Note 8 - Income Taxes

12 Months Ended

Jun. 30, 2015

Income Taxes

Loss before income tax benefits was comprised of $14,041 from US and $811 from foreign jurisdictions in 2015 and $8,719 from US and $315 from foreign jurisdictions in 2014.

The reconciliation of federal income tax attributable to operations computed at the federal statutory tax rate of 34% to income tax expense (benefit) is as follows for the years ended June 30:

	2015			2014
Statutory federal income tax benefit	$	(5,046	)	$	(3,072	)

Unbenefited net operating losses and credits		5,091			2,163
State and local taxes		(649	)		(326	)
Merger costs		--			757
Expiration of CA NOLs		616			--
Other		(12	)		75

Total income tax benefit	$	--		$	(403	)

A deferred income tax expense of $0 was recorded for the year ended June 30, 2015. No tax benefit has been recorded through June 30, 2015 because of the net operating losses incurred and a full valuation allowance has been provided. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized.

At June 30, 2015, the Company had net operating loss carryforwards for federal and state income tax purposes of $101,649 and $60,885 respectively that are available to offset future income. The federal and state loss carryforwards expire in various years between 2016 and 2035.

At June 30, 2015, the Company has research and experimentation credit carryforwards of $1,273 for federal tax purposes that expire in various years between 2019 and 2035, and $1,363 for state income tax purposes that do not have an expiration date.

Significant components of the Company’s deferred tax assets and liabilities for federal and state income taxes are as follows:

	June 30, 2015			June 30, 2014
Deferred tax assets:
Net operating loss carryforwards	$	38,317		$	34,154
Income tax credit carryforwards		2,143			1,995
Depreciation and amortization		--			--
Stock compensation		916			--
Other		1,479			1,750
Valuation allowance		(42,408	)		(37,317	)
Total deferred taxes	$	447		$	582

Deferred tax liabilities
Depreciation and amortization		(8,088	)		(8,223	)
Net deferred taxes and liabilities	$	(7,641	)	$	(7,641	)

The valuation allowance increased by $5,091 in 2015. As of June 30, 2015, the Company has a benefit of $1,804 related to stock option deductions, which will be credited to paid-in capital when realized.

Because of the “change of ownership” provisions of the Tax Reform Act of 1986, a portion of the Company’s federal net operating loss and credit carryovers may be subject to an annual limitation regarding their utilization against taxable income in future periods.