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Income Taxes (Tables)

12 Months Ended

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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