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Note 11 - Income Taxes | 12 Months Ended
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Jun. 30, 2017
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | NOTE 11 — INCOME TAXES The following information is provided for the years ended June 30:
(In thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Components of income before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 3,080 |  |  | $ | 14,004 |  |  | $ | 7,697 |
Foreign |  |  | — |  |  |  | — |  |  |  | (183 | )
Income before income taxes |  | $ | 3,080 |  |  | $ | 14,004 |  |  | $ | 7,514 |
Provision for income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  |  |  |  |  |  |  |  |  |  |
U.S. federal |  | $ | 800 |  |  | $ | 5,056 |  |  | $ | 2,364 |
State and local |  |  | 59 |  |  |  | 582 |  |  |  | 237 |
Foreign |  |  | — |  |  |  | — |  |  |  | (12 | )
Total current |  |  | 859 |  |  |  | 5,638 |  |  |  | 2,589 |
Deferred |  |  | (779 | ) |  |  | (1,116 | ) |  |  | (226 | )
Total provision for income taxes |  | $ | 80 |  |  | $ | 4,522 |  |  | $ | 2,363 |
(In thousands) |  | 2017 |  |  | 2016 |  |  | 2015 |
Reconciliation to federal statutory rate: |  |  |  |  |  |  |  |  |  |  |  |
Federal statutory tax rate |  |  | 34.0 | % |  |  | 35.0 | % |  |  | 34.0 | %
State and local taxes, net of federal benefit |  |  | 2.4 |  |  |  | 2.2 |  |  |  | 2.4 |
Impact of foreign operations |  |  | — |  |  |  | — |  |  |  | 0.7 |
Federal and state tax credits |  |  | (5.3 | ) |  |  | (2.6 | ) |  |  | (3.7 | )
Valuation allowance |  |  | (18.9 | ) |  |  | — |  |  |  | (3.8 | )
Domestic production activities deduction |  |  | (4.1 | ) |  |  | (4.2 | ) |  |  | (4.0 | )
Uncertain tax position activity |  |  | (5.5 | ) |  |  | (0.6 | ) |  |  | (1.3 | )
Other |  |  | 0.0 |  |  |  | 2.5 |  |  |  | 2.1 |
Sale of subsidiary |  |  | — |  |  |  | — |  |  |  | 5.0 |
Effective tax rate |  |  | 2.6 | % |  |  | 32.3 | % |  |  | 31.4 | %
The components of deferred income tax assets and (liabilities) at June 30, 2017 and 2016 are as follows:
(In thousands) |  | 201 7 |  |  | 2016 |
Uncertain tax positions |  | $ | 281 |  |  | $ | — |
Reserves against current assets |  |  | 584 |  |  |  | 679 |
Accrued expenses |  |  | 3,357 |  |  |  | 3,690 |
Deferred compensation |  |  | 925 |  |  |  | 842 |
Stock-based compensation |  |  | 1,824 |  |  |  | 1,473 |
State net operating loss carryover and credits |  |  | 1,853 |  |  |  | 1,878 |
Long term capital loss carryforward |  |  | 3,703 |  |  |  | 4,272 |
U.S. Federal net operating loss carryover and credits |  |  | 406 |  |  |  | 456 |
Deferred income tax asset before valuation reserve |  |  | 12,933 |  |  |  | 13,290 |
Valuation reserve |  |  | (5,556 | ) |  |  | (6,150 | )
Deferred income tax asset |  |  | 7,377 |  |  |  | 7,140 |
Depreciation |  |  | (3,515 | ) |  |  | (4,270 | )
Goodwill, acquisition costs and intangible assets |  |  | (502 | ) |  |  | (289 | )
Deferred income tax liability |  |  | (4,017 | ) |  |  | (4,559 | )
Net deferred income tax asset |  | $ | 3,360 |  |  | $ | 2,581 |
As of June 30, 2017 and 2016, the Company has recorded a deferred tax asset in the amount of $406,000 and $456,000, respectively, related to U.S. Federal net operating loss and research and development credit carryovers acquired in the acquisition of Virticus Corporation. The net operating losses will expire over a period of 3 years, beginning in June 30, 2029. The research and development credits will expire over a period of 2 years, beginning in June 30, 2029. The annual utilization is limited by Internal Revenue Code Section 382. However, the Company has determined these assets, more likely than not, will be realized. As of June 30, 2017 and 2016, the Company has recorded a deferred state income tax asset in the amount of $1,716,000, net of federal tax benefits, related to non-refundable New York state tax credits. These credits do not expire, but pursuant to New York state legislation enacted in fiscal 2014, the Company has determined that this asset, more likely than not, will not be realized. As of June 30, 2017 and 2016, the Company has recorded a full valuation reserve in the amount of $1,716,000. There was no change in the deferred state income tax asset or related valuation reserve in fiscal 2017. As of June 30, 2017 and 2016, the Company has recorded a deferred state income tax asset in the amount of $137,000 and $162,000, respectively , related to a state net operating loss carryover