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Income Taxes
 12 Months Ended
Jun. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

10. Income Taxes

The components of (loss) income before income taxes were as follows (in thousands):

 

 

 

Fiscal Year Ended June 30,

 

 

 

2022

 

 

2021

 

 

2020

 

US

 

$

(6,022

)

 

$

29,433

 

 

$

17,824

 

Foreign

 

 

260

 

 

 

(104

)

 

 

862

 

Total

 

$

(5,762

)

 

$

29,329

 

 

$

18,686

 

The components of the (benefit from) provision for income taxes were as follows (in thousands):

 

 

 

Fiscal Year Ended June 30,

 

 

 

2022

 

 

2021

 

 

2020

 

Current:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

—

 

 

$

(3

)

 

$

—

 

State

 

 

176

 

 

 

252

 

 

 

(3,110

)

Foreign

 

 

195

 

 

 

187

 

 

 

218

 

Total current provision for (benefit from) income taxes

 

 

371

 

 

 

436

 

 

 

(2,892

)

Deferred:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

(1,032

)

 

 

4,732

 

 

 

2,504

 

State

 

 

147

 

 

 

606

 

 

 

972

 

Foreign

 

 

—

 

 

 

—

 

 

 

—

 

Total deferred (benefit from) provision for income taxes

 

 

(885

)

 

 

5,338

 

 

 

3,476

 

Total (benefit from) provision for income taxes

 

$

(514

)

 

$

5,774

 

 

$

584

 

The fiscal 2021 and 2020 provision for income taxes reconciliations have been recast to dollar amounts versus a percentage of income before taxes for comparability to the fiscal 2022 presentation. The reconciliation between the statutory federal income tax (benefit) expense and the Company’s effective tax (benefit) expense was as follows (in thousands):

 

 

 

Fiscal Year Ended June 30,

 

 

 

2022

 

 

2021

 

 

2020

 

Statutory federal tax

 

$

(1,210

)

 

$

6,180

 

 

$

3,924

 

States taxes, net of federal (benefit) expense

 

 

(314

)

 

 

206

 

 

 

(2,124

)

Foreign rate differential

 

 

11

 

 

 

59

 

 

 

390

 

Stock-based compensation benefit

 

 

(774

)

 

 

(2,744

)

 

 

(1,633

)

Change in valuation allowance

 

 

(1,034

)

 

 

671

 

 

 

(444

)

Research and development credits

 

 

(1,174

)

 

 

(1,131

)

 

 

(759

)

Disqualified compensation expense

 

 

1,806

 

 

 

2,219

 

 

 

993

 

Uncertain tax position

 

 

385

 

 

 

349

 

 

 

333

 

Business divestitures

 

 

—

 

 

 

—

 

 

 

(241

)

Expired attributes

 

 

261

 

 

 

—

 

 

 

—

 

Foreign deferred adjustment

 

 

1,354

 

 

 

—

 

 

 

—

 

Other

 

 

175

 

 

 

(35

)

 

 

145

 

Effective income tax

 

$

(514

)

 

$

5,774

 

 

$

584

 

 

The components of the long-term deferred tax assets and liabilities, net were as follows (in thousands):

 

 

 

 

 

June 30,

 

 

 

 

 

2022

 

 

2021

 

Noncurrent deferred tax assets:

 

 

 

 

 

 

 

 

 

 

Reserves and accruals

 

 

 

$

1,019

 

 

$

1,608

 

Stock-based compensation expense

 

 

 

 

3,400

 

 

 

3,841

 

Intangible assets

 

 

 

 

—

 

 

 

4,444

 

Net operating loss

 

 

 

 

34,684

 

 

 

30,440

 

Fixed assets

 

 

 

 

217

 

 

 

135

 

Tax credits

 

 

 

 

11,748

 

 

 

10,279

 

Operating lease liabilities

 

 

 

 

1,894

 

 

 

3,108

 

Other

 

 

 

 

39

 

 

 

38

 

