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Income Taxes
 12 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes

Income tax benefit resulting from applying statutory rates in jurisdictions in which Aytu is taxed (Federal and various states) differs from the income tax provision (benefit) in the Aytu financial statements. The following table reflects the reconciliation for the respective periods.

 

    June 30,  
    2020     2019  
Benefit at statutory rate   $  (2,934,000 )     -21.00 %   $  (5,698,000 )     -21.00 %
State income taxes, net of federal benefit     (798,000 )     -5.71 %     (1,077,000 )     -3.97 %
Stock based compensation     (35,000 )     -0.25 %     3,000       0.01 %
Contingent consideration     54,000       0.39 %     -       0.00 %
Change in tax rate     -       0.00 %     12,000       0.04 %
Remeasurement of deferred taxes     -       0.00 %     -       0.00 %
Effect of phased-in tax rate     -       0.00 %     -       0.00 %
Loss on debt extinguishment and interest expense     167,000       1.20 %     -       0.00 %
Change in valuation allowance     3,496,000       25.02 %     6,584,000       24.27 %
Derivative income     -       0.00 %     (16,000 )     -0.06 %
Other     50,000       0.37 %     192,000       0.71 %
     Net income tax provision (benefit)   $  -       0.02 %   $  -       0.00 %

 

Deferred income taxes arise from temporary differences in the recognition of certain items for income tax and financial reporting purposes. The approximate tax effects of significant temporary differences which comprise the deferred tax assets and liabilities are as follows for the respective periods:

 

     June 30,  
    2020      2019  
Deferred tax assets (liabilities):            
     Accrued expenses   $ 855,000     $ 234,000  
     Net operating loss carry forward     37,191,000       18,085,000  
     Intangibles     (1,578,000 )     3,377,000  
     Share-based compensation     1,891,000       1,210,000  
     Fixed assets     73,000       86,000  
     Capital loss carry forward     203,000       203,000  
     Contribution carry forward     31,000       31,000  
     Warrant liability     51,000       51,000  
     Inventory     789,000       25,000  
     R&D Credits     9,000       -  
     Lease Liability     261,000       -  
  ROU Asset     (224,000 )     -  
                 
Total deferred income tax assets (liabilities)     39,552,000       23,302,000  
Less: Valuation allowance     (39,552,000 )     (23,302,000 )
Total deferred income tax assets (liabilities)   $ -     $ -  

 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, carry back opportunities and tax planning strategies in making the assessment. The Company believes it is more likely than not it will realize the benefits of these deductible differences, net of the valuation allowance provided.

 

The Company has federal net operating losses of approximately $147 million and $73.9 million as of June 30, 2020 and June 30, 2019, respectively that, subject to limitation, may be available in future tax years to offset taxable income. Of the available federal net operating losses, approximately $46.9 million can be carried forward indefinitely while the balance will begin to expire in 2031. The available state net operating losses, if not utilized to offset taxable income in future periods, will begin to expire in 2025 through 2038. Under the provisions of the Internal Revenue Code, substantial changes in the Company's ownership may result in limitations on the amount of NOL carryforwards that can be utilized in future years. Net operating loss carryforwards are subject to examination in the year they are utilized regardless of whether the tax year in which they are generated has been closed by statute. The amount subject to disallowance is limited to the NOL utilized. Accordingly, the Company may be subject to examination for prior NOLs generated as such NOLs are utilized. As of June 30, 2020, the company had various state NOL carryforwards. The determination of the state NOL carryforwards is dependent on apportionment percentages and state laws that can change from year to year and impact the amount of such carryforwards.

 

 As of June 30, 2020, and 2019, the Company has no liability for gross unrecognized tax benefits or related interest and penalties.

 

 Aytu has made its best estimates of certain income tax amounts included in the financial statements. Application of the Company's accounting policies and estimates, however, involves the exercise of judgement and use of assumptions as to future uncertainties and, as a result, could differ from these estimates. In arriving at its estimates, factors the Company considers include how accurate the estimates or assumptions have been in the past, how much the estimates or assumptions have changed and how reasonably likely such changes may have a material impact. Under the general statute of limitations, the Company would not be subject to federal or Colorado income tax examinations for tax years prior to 2016 and 2015, respectively. However, given the net operating losses generated since inception, all tax years since inception are subject to examination.