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Income Taxes
 12 Months Ended
Jul. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Loss before benefit from income taxes consists of the following:
 Fiscal Years Ended July 31,
 202520242023
U.S.$(135,111,000)(65,374,000)(21,327,000)
Foreign(20,271,000)(34,906,000)(9,520,000)
 $(155,382,000)(100,280,000)(30,847,000)
The benefit from income taxes included in the accompanying Consolidated Statements of Operations consists of the following:
 Fiscal Years Ended July 31,
 202520242023
Federal – current$673,000 377,000 (258,000)
Federal – deferred— (2,345,000)(4,623,000)
State and local – current514,000 1,181,000 1,412,000 
State and local – deferred— (834,000)(815,000)
Foreign – current433,000 1,137,000 958,000 
Foreign – deferred(1,700,000)189,000 (622,000)
Benefit from income taxes$(80,000)(295,000)(3,948,000)

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,
 202520242023
 AmountRateAmountRateAmountRate
Computed "expected" tax benefit$(32,630,000)21.0 %(21,059,000)21.0 %(6,478,000)21.0 %
Increase (reduction) in income taxes due to:      
State and local income taxes, net of valuation allowance and federal benefit406,000 (0.2)(127,000)0.1 440,000 (1.4)
Stock-based compensation1,017,000 (0.6)1,891,000 (1.9)692,000 (2.2)
Research and experimentation credits(1,125,000)0.7 (1,251,000)1.2 (2,576,000)8.4 
Foreign-derived intangible income deduction— — 43,000 — (517,000)1.7 
Revaluation of warrants and embedded derivatives(8,085,000)5.2 (897,000)0.9 — — 
Nondeductible executive compensation102,000 (0.1)— — 1,484,000 (4.8)
PST Divestiture— — 1,384,000 (1.4)— — 
Change in U.S. federal and foreign valuation allowances24,929,000 (16.0)10,177,000 (10.0)2,834,000 (9.2)
Foreign income tax rate differential(804,000)0.5 (389,000)0.4 (269,000)0.9 
Goodwill impairment15,975,000 (10.3)9,549,000 (9.5)— — 
Other, net135,000 (0.1)384,000 (0.5)442,000 (1.6)
Benefit from income taxes$(80,000)0.1 %(295,000)0.3 %(3,948,000)12.8 %
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at July 31, 2025 and 2024 are presented below:
 20252024
Deferred tax assets:  
Inventory and warranty reserves$7,026,000 4,685,000 
Compensation and commissions4,414,000 3,401,000 
Federal, state and foreign research and experimentation credits18,134,000 17,559,000 
Capitalized U.S. research and experimental expenditures11,188,000 12,177,000 
Stock-based compensation1,505,000 2,409,000 
Foreign scientific research and experimental development expenditures2,006,000 1,720,000 
Federal, state and foreign net operating losses24,373,000 18,289,000 
Federal and state capital losses14,473,000 14,473,000 
Lease liabilities8,455,000 8,999,000 
Deferred revenue, non-current3,390,000 4,664,000 
Interest expense limitation13,411,000 3,423,000 
Other7,054,000 1,278,000 
Less: valuation allowance(70,973,000)(44,888,000)
Total deferred tax assets, net44,456,000 48,189,000 
 Deferred tax liabilities:  
Plant and equipment(3,379,000)(4,781,000)
Lease right-of-use assets(6,757,000)(7,116,000)
Intangibles(38,752,000)(42,563,000)
Total deferred tax liabilities(48,888,000)(54,460,000)
Net deferred tax liabilities$(4,432,000)(6,271,000)

At July 31, 2025, our net deferred tax liability of $4,432,000 includes $187,000 of foreign net deferred tax assets that were recorded as "Other assets, net" in our Consolidated Balance Sheets. At July 31, 2024, our net deferred tax liability of $6,271,000 includes $78,000 of foreign net deferred tax liabilities that were recorded as "Other liabilities" in our Consolidated Balance Sheets.

Federal and State

At July 31, 2025, we have federal research and experimentation credit carryforwards of $8,447,000 which begin to expire in 2032. We have state research and experimentation credit carryforwards of $9,048,000 which begin to expire in 2026. We believe that it is more-likely-than-not that the benefit from these credits will not be realized. In recognition of this risk, we have provided for a valuation allowance of $17,495,000 on the deferred tax assets relating to these credits.

