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Note 11 - Income Taxes | 12 Months Ended
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Jun. 30, 2020
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) |  | 2020 |  |  | 2019 |
Components of income (loss) before income taxes: |  |  |  |  |  |  |  |
United States |  | $ | 11,494 |  |  | $ | (23,005 | )
Foreign |  |  | 199 |  |  |  | 737 |
Income (loss) before income taxes |  | $ | 11,693 |  |  | $ | (22,268 | )
Provision for income taxes |  |  |  |  |  |  |  |
U.S. Federal |  | $ | (2,082 | ) |  | $ | 88 |
Foreign |  |  | 83 |  |  |  | 221 |
State and local |  |  | 175 |  |  |  | 132 |
Total current |  |  | (1,824 | ) |  |  | 441 |
Deferred |  |  | 3,925 |  |  |  | (6,370 | )
Total provision for income taxes |  | $ | 2,101 |  |  | $ | (5,929 | )
(In thousands) |  | 2020 |  |  | 2019 |
Reconciliation to federal statutory rate: |  |  |  |  |  |  |  |
Federal statutory rate |  |  | 21.0 | % |  |  | 21.0 | %
State and local taxes, net of federal benefit |  |  | 2.0 |  |  |  | 3.3 |
Foreign operations |  |  | 0.4 |  |  |  | (0.3 | )
Federal tax credits |  |  | (0.7 | ) |  |  | 0.8 |
Valuation allowance |  |  | (13.4 | ) |  |  | 3.8 |
Expiration of capital loss carryforward |  |  | 8.9 |  |  |  | - |
Uncertain tax position activity |  |  | (0.5 | ) |  |  | 0.3 |
Stock-based compensation |  |  | 3.6 |  |  |  | (1.3 | )
Tax rate changes |  |  | (5.4 | ) |  |  | (0.2 | )
Other |  |  | 2.1 |  |  |  | (0.8 | )
Effective tax rate |  |  | 18.0 | % |  |  | 26.6 | %
The favorable tax rate change for the year ended June 30, 2020 is due to the enactment of the CARES Act. The CARES Act allows the Company to carryback a federal net operating loss to prior tax years, offset taxable income in those earlier tax years, and obtain a refund of income taxes that were paid at a higher statutory tax rate. The components of deferred income tax assets and (liabilities) at June 30, 2020 and 2019 are as follows:
(In thousands) |  | 2020 |  |  | 2019 |
Uncertain tax positions |  | $ | 125 |  |  | $ | 128 |
Reserves against current assets |  |  | 798 |  |  |  | 1,800 |
Accrued expenses |  |  | 2,196 |  |  |  | 1,722 |
Interest |  |  | - |  |  |  | 388 |
Deferred compensation |  |  | 235 |  |  |  | 308 |
Stock-based compensation |  |  | 597 |  |  |  | 926 |
State net operating loss carryover and credits |  |  | 2,194 |  |  |  | 2,374 |
Long term capital loss carryforward |  |  | - |  |  |  | 2,555 |
Right of use asset |  |  | 1,992 |  |  |  | - |
Goodwill, acquisition costs and intangible assets |  |  | 8,040 |  |  |  | 8,949 |
U.S. Federal net operating loss carryover and credits |  |  | 217 |  |  |  | 1,139 |
Deferred income tax asset before valuation allowance |  |  | 16,394 |  |  |  | 20,289 |
Valuation allowance |  |  | (2,194 | ) |  |  | (3,820 | )
Deferred income tax asset |  |  | 14,200 |  |  |  | 16,469 |
Depreciation |  |  | (1,837 | ) |  |  | (2,169 | )
Lease liability |  |  | (1,992 | ) |  |  | - |
Deferred income tax liability |  |  | (3,829 | ) |  |  | (2,169 | )
Net deferred income tax asset |  | $ | 10,371 |  |  | $ | 14,300 |
The Company has deferred tax assets for US federal net operating loss carry forwards of $0.1 million and $0.9 million at June 30, 2020 and June 30, 2019, respectively. The $0.1 million was acquired from Virticus Corporation and will expire over a 3 -year period beginning in June 30, 2029. The acquired federal net operating loss is subject to Internal Revenue Code Section 382. The Company has determined, more likely than not, the amount will be realized before expiration. The Company has deferred tax assets for research and development credits of $0.1 million and $0.2 million, at June 30, 2020 and June 30, 2019, respectively. Of the $0.1 million, $45,000 will expire on June 30, 2039 and the remainder, which was acquired from Virticus Corporation, will expire over a 2 -year period beginning June 30, 2029. The acquired credit is limited by Internal Revenue Code Section 382. The