Total noncurrent deferred tax assets

 

 

 

 

53,001

 

 

 

53,893

 

Valuation allowance - long-term

 

 

 

 

(7,160

)

 

 

(8,193

)

Noncurrent deferred tax assets, net

 

 

 

 

45,841

 

 

 

45,700

 

 

 

 

 

 

 

 

 

 

 

 

Noncurrent deferred tax liabilities:

 

 

 

 

 

 

 

 

 

 

Intangibles

 

 

 

 

(2

)

 

 

—

 

Deferred acquisition costs

 

 

 

 

(215

)

 

 

—

 

Operating lease right-of-use assets

 

 

 

 

(1,404

)

 

 

(2,364

)

Noncurrent deferred tax liabilities

 

 

 

 

(1,621

)

 

 

(2,364

)

 

 

 

 

 

 

 

 

 

 

 

Total deferred tax assets, net

 

 

 

$

44,220

 

 

$

43,336

 

The Company has a gross deferred tax asset balance of $44.2 million and $43.3 million as of June 30, 2022 and 2021, respectively. The Company has a valuation allowance of approximately $7.2 million and $8.2 million as of June 30, 2022, and 2021, respectively primarily related to deferred tax assets of a foreign subsidiary and California research and development tax credits. The Company continues to reassess the ability to realize its deferred tax assets on a quarterly basis, and if there are unfavorable changes to actual operating results or to projections of future income, the Company may determine that it is more likely than not that such deferred tax assets may not be realizable.

As of June 30, 2022 and 2021, the Company had a federal operating loss carryforward of approximately $138.1 million and $117.7 million. As of June 30, 2022 and 2021, the Company’s state operating loss carryforward was approximately $78.0 million and $70.4 million. With the exception of $54.7 million of federal net operating losses which can be carried forward indefinitely, the federal and state net operating losses, if not used, will begin to expire on June 30, 2035 and June 30, 2034. The operating loss carryforward in the India jurisdiction was approximately $3.6 million which will begin to expire on June 30, 2023. The Company has federal and California research and development tax credit carry-forwards of approximately $7.3 million and $10.3 million to offset future taxable income. The federal research and development tax credits, if not used, will begin to expire on June 30, 2034, while the state tax credit carry-forwards do not have an expiration date and may be carried forward indefinitely.

Utilization of the operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of operating loss carryforwards and credits before utilization.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits was as follows (in thousands):

 

 

 

Fiscal Year Ended June 30,

 

 

 

2022

 

 

2021

 

 

2020

 

Balance at the beginning of the year

 

$

4,756

 

 

$

4,236

 

 

$

3,727

 

Gross increases - current period tax positions

 

 

542

 

 

 

535

 

 

 

406

 

Gross increases - prior period tax positions

 

 

—

 

 

 

—

 

 

 

106

 

Gross decreases - prior period tax positions

 

 

—

 

 

 

(7

)

 

 

—

 

Reductions as a result of lapsed statute of limitations

 

 

(2

)

 

 

(8

)

 

 

(3

)

Balance at the end of the year

 

$

5,296

 

 

$

4,756

 

 

$

4,236

 

 

The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the Company’s (benefit from) provision for income taxes. As of June 30, 2022, the Company has accrued $1.4 million for interest and penalties related to the unrecognized tax benefits. The balance of interest and penalties is recorded as a noncurrent liability in the Company’s consolidated balance sheet.

As of June 30, 2022, unrecognized tax benefits of $2.9 million, if recognized, would affect the Company’s effective tax rate. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months.

The Company files income tax returns in the United States, various U.S. states and certain foreign jurisdictions and is no longer subject to U.S. federal, state and local, or non-U.S., income tax examinations by tax authorities for years before 2013. As of June 30, 2022, the tax years 2013 through 2020 remain open in the U.S., and the tax years 2015 through 2019 remain open in various foreign jurisdictions. The Company believes that adequate amounts have been reserved for any adjustments that may ultimately result from our examinations.