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v3.23.3

Income Taxes (Tables) | 12 Months Ended
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Jul. 31, 2023
Income Tax Disclosure [Abstract] |
Income before provision for income taxes | Loss before benefit from income taxes consists of the following:
|  | Fiscal Years Ended July 31,
|  | 2023 |  | 2022 |  | 2021
U.S. |  | $ | (21,327,000) |  |  | (31,772,000) |  |  | (73,153,000) |
Foreign |  | (9,520,000) |  |  | (5,303,000) |  |  | (1,827,000) |
|  | $ | (30,847,000) |  |  | (37,075,000) |  |  | (74,980,000) |
Provision for income taxes | The (benefit from) provision for income taxes included in the accompanying Consolidated Statements of Operations consists of the following:
|  | Fiscal Years Ended July 31,
|  | 2023 |  | 2022 |  | 2021
Federal – current |  | $ | (258,000) |  |  | 287,000 |  |  | 608,000 |
Federal – deferred |  | (4,623,000) |  |  | (4,888,000) |  |  | (877,000) |
State and local – current |  | 1,412,000 |  |  | 348,000 |  |  | 466,000 |
State and local – deferred |  | (815,000) |  |  | (442,000) |  |  | (598,000) |
Foreign – current |  | 958,000 |  |  | 1,197,000 |  |  | 688,000 |
Foreign – deferred |  | (622,000) |  |  | (525,000) |  |  | (1,787,000) |
Benefit from income taxes |  | $ | (3,948,000) |  |  | (4,023,000) |  |  | (1,500,000) |
Provision for income taxes differed from amounts computed by applying the U.S. Federal income tax rate | The benefit from income taxes differed from the amounts computed by applying the U.S. Federal income tax rate as a result of the following:
|  | Fiscal Years Ended July 31,
|  | 2023 |  | 2022 |  | 2021
|  | Amount |  | Rate |  | Amount |  | Rate |  | Amount |  | Rate
Computed "expected" tax benefit |  | $ | (6,478,000) |  |  | 21.0 | % |  | (7,786,000) |  |  | 21.0 | % |  | (15,746,000) |  |  | 21.0 | %
Increase (reduction) in income taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
State and local income taxes, net of federal benefit |  | 440,000 |  |  | (1.4) |  |  | 227,000 |  |  | (0.6) |  |  | (1,371,000) |  |  | 1.8 |
Stock-based compensation |  | 692,000 |  |  | (2.2) |  |  | 1,049,000 |  |  | (2.8) |  |  | (20,000) |  |  | — |
Research and experimentation credits |  | (2,576,000) |  |  | 8.4 |  |  | (1,484,000) |  |  | 4.0 |  |  | (1,018,000) |  |  | 1.4 |
Foreign-derived intangible income deduction |  | (517,000) |  |  | 1.7 |  |  | — |  |  | — |  |  | 164,000 |  |  | (0.2) |
Revaluation of convertible preferred stock option liability |  | — |  |  | — |  |  | (211,000) |  |  | 0.6 |  |  | — |  |  | — |
Nondeductible transaction costs |  | — |  |  | — |  |  | — |  |  | — |  |  | 402,000 |  |  | (0.5) |
Nondeductible executive compensation |  | 1,484,000 |  |  | (4.8) |  |  | 2,801,000 |  |  | (7.6) |  |  | 628,000 |  |  | (0.8) |
Fines and penalties |  | — |  |  | — |  |  | (1,000) |  |  | — |  |  | — |  |  | — |
Audit settlements |  | — |  |  | — |  |  | 18,000 |  |  | — |  |  | 6,000 |  |  | — |
Change in the beginning of the year valuation allowance for deferred tax assets |  | — |  |  | — |  |  | — |  |  | — |  |  | (805,000) |  |  | 1.1 |
Change in valuation allowance |  | 2,834,000 |  |  | (9.2) |  |  | 2,009,000 |  |  | (5.4) |  |  | 15,582,000 |  |  | (20.8) |
Remeasurement of deferred taxes |  | — |  |  | — |  |  | (396,000) |  |  | 1.1 |  |  | (224,000) |  |  | 0.3 |
Foreign income taxes |  | (269,000) |  |  | 0.9 |  |  | (478,000) |  |  | 1.3 |  |  | 676,000 |  |  | (0.9) |
Other, net |  | 442,000 |  |  | (1.6) |  |  | 229,000 |  |  | (0.7) |  |  | 226,000 |  |  | (0.4) |
Benefit from income taxes |  | $ | (3,948,000) |  |  | 12.8 | % |  | (4,023,000) |  |  | 10.9 | % |  | (1,500,000) |  |  | 2.0 | %
Tax effects of temporary differences | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at July 31, 2023 and 2022 are presented below:
|  | 2023 |  | 2022
Deferred tax assets: |  |  |  |
Inventory and warranty reserves |  | $ | 6,147,000 |  |  | 5,970,000 |
Compensation and commissions |  | 3,221,000 |  |  | 4,376,000 |
Federal, state and foreign research and experimentation credits |  | 19,308,000 |  |  | 19,476,000 |
Capitalized U.S. research and experimental expenditures |  | 8,784,000 |  |  | — |
Stock-based compensation |  | 4,774,000 |  |  | 3,950,000 |
Foreign scientific research and experimental development expenditures |  | 2,118,000 |  |  | 1,890,000 |
Federal, state and foreign net operating losses |  | 13,011,000 |  |  | 14,481,000 |
Federal and state capital losses |  | 15,582,000 |  |  | 15,582,000 |
Lease liabilities |  | 11,986,000 |  |  | 12,595,000 |
Deferred revenue, non-current |  | 4,463,000 |  |  | 2,194,000 |
Other |  | 2,417,000 |  |  | 3,725,000 |
Less: valuation allowance |  | (34,478,000) |  |  | (31,227,000) |
Total deferred tax assets |  | 57,333,000 |  |  | 53,012,000 |
Deferred tax liabilities: |  |  |  |
Plant and equipment |  | (4,883,000) |  |  | (3,489,000) |
Lease right-of-use assets |  | (10,510,000) |  |  | (11,801,000) |
Intangibles |  | (50,843,000) |  |  | (52,681,000) |
Total deferred tax liabilities |  | (66,236,000) |  |  | (67,971,000) |
Net deferred tax liabilities |  | $ | (8,903,000) |  |  | (14,959,000) |
Summary of unrecognized tax benefits | The following table summarizes the activity related to our unrecognized tax benefits for fiscal years 2023, 2022 and 2021 (excluding interest):
|  | 2023 |  | 2022 |  | 2021
Balance at beginning of period |  | $ | 9,675,000 |  |  | 9,009,000 |  |  | 8,270,000 |
Increase related to current period |  | 681,000 |  |  | 598,000 |  |  | 528,000 |
Increase related to prior periods |  | 51,000 |  |  | 153,000 |  |  | 338,000 |
Expiration of statute of limitations |  | (1,406,000) |  |  | (83,000) |  |  | (48,000) |
Decrease related to prior periods |  | (45,000) |  |  | (2,000) |  |  | (79,000) |
Balance at end of period |  | $ | 8,956,000 |  |  | 9,675,000 |  |  | 9,009,000 |

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