and a state research and development credit in Oregon acquired during the acquisition of Virticus Corporation. The Company has determined this asset more likely than not, will not be realized and that a full valuation reserve is required. The Oregon net operating loss will expire over a period of 4 years, beginning in June 30, 2027. Related to the Oregon research and development credit, $11,000 expired during fiscal 2016 and the remaining balance of $25,000 expired during fiscal 2017. During fiscal 2015, the Company recorded a deferred tax asset related to the sale of its Canadian subsidiary creating a long term capital loss carryforward totaling $4,272,000. The Company previously determined that this asset, more likely than not, will not be realized within the 5 year carryforward period and that a full valuation reserve was required. In fiscal 2017 the Company sold its Kansas City facility that generated a long term capital gain. The capital loss carryforward related to the sale of the Canadian subsidiary will offset the long term gain from the sale of the Kansas City facility. The utilization of the capital loss carryforward will reduce the deferred tax asset with its corresponding full valuation allowance to $3,703,000. The long term capital loss carryforward will expire in June 30, 2020. Considering all issues discussed above, the Company has recorded valuation reserves of $5,556,000 and $6,150 ,000 as of June 30, 2017 and 2016, respectively. The Company accounts for uncertain tax positions in accordance with accounting standards. At June 30, 2017, tax, interest, and penalties, net of potential federal tax benefits, were $657,000, $268,000, and $194,000, respectively, of the total reserve for uncertain tax positions of $1,119,000. Of the $1,119,000 reserve for uncertain tax positions, $925,000 would have an unfavorable impact on the effective tax rate if recognized. During fiscal 2017, the Company added uncertain tax positions as a result of the acquisition of Atlas totaling $483,000, which is included in the $1,119,000 above. Tax, interest, and penalties, net of potential federal tax benefits were $314,000, $79,000, and $90,000, respectively. At June 30, 2016, tax, interest, and penalties, net of potential federal tax benefits, were $421,000, $244,000, and $142,000 respectively, of the total reserve for uncertain tax positions of $807,000. Of the $807,000 reserve for uncertain tax positions, $665,000 would have an unfavorable impact on the effective tax rate if recognized. The liability for uncertain tax positions is included in Other Long-Term Liabilities. The Company recognized a $78,000 net tax benefit in fiscal 2017, a $26,000 net tax benefit in fiscal 2016, and a $40,000 net tax benefit in fiscal 2015 related to the change in reserves for uncertain tax positions. The Company recognized interest net of federal benefit and penalties of $66,000 and $27,000, respectively, in fiscal 2017, $48,000 and $10,000, respectively, in fiscal 2016, and $41,000 and $17,000, respectively in fiscal 2015. The Company is recording estimated interest and penalties related to potential underpayment of income taxes as a component of tax expense in the Consolidated Statements of Operations. The reserve for uncertain tax positions is not expected to change significantly in the next twelve months. The fiscal 2017, 2016 and 2015 tax activity in the liability for uncertain tax positions was as follows:
(in thousands) |  | 201 7 |  |  | 2016 |  |  | 2015 |
Balance at beginning of the fiscal year |  | $ | 648 |  |  | $ | 687 |  |  | $ | 746 |
Decreases — tax positions in prior period |  |  | (170 | ) |  |  | (161 | ) |  |  | (134 | )
Increases — tax positions in current period |  |  | 50 |  |  |  | 122 |  |  |  | 75 |
Increases — tax positions in prior period |  |  | 314 |  |  |  | — |  |  |  | — |
Settlements and payments |  |  | — |  |  |  | — |  |  |  | — |
Lapse of statute of limitations |  |  | — |  |  |  | — |  |  |  | — |
Balance at end of the fiscal year |  | $ | 842 |  |  | $ | 648 |  |  | $ | 687 |
The Company files a consolidated federal income tax return in the United States, and files various combined and separate tax returns in several state and local jurisdictions. With limited exceptions, the Company is no longer subject to U.S. Federal, state and local tax examinations by tax authorities for fiscal years ending prior to June 30, 2014.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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