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INCOME TAXES | 12 Months Ended
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Jun. 30, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The Company has significant deferred tax assets, a substantial amount of which result from operating loss carryforwards. The Company routinely evaluates its ability to realize the benefits of these assets to determine whether it is more likely than not that such benefit will be realized. In accordance with the history of losses generated, the Company believes that for the year ended June 30, 2023, it is more likely than not that its deferred tax assets will not be realized. Accordingly, the Company has established a full valuation allowance on its net deferred tax assets. The Company intends to continue maintaining a full valuation allowance on its federal and state deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given the Company’s current earnings and anticipated future earnings, the Company believes that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow the Company to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that the Company is able to actually achieve. The provision for income taxes for the years ended June 30, 2023, 2022 and 2021 is comprised of the following:
| Year ended June 30,
($ in thousands) | 2023 |  | 2022 |  | 2021
Current: |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | — |
State | (92) |  |  | (179) |  |  | (328) |
Foreign | — |  |  | — |  |  | — |
Total current | (92) |  |  | (179) |  |  | (328) |
Deferred: |  |  |  |  |
Federal | (62) |  |  | (18) |  |  | (12) |
State | (27) |  |  | 11 |  |  | (30) |
Foreign | — |  |  | — |  |  | — |
Total deferred | (89) |  |  | (7) |  |  | (42) |
Total income tax provision | $ | (181) |  |  | $ | (186) |  |  | $ | (370) |
The components of pre-tax income (loss) are as follows:
| Year ended June 30,
($ in thousands) | 2023 |  | 2022 |  | 2021
U.S. income (loss) | $ | 996 |  |  | $ | (1,517) |  |  | $ | (8,335) |
Other income (loss) | (182) |  |  | — |  |  | — |
Total income (loss) | $ | 814 |  |  | $ | (1,517) |  |  | $ | (8,335) |
A reconciliation of the provision for income taxes for the years ended June 30, 2023, 2022 and 2021 to the indicated provision based on income (loss) before the provision for income taxes at the federal statutory rate of 21.0% for the fiscal years ended June 30, 2023, June 30, 2022, and June 30, 2021 is as follows:
| Year ended June 30,
($ in thousands) | 2023 |  | 2022 |  | 2021
U.S. federal statutory income tax rate | $ | (171) |  |  | $ | 319 |  |  | $ | 1,648 |
Effects of permanent differences |  |  |  |  |
Stock compensation | $ | (688) |  |  | $ | (184) |  |  | $ | 168 |
Other permanent differences | $ | (497) |  |  | $ | (106) |  |  | $ | 608 |
State income taxes, net of federal benefit | $ | (296) |  |  | $ | (275) |  |  | $ | 116 |
Changes related to prior years | $ | 51 |  |  | $ | — |  |  | $ | — |
Changes related to state tax rates | $ | (2,455) |  |  | $ | — |  |  | $ | — |
Changes in valuation allowances | $ | 3,942 |  |  | $ | 184 |  |  | $ | (2,927) |
Other | $ | (67) |  |  | $ | (124) |  |  | $ | 17 |
Effective income tax rate | $ | (181) |  |  | $ | (186) |  |  | $ | (370) |
As of June 30, 2023 the Company had federal and state operating loss carryforwards of approximately $179 million and $112 million, respectively, to offset future taxable income. As of June 30, 2022 the Company had federal and state operating loss carryforwards of approximately $190 million and $133 million, respectively, to offset future taxable income. The timing and extent to which the Company can utilize operating loss carryforwards in any year may be limited because of provisions of the Internal Revenue Code regarding changes in ownership of corporations (i.e. IRS Code Section 382). Federal and state operating loss carryforwards start to expire in 2023 and certain state operating loss carryforwards are currently expiring. The net deferred tax assets arose primarily from net operating loss carryforwards, as well as the use of different accounting methods for financial statement and income tax reporting purposes as follows:
| As of June 30,
($ in thousands) | 2023 |  | 2022
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 42,614 |  |  | $ | 47,984 |
Asset reserves | 6,500 |  |  | 6,666 |
Deferred research and development | 2,856 |  |  | 1,503 |
Stock-based compensation | 3,798 |  |  | 3,416 |
Other | (978) |  |  | (143) |
| 54,790 |  |  | 59,426 |
Deferred tax liabilities: |  |  |
Intangibles | (3,689) |  |  | (4,316) |
Deferred tax assets, net | 51,101 |  |  | 55,110 |
Valuation allowance | (51,376) |  |  | (55,296) |
Deferred tax liabilities | $ | (275) |  |  | $ | (186) |
As of June 30, 2023, the Company had total unrecognized income tax benefits of $0.7 million related to its nexus in certain state tax jurisdictions. If recognized in future years, $0.7 million of these currently unrecognized income tax benefits would impact the income tax provision and effective tax rate. The following table summarizes the activity related to unrecognized income tax benefits:
| Year ended June 30,
($ in thousands) | 2023 |  | 2022 |  | 2021
Balance at the beginning of the year | $ | 572 |  |  | $ | 444 |  |  | $ | 207 |
Gross increases and decreases related to current period tax positions | — |  |  | — |  |  | — |
Gross increases and decreases related to prior period tax positions | 117 |  |  | 128 |  |  | 237 |
Balance at the end of the year | $ | 689 |  |  | $ | 572 |  |  | $ | 444 |
The Company files income tax returns in the United States federal jurisdiction and various state jurisdictions. The tax years ended June 30, 2020 through June 30, 2022 re main open to examination by taxing jurisdictions to which the Company is subject. While the statute of limitations has expired for years prior to the year e nded June 30, 2020, ch anges in reported losses for those years are examinable by tax authorities to the extent that operating loss carryforwards from those prior years impact upon taxable income in current years. As of June 30, 2023, the Company did not have any income tax examinations in process.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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