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Income Taxes | 12 Months Ended
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Jul. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Note 11—Income Taxes The components of income (loss) before income taxes are as follows:
Fiscal year ended July 31, |  |  |  |  |  |
(in thousands) |  | 2021 |  |  | 2020 |
Domestic |  | $ | 7,629 |  |  | $ | (630 | )
Foreign |  |  | 417 |  |  |  | 86 |
Income (loss) before income taxes |  | $ | 8,046 |  |  | $ | (544 | )
Provision for (benefit from) income taxes consisted of the following:
Fiscal year ended July 31, |  |  |  |  |  |
(in thousands) |  | 2021 |  |  | 2020 |
Current: |  |  |  |  |  |
Foreign |  | $ | 30 |  |  | $ | 14 |
Federal |  |  | 239 |  |  |  | - |
State |  |  | 6 |  |  |  | 1 |
Total current expense |  |  | 275 |  |  |  | 15 |
Deferred: |  |  |  |  |  |  |  |
Foreign |  |  | (44 | ) |  |  | - |
Federal |  |  | (253 | ) |  |  | - |
State |  |  | (180 | ) |  |  | - |
Total deferred expense |  |  | (477 | ) |  |  | - |
Provision for (benefit from) income taxes |  | $ | (202 | ) |  | $ | 15 |
The differences between income taxes expected at the U.S. federal statutory income tax rate and income taxes reported were as follows:
Fiscal year ended July 31, |  |  |  |  |  |
(in thousands) |  | 2021 |  |  | 2020 |
U.S federal income tax (benefit) at statutory rate |  | $ | 1,690 |  |  | $ | (114 | )
State tax (net of federal benefit) |  |  | 5 |  |  |  | 29 |
Change in valuation allowance |  |  | (1,601 | ) |  |  | 13 |
Foreign tax rate differential |  |  | (10 | ) |  |  | (6 | )
Other |  |  | (286 | ) |  |  | 93 |
Provision for (benefit from) income taxes |  | $ | (202 | ) |  | $ | 15 |
On March 27, 2020, the CARES Act was signed into law. The Act contains several new or changed income tax provisions, including but not limited to the following: increased limitation threshold for determining deductible interest expense, class life changes to qualified improvements (in general, from 39 years to 15 years), and the ability to carry back net operating losses incurred from tax years 2018 through 2020 up to the five preceding tax years. Most of these provisions are either not applicable or have no material effect on the Company. The Tax Cuts and Jobs Act of 2017 (the “Tax Act”) contains a provision which subjects a U.S parent of a foreign subsidiary to current U.S. tax on its global intangible low-taxed income (“GILTI”). The GILTI income is eligible for a deduction, which lowers to effective tax. The Company will report the tax impact of GILTI as a period cost when incurred. Accordingly, the Company is not providing deferred taxes for basis differences expected to reverse as GILTI. U.S Companies are eligible for a deduction that lowers the effective tax rate on certain foreign income. This regime is referred to as the Foreign-Derived Intangible Income deduction (“FDII”). Significant components of the Company’s deferred tax assets and deferred tax liabilities are as follows:
July 31, (in thousands) |  | 2021 |  |  | 2020 |
Deferred tax assets: |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 502 |  |  | $ | 1,783 |
Reserves and accruals |  |  | 163 |  |  |  | 185 |
Stock-based compensation |  |  | 156 |  |  |  | 242 |
Net deferred tax assets |  |  | 821 |  |  |  | 2,210 |
Less valuation allowance |  |  | (344 | ) |  |  | (2,210 | )
Total deferred tax assets |  | $ | 477 |  |  | $ | - |
At July 31, 2021 and 2020, the Company had available U.S. federal net operating loss (“NOL”) carryforwards from domestic operations of approximately $0 and $5.6 million, respectively, to offset future taxable income. At July 31, 2021 and 2020, the Company had available U.S. state NOL carryforwards from domestic operations of approximately $5.3 and $5.9 million, respectively, to offset future taxable income. The state NOL carryforwards will begin to expire in 2036. At July 31, 2021 and 2020, the Company had available Norwegian NOL carryforwards of approximately $201,000 and $433,000, respectively, to offset future taxable income. Due to its recent and projected financial performance, the Company believes that it is more-likely-than-not that substantially all of the deferred tax assets except certain state net operating losses and capital loss carryforward will be realized. Therefore, the Company has released the valuation allowance on deferred tax assets other than those stated above. The change in the valuation allowance is as follows:
Fiscal year ended July 31, (in thousand) |  | Balance at beginning of year |  |  | Additions charged to costs and expenses |  |  | Deductions |  |  | Balance at end of year |
2021 |  |  |  |  |  |  |  |  |  |  |  |
Reserves deducted from deferred income taxes, net: |  |  |  |  |  |  |  |  |  |  |  |
Valuation allowance |  | $ | 2,210 |  |  | $ | - |  |  | $ | (1,866 | ) |  |  | $ 344 |
2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Reserves deducted from deferred income taxes, net: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Valuation allowance |  | $ | 2,197 |  |  | $ | 13 |  |  | $ | - |  |  | $ | 2,210 |
At July 31, 2021 and 2020, the Company did not have any unrecognized tax benefits and did not anticipate any significant changes to the unrecognized tax benefits within twelve months of this reporting date. In the fiscal years ended July 31, 2021 and 2020, the Company recorded no interest and penalties on income taxes. At July 31, 2021 and 2020, there was no accrued interest included in income taxes payable. The Company currently remains subject to examinations of its U.S. tax returns as follows: U.S. federal tax return for fiscal 2018 to fiscal 2020, state and local tax returns generally for fiscal 2018 to fiscal 2020 and foreign tax returns generally for fiscal 2019 to fiscal 2020. In connection with the Spin-Off, the Company and IDT entered into various agreements prior to the Spin-Off including a Separation and Distribution Agreement to effect the separation and provide a framework for the Company’s relