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INCOME TAXES | 12 Months Ended
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Jun. 30, 2024
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. The Company believes that for the year ended June 30, 2024, 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 this allowance. However, given the Company’s current earnings and anticipated future earnings, the Company believes that there is a reasonable possibility in a future period that 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, 2024, 2023 and 2022 is comprised of the following:
| Year ended June 30,
($ in thousands) | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |
Federal | $ | (65) |  |  | $ | — |  |  | $ | — |
State | (729) |  |  | (92) |  |  | (179) |
Foreign | — |  |  | — |  |  | — |
Total current | (794) |  |  | (92) |  |  | (179) |
Deferred: |  |  |  |  |
Federal | (248) |  |  | (62) |  |  | (18) |
State | 57 |  |  | (27) |  |  | 11 |
Foreign | — |  |  | — |  |  | — |
Total deferred | (191) |  |  | (89) |  |  | (7) |
Total income tax provision | $ | (985) |  |  | $ | (181) |  |  | $ | (186) |
The components of pre-tax income (loss) are as follows:
| Year ended June 30,
($ in thousands) | 2024 |  | 2023 |  | 2022
U.S. income (loss) | $ | 16,217 |  |  | $ | 996 |  |  | $ | (1,517) |
Other income (loss) | (3,239) |  |  | (182) |  |  | — |
Total income (loss) | $ | 12,978 |  |  | $ | 814 |  |  | $ | (1,517) |
A reconciliation of the provision for income taxes for the years ended June 30, 2024, 2023 and 2022 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, 2024, June 30, 2023, and June 30, 2022 is as follows:
| Year ended June 30,
($ in thousands) | 2024 |  | 2023 |  | 2022
Tax at U.S Federal statutory rate | $ | (2,725) |  |  | $ | (171) |  |  | $ | 319 |
Effects of permanent differences |  |  |  |  |
Stock compensation | $ | 24 |  |  | $ | (688) |  |  | $ | (184) |
Other permanent differences | $ | (81) |  |  | $ | (497) |  |  | $ | (106) |
State income taxes, net of federal benefit | $ | (613) |  |  | $ | (296) |  |  | $ | (275) |
Changes related to prior years | $ | — |  |  | $ | 51 |  |  | $ | — |
Changes related to state tax rates | $ | — |  |  | $ | (2,455) |  |  | $ | — |
Changes in valuation allowances | $ | 2,281 |  |  | $ | 3,942 |  |  | $ | 184 |
Statutory Rates Different from U.S. | $ | 183 |  |  | $ | — |  |  | $ | — |
Other | $ | (54) |  |  | $ | (67) |  |  | $ | (124) |
Total | $ | (985) |  |  | $ | (181) |  |  | $ | (186) |
As of June 30, 2024 the Company had federal and state operating loss carryforwards of approximately $159 million and $91 million, respectively, to offset future taxable income. 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. 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 net operating loss carryforwards of $64 million and $10 million, respectively, have indefinite lives and will not expire. The remaining $95 million of federal net operating loss carryforwards and $81 million of state operating loss carryforwards begin to expire in 2024. The net deferred tax assets arose primarily from net operating loss carryforwards, as well as the use of different accounting methods for financial statement and income tax reporting purposes as follows:
| As of June 30,
($ in thousands) | 2024 |  | 2023
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 37,621 |  |  | $ | 42,614 |
Receivable credit losses | 1,367 |  |  | 1,180 |
Inventory reserves | 541 |  |  | 580 |
Sales returns and allowances | 2,463 |  |  | 1,916 |
Sales tax reserves | 1,876 |  |  | 2,824 |
Deferred research and development | 5,750 |  |  | 2,856 |
Stock-based compensation | 4,327 |  |  | 3,798 |
Lease liabilities | 2,410 |  |  | 884 |
Other | 346 |  |  | 190 |
| 56,701 |  |  | 56,842 |
Deferred tax liabilities: |  |  |
Intangibles | (3,502) |  |  | (3,689) |
Property and equipment | (1,179) |  |  | (1,466) |
Right-of-use assets | (1,954) |  |  | (586) |
| (6,635) |  |  | (5,741) |
Deferred tax assets, net | 50,066 |  |  | 51,101 |
Valuation allowance | (50,532) |  |  | (51,376) |
Deferred income taxes | $ | (466) |  |  | $ | (275) |
As of June 30, 2024, the Company had total unrecognized income tax benefits of $0.8 million related to its nexus in certain state tax jurisdictions. If recognized in future years, $0.8 million of these currently unrecognized income tax benefits would impact the income tax provision and effective tax rate. The following table summarizes the activity related to unrecognized income tax benefits:
| Year ended June 30,
($ in thousands) | 2024 |  | 2023 |  | 2022
Balance at the beginning of the year | $ | 689 |  |  | $ | 572 |  |  | $ | 444 |
Gross increases and decreases related to current period tax positions | — |  |  | — |  |  | — |
Gross increases and decreases related to prior period tax positions | 110 |  |  | 117 |  |  | 128 |
Balance at the end of the year | $ | 799 |  |  | $ | 689 |  |  | $ | 572 |
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 subject to examination 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, 2024, the Company did not have any income tax examinations in process.

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