Colorado and California NOL carryforwards totaling $258.9 million that begin to expire in 2031 and are expected to be subject to similar limitations as those imposed under IRC Section 382.

Income Tax Expense

For the fiscal years ended June 30, 2025 and 2024, the reconciliation between the income tax benefit computed by applying the statutory U.S. federal income tax rate to the pre-tax loss before income taxes, and total income tax expense recognized in the consolidated financial statements is as follows (in thousands):

	2025		2024
Income tax benefit at statutory U.S. federal rate	$	15,626	$	14,374
Income tax benefit attributable to U.S. states		5,042		4,413
Non-taxable derivative loss		—		(598)
Non-deductible expenses		(464)		(505)
Stock option expirations		(35)		(16)
NOL expirations		—		(7,004)
Other		3		4
Change in valuation allowance		(20,172)		(10,668)
Total income tax expense	$	—	$	—

For the fiscal years ended June 30, 2025 and 2024, the Company did not recognize any current income tax expense or benefit due to a full valuation allowance on its net deferred income tax assets.

Deferred Income Tax Assets and Liabilities

As of June 30, 2025 and 2024, the income tax effects of temporary differences that give rise to significant deferred income tax assets and liabilities are as follows (in thousands):

	2025		2024
Deferred income tax assets:
Net operating loss carryforwards	$	51,049	$	38,942
Research and experimental costs		25,074		19,213
Intangible assets		7,285		6,487
Share-based compensation		5,650		4,280
Operating lease liabilities		452		624
Accrued expenses and other		802		763
Total deferred income tax assets		90,312		70,309
Valuation allowance for deferred income tax assets		(89,935)		(69,783)
Deferred income tax assets, net of valuation allowance		377		526
Deferred income tax liability right-of-use assets		(377)		(526)
Net deferred income tax assets	$	—	$	—

For the fiscal years ended June 30, 2025 and 2024, the valuation allowance increased by $20.2 and $10.7 million, respectively, primarily as a result of an increase in net operating loss carryforwards and capitalization of research and experimental costs for income tax purposes. In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law. Key elements of the Tax Cuts and Jobs Act changed under the OBBBA, including the restoration of full expensing for domestic research and development cost

and the option to elect to accelerate any domestic research costs that were capitalized but still are unamortized. FASB ASC 740, "Income Taxes", requires the effects of changes in tax rates and laws on tax balances to be recognized in the period in which the legislation is enacted. Since the date of enactment is after June 30, 2025, there is no financial impact as of and for the fiscal year ended June 30, 2025. The Company is currently evaluating the impact of the OBBBA on its consolidated financial statements.

Unrecognized Tax Benefits

The Company did not have any unrecognized tax benefits as of June 30, 2025 and 2024. The Company’s policy is to account for any interest expense and penalties for unrecognized tax benefits as part of the income tax provision. The Company does not anticipate that unrecognized tax benefits will significantly increase or decrease within the next twelve months.