Note 10 - Income Taxes

12 Months Ended

Jun. 30, 2015

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(10) Income Taxes

For financial reporting purposes, income before taxes includes the following components (in millions)

:

	Years Ended June 30,
	2015			2014			2013
United States	$	(26.7	)	$	(8.3	)	$	6.5
Foreign		7.5			(3.0	)		(15.3	)
Total	$	(19.2	)	$	(11.3	)	$	(8.8	)

The expense (benefit) for income taxes is comprised of:

	Years Ended June 30,
	2015			2014			2013
Current:
Federal	$	-		$	-		$	-
State		-			-			-
Foreign		(0.1	)		(0.3	)		0.1
		(0.1	)		(0.3	)		0.1
Deferred:
Federal		-			-			-
State		-			-			-
Foreign		-			-			-
		-			-			-
Total tax (benefit) expense	$	(0.1	)	$	(0.3	)	$	0.1

Biota Pharmaceuticals

,

Inc

.

Notes to Consolidated Financial Statements

The reconciliation between the company's effective tax rate and the statutory rate is as follows:

	Years Ended June 30,
	2015			2014			2013
Income tax (benefit) expense at federal statutory rate	$	(6.7	)	$	(4.0	)	$	(3.3	)
State and local income taxes, net of federal benefit		(1.0	)		(0.3	)		0.3
Foreign tax rate differential		(0.4	)		0.4			1.3
In-process research and development		6.9			-			-
Change in valuation allowance		0.8			4.1			4.2
Merger related items		0.4			0.1			(3.0	)
Research and development expenses		-			(0.1	)		1.1
Research and development tax credits		(0.1	)		(0.3	)		(1.1	)
Foreign Tax Credit		(0.2	)		-			-
Employee stock options		-			-			0.5
Other		0.2			(0.2	)		0.1
Income tax (benefit) expense	$	(0.1	)	$	(0.3	)	$	0.1

The following table includes deferred tax assets and liabilities as of June 30, 2015 and 2014:

	As of June 30,
	2015			2014
Deferred tax assets:
Foreign net operating loss carryforwards	$	19.8		$	18.2
US federal and state loss carryforwards		5.4			2.8
Amortization		0.6			0.8
Depreciation		-			0.6
Accrued compensated-related costs		1.4			0.8
Other		0.4			4.3
Subtotal		27.6			27.5
Less valuation allowance		(27.1	)		(26.4	)
Total net deferred tax asset		0.5			1.1
Unearned Income		(0.5	)		(1.1	)
Net deferred tax assets	$	-		$	-
Current net deferred tax liability		(0.5	)		(0.9	)
Noncurrent net deferred tax asset		0.5			0.9
Net deferred taxes	$	-		$	-

Significant components of deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting and tax purposes. As of June 30, 2015 a full valuation allowance has been established, as the Company has determined that the realization of its deferred tax assets is not more likely than not. The Company recorded $27.1 million and $26.4 million of valuation allowance as of June 30, 2015 and 2014, respectively.

As of June 30, 2015, the Company has $13.8 million of gross U.S. federal net operating loss carryforwards that expire at various dates through 2034. Under IRC section 382, certain significant changes in ownership may restrict the future utilization of its U.S. tax loss carryforwards. As of June 30, 2015, the Company also has accumulated tax losses of $34.7 million for Australia, $25

million for the United Kingdom and $13.2 million for France available for carry forward against future earnings, which under relevant tax laws do not expire but may not be available under certain circumstances.

Biota Pharmaceuticals

,

Inc

.

Notes to Consolidated Financial Statements

As of June 30, 2015, the Company’s foreign subsidiaries have no positive accumulated earnings. As such, no federal or state income taxes have been provided on the losses of its foreign subsidiaries under ASC 740. If in the future there are positive earnings generated from the Company’s foreign subsidiaries, the Company will evaluate whether to record any applicable federal and state income taxes on such earnings.

Uncertain Tax Positions

The Company files income tax returns in the U.S, Australia, France and the United Kingdom, as well as with various U.S. states. The Company is subject to tax audits in all jurisdictions for which we file income tax returns. Tax audits by their very nature are often complex and can require several years to complete. There are currently no tax audits that have commenced with respect to income tax returns in any jurisdiction.

Under the tax statute of limitations applicable to the Internal Revenue Code, we are no longer subject to U.S. federal income tax examinations by the Internal Revenue Service for years before 2012. Under the statute of limitations applicable to most state income tax laws, the Company is no longer subject to state income tax examinations by tax authorities for years before 2011 in states in which we have filed income tax returns. Certain states may take the position that the Company is subject to income tax in such states even though the Company has not filed income tax returns in such states and, depending on the varying state income tax statutes and administrative practices, the statute of limitations in such states may extend to years before 2009. The Company began foreign operations in 1985. The Company is subject to foreign tax examinations by tax authorities for all years of operations.

The Company does not have any unrecognized tax benefits as of June 30, 2015.