Company has determined, more likely than not, the amount will be realized before expiration. The Company has state net operating loss carryovers and credits of $2.4 million at both June 30, 2020 and June 30, 2019. The amount recognized in fiscal 2020 relates to net deferred tax assets of $0.1 million from various state net operating losses. Also related to the acquisition of Virticus Corporation, the Company has recorded a deferred state income tax asset related to a state net operating loss carryover and a state research and development credit in Oregon in the amount of $0.1 million for both fiscal years 2020 and 2019. 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. The Company has recorded a deferred state income tax asset net of federal tax benefits related to non-refundable New York state tax credits in the amount of $2.1 million at both June 30, 2020 and June 30, 2019. 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, 2020, and 2019, the Company has recorded a full valuation reserve in the amount of $2.1 million. The Company had a capital loss carry forward of $10.7 million at June 30, 2019 that was generated from the sale of a Canadian subsidiary during fiscal 2015. During fiscal 2020, the Company sold its North Canton, Ohio and New Windsor, New York facilities, resulting in taxable capital gain and expects to use $6.6 million of the capital loss carry forward to offset the gain. The remaining capital loss carryforward of $4.2 million expired unused. The Company recognized the tax benefits of utilizing the capital loss of $0.6 million and $0.8 million in the fiscal years 2020 and 2019 by releasing the related valuation allowance. Considering all items discussed above, the Company has recorded valuation reserves of $2.2 million and $3.8 million as of June 30, 2020 and 2019, respectively. At June 30, 2020, tax, interest, and penalties, net of potential federal tax benefits, were $0.5 million, $0.3 million, and $0.1 million, respectively, of the total reserve for uncertain tax positions of $0.9 million. The entire uncertain tax position of $0.5 million, net of federal tax benefit, would impact the effective tax rate if recognized. At June 30, 2019, tax, interest, and penalties, net of potential federal tax benefits, were $0.6 million, $0.2 million and $0.2 million, respectively, of the total reserve for uncertain tax positions of $1.0 million. The entire uncertain tax position of $0.6 million net of federal tax benefit, would impact the effective tax rate if recognized. The liability for uncertain tax position is included in Other Long-Term Liabilities. 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 Company recognized a $0.1 million net tax benefit in both fiscal 2020 and fiscal 2019, related to the change in reserves for uncertain tax positions. The Company recognized interest net of federal benefit and penalties of $0 and $13,000, respectively, in fiscal 2020 and $14,000 and $7,000, respectively, in fiscal 2019. The reserve for uncertain tax positions is not expected to change significantly in the next twelve months. The tax activity in the liability for uncertain tax positions was as follows:
(In thousands) |  | 2020 |  |  | 2019 |
Balance at the beginning of the fiscal year |  | $ | 675 |  |  | $ | 736 |
Decreases - tax positions in prior period |  |  | (70 | ) |  |  | (120 | )
Increase - tax positions in current period |  |  | 15 |  |  |  | 59 |
Increases - tax positions in prior period |  |  | - |  |  |  | - |
Settlements and payments |  |  | (13 | ) |  |  | - |
Lapse of statute of limitations |  |  | - |  |  |  | - |
Balance at end of the fiscal year |  |  | 607 |  |  |  | 675 |
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 and Mexico. 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, 2017.

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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 -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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