Income Taxes

12 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

15. Income Taxes

The components of net loss consist of the following (in thousands):

	For the Years Ended ‎June 30,
	2018			2017
United States	$	(16,076	)	$	(16,122	)
Brazil		(32	)		(17	)
Total	$	(16,108	)	$	(16,139	)

The components of the provision (benefit) for income taxes consist of the following (in thousands):

	For the Years Ended ‎June 30,
	2018			2017
Current – Federal, state and foreign	$	-		$	-
Deferred – Federal		3,318			(5,178	)
Deferred – State		943			(866	)
Deferred – Foreign		(8	)		(4	)
Total		4,253			(6,048	)
Change in valuation allowance		(4,253	)		6,048
Income tax expense	$	-		$	-

The Company has deferred income taxes due to income tax credits, net operating loss carryforwards, and the effect of temporary differences between the carrying values of certain assets and liabilities for financial reporting and income tax purposes.

The components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

	As of June 30,
	2018			2017
Deferred tax assets (liabilities):
Net operating loss	$	15,652		$	17,827
Share-based compensation		2,211			3,072
Research and development tax credits		1,404			1,285
Suspended losses in iBio CDMO		1,223			2,762
Basis in iBio CDMO		678			538
Intangible assets		(202	)		(267	)
Vacation accrual and other		24			24
Valuation allowance		(20,990	)		(25,241	)
Total	$	-		$	-

The Company has a valuation allowance against the full amount of its net deferred tax assets due to the uncertainty of realization of the deferred tax assets due to operating loss history of the Company. The Company currently provides a valuation allowance against deferred taxes when it is more likely than not that some portion, or all of its deferred tax assets will not be realized. The valuation allowance could be reduced or eliminated based on future earnings and future estimates of taxable income.

Federal net operating losses of approximately $5.5 million were used by the Former Parent prior to June 30, 2008 and are not available to the Company. The Former Parent allocated the use of the Federal net operating losses available for use on its consolidated Federal tax return on a pro rata basis based on all of the available net operating losses from all the entities included in its control group.

U.S. Federal and state net operating losses of approximately $66.3 million and $29.0 million, respectively, are available to the Company as of June 30, 2018 and will expire at various dates through 2038. These carryforwards could be subject to certain limitations in the event there is a change in control of the Company pursuant to Internal Revenue Code Section 382, though the Company has not performed a study to determine if the loss carryforwards are subject to these Section 382 limitations. The Company has a research and development credit carryforward of approximately $1.4 million at June 30, 2018. In addition, the Company has foreign net operating losses totaling approximately $125,000 with no expiration date.

A reconciliation of the statutory tax rate to the effective tax rate is as follows:

	Years Ended ‎June 30,
	2018			2017
Statutory federal income tax rate		21	%		34	%
State (net of federal benefit)		6	%		6	%
Research and development tax credit		1	%		1	%
Permanent differences		-	%		(5	)%
Reclassification of incentive stock options to non-qualifying		-	%		13	%
Change in federal rate		(56	)%		-	%
Change in valuation allowance		28	%		(49	)%
Effective income tax rate		-	%		-	%

The Company has not been audited in connection with income taxes. iBio files U.S. Federal and state income tax returns subject to varying statutes of limitations. The 2014 through 2017 tax returns generally remain open to examination by U.S. Federal authorities and by state tax authorities. In addition, the 2015 through 2018 Brazilian federal tax returns remain open to examination by Brazil’s federal tax authorities.

In December 2017, the United States Government passed new tax legislation that, among other provisions, lowers the corporate tax rate from 35% to 21%. In addition to applying the new lower corporate tax rate in 2018 and thereafter to any taxable income the Company may have, the legislation affects the way the Company can use and carryforward net operating losses previously accumulated and results in a revaluation of deferred tax assets and liabilities recorded on the Company's balance sheet. Given that current deferred tax assets are offset by a full valuation allowance, these changes will have no net impact on the balance sheet. However, when we become profitable, we will receive a reduced benefit from such deferred tax assets. The effect of the legislation resulted in a reduction in deferred tax assets and the corresponding valuation allowance of approximately $9.1 million.