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Note 12 - Income Taxes | 12 Months Ended
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Jun. 30, 2024
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | NOTE 12 — INCOME TAXES The following information is provided for the years ended June 30:
(In thousands) |  | 2024 |  |  | 2023 |
Components of income (loss) before income taxes: |  |  |  |  |  |  |  |
United States |  | $ | 32,295 |  |  | $ | 31,701 |
Foreign |  |  | 804 |  |  |  | 1,625 |
Income before income taxes |  | $ | 33,099 |  |  | $ | 33,326 |
Provision for income taxes |  |  |  |  |  |  |  |
U.S. Federal |  | $ | 6,909 |  |  | $ | 6,327 |
Foreign |  |  | (30 | ) |  |  | 325 |
State and local |  |  | 2,851 |  |  |  | 1,330 |
Total current |  | $ | 9,730 |  |  | $ | 7,982 |
Deferred |  |  | (1,608 | ) |  |  | (418 | )
Total provision for income taxes |  | $ | 8,122 |  |  | $ | 7,564 |
(In thousands) |  | 2024 |  |  | 2023 |
Reconciliation to federal statutory rate: |  |  |  |  |  |  |  |
Federal statutory rate |  |  | 21.0 |  |  |  | 21.0 |
State and local taxes, net of federal benefit |  |  | 4.2 |  |  |  | 2.9 |
Foreign operations |  |  | (0.5 | ) |  |  | 0.6 |
Federal tax credits |  |  | (1.1 | ) |  |  | (1.0 | )
Officer's Compensation |  |  | 1.9 |  |  |  | 1.0 |
Uncertain tax position activity |  |  | 0.5 |  |  |  | - |
Stock-based compensation |  |  | (2.3 | ) |  |  | (1.2 | )
Tax rate changes |  |  | - |  |  |  | (0.2 | )
Other |  |  | 0.8 |  |  |  | (0.4 | )
Effective tax rate |  |  | 24.5 |  |  |  | 22.7 |
The components of deferred income tax assets and (liabilities) at June 30, 2024, and 2023 are as follows:
Components of deferred income tax assets and liabilities |  |  |  |  |  |  |  |
(In thousands) |  | 2024 |  |  | 2023 |
Uncertain tax positions |  | $ | 241 |  |  | $ | 185 |
Reserves against current assets |  |  | 1,408 |  |  |  | 1,255 |
Accrued expenses |  |  | 3,029 |  |  |  | 3,381 |
Deferred compensation |  |  | 2,008 |  |  |  | 1,459 |
Stock-based compensation |  |  | 1,859 |  |  |  | 1,680 |
Capitalized R&D |  |  | 1,985 |  |  |  | - |
State net operating loss carryover and credits |  |  | 120 |  |  |  | 140 |
Lease Liability |  |  | 4,187 |  |  |  | 2,397 |
Canadian NOL |  |  | 313 |  |  |  | 319 |
U.S. Federal net operating loss carryover and credits |  |  | 52 |  |  |  | 258 |
Deferred income tax asset before valuation allowance |  |  | 15,202 |  |  |  | 11,074 |
Valuation allowance |  |  | (108 | ) |  |  | (108 | )
Deferred income tax asset |  |  | 15,094 |  |  |  | 10,966 |
Goodwill, acquisition costs and intangible assets |  |  | (3,977 | ) |  |  | (3,749 | )
Depreciation |  |  | (2,048 | ) |  |  | (1,634 | )
Right of Use Asset |  |  | (4,149 | ) |  |  | (2,269 | )
Deferred income tax liability |  |  | (10,174 | ) |  |  | (7,652 | )
Net deferred income tax asset |  | $ | 4,920 |  |  | $ | 3,314 |
The Company has U.S. federal net operating loss carry forward deferred tax asset of $0.2 million at June 30, 2023, with no remaining operating loss carryforward as of June 30, 2024. The Company has deferred tax assets for research and development credits of $0.1 million for both fiscal years ended June 30, 2024, and June 30, 2023. Utilization of the federal net operating losses and research and development credits are limited by Internal Revenue Code Section 382 but are expected to be realized before expiration. The Company has Canadian net operating loss carry forward deferred tax assets of $0.3 million for both fiscal years ending June 30, 2024, and June 30, 2023. The $0.3 million deferred tax asset was from the acquisition of JSI and has a 20 year carryforward period. The Company has state net operating loss carryovers and tax credit deferred tax assets of $0.1 million for both fiscal years ending June 30, 2024, and June 30, 2023. A portion of the sate net operating loss carry forward was from the acquisition of JSI in May 2021. A valuation allowance of $0.1 million exists at June 30, 2004, against Oregon tax credits not expected to be used. The Oregon credits are otherwise expected to expire over a 4-year period beginning June 30, 2027. At June 30, 2024, tax, interest, and penalties, net of potential federal tax benefits, were $0.6 million, $0.3 million, and $0.2 million, respectively, of the total reserve for uncertain tax positions of $1.1 million. The entire uncertain tax position of $0.6 million, net of federal tax benefit, would impact the effective tax rate if recognized. At June 30, 2023, tax, interest, and penalties, net of potential federal tax benefits, were $0.6 million, $0.3 million, and $0.1 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 expense/(benefit) in both fiscal 2024 and fiscal 2023, related to the change in reserves for uncertain tax positions. The Company recognized interest net of federal benefit and penalties of $17,000 and $37,000, respectively, in fiscal 2024, and $500 and $(3,000), respectively, in fiscal 2023. 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:
Uncertain tax positions |  |  |  |  |  |  |  |
(In thousands) |  | 2024 |  |  | 2023 |
Balance at the beginning of the fiscal year |  | $ | 656 |  |  | $ | 647 |
Decreases - tax positions in prior period |  |  | (63 | ) |  |  | (134 | )
Increase - tax positions in current period |  |  | 232 |  |  |  | 143 |
Balance at end of the fiscal year |  | $ | 825 |  |  | $ | 656 |
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 also in Canada, Mexico, Jamaica, and Puerto Rico. In general, 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, 2021.

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