At July 31, 2025, we have $962,000 of federal net operating loss carryforwards, which do not expire (but are subject to annual deduction limitations based on a percentage of taxable income). We have state net operating loss carryforwards of $3,758,000, which begin to expire in 2026. We believe that it is more-likely-than-not that the benefit from these carryforwards will not be realized. In recognition of this risk, we have provided for a valuation allowance of $4,720,000 on the deferred tax assets relating to these carryforwards.

At July 31, 2025, we have federal and state capital loss carryforwards of $14,473,000, which expire in 2026. We believe it is more-likely-than-not that the benefit from these carryforwards will not be realized. In recognition of this risk, we have provided for a full valuation allowance on the deferred tax assets relating to these carryforwards.
With respect to our remaining U.S. federal and state net deferred tax assets as of July 31, 2025, we believe it is more-likely-than-not that the benefit from such assets will not be realized. In recognition of this risk, we have provided a valuation allowance of $13,456,000 on these net deferred tax assets.

Foreign

At July 31, 2025, we have foreign deferred tax assets relating to research and experimentation credits of $489,000, which begin to expire in 2043. We have foreign deferred tax assets relating to net operating loss carryforwards of $19,513,000 in the United Kingdom that do not expire. We believe that it is more-likely-than-not that certain foreign deferred tax assets, including these net operating loss carryforwards, may not be realized. In recognition of this risk, we have provided for a valuation allowance of $20,829,000 on these deferred tax assets. Our foreign earnings and profits are not material and, as such, we have not recorded any deferred tax liability on unremitted foreign earnings.

Unrecognized Tax Positions

At July 31, 2025 and 2024, total unrecognized tax benefits were $8,084,000 and $8,605,000, respectively, including interest of $240,000 and $224,000, respectively. At July 31, 2025 and 2024, $1,818,000 and $2,231,000, respectively, of our unrecognized tax benefits were recorded as non-current income taxes payable on our Consolidated Balance Sheets. The remaining unrecognized tax benefits of $6,266,000 and $6,374,000 at July 31, 2025 and 2024, respectively, were presented as an offset to the associated deferred tax assets on our Consolidated Balance Sheets. Of the total unrecognized tax benefits, $7,180,000 and $7,679,000 at July 31, 2025 and 2024, respectively, net of the reversal of the federal benefit recognized as a deferred tax asset relating to state reserves, would favorably impact our effective tax rate, if recognized. We believe it is reasonably possible that the gross unrecognized tax benefits could decrease by as much as $196,000 in the next 12 months due to the expiration of statute of limitations related to federal, state and foreign tax positions.

Our policy is to recognize potential interest and penalties relating to uncertain tax positions in income tax expense. The following table summarizes the activity related to our unrecognized tax benefits for fiscal years 2025, 2024 and 2023 (excluding interest):
 202520242023
Balance at beginning of period$8,381,000 8,956,000 9,675,000 
Increase related to current period89,000 181,000 681,000 
Increase related to prior periods8,000 130,000 51,000 
Expiration of statute of limitations(569,000)(622,000)(1,406,000)
Decrease related to prior periods(65,000)(264,000)(45,000)
Balance at end of period$7,844,000 8,381,000 8,956,000 

Our U.S. federal income tax returns for fiscal 2022 through 2025 are subject to potential future Internal Revenue Service ("IRS") audit. None of our state and foreign income tax returns prior to fiscal 2021 are subject to audit. Future tax assessments or settlements could have a material adverse effect on our consolidated results of operations and financial condition.

In July 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted, resulting in significant changes to U.S. tax law. U.S. GAAP, specifically ASC 740, requires that the effects of an applicable change in tax law be recognized in the period of enactment. Accordingly, our financial statements and footnote disclosures for fiscal 2025 reflect the impact of those provisions of the OBBBA that are currently applicable to us, such as changes to bonus depreciation rules which resulted in an estimated increased deduction of $1,254,000. We continue to assess the potential impacts of certain other provisions of the OBBBA which go into effect in the future and are not currently applicable to us, such as those provisions related to changes in the tax treatment of U.S. research and experimental expenditures (and related deductions) and limitations imposed on business interest expense deductions. Such provisions, once applicable to us, could materially affect our results of operations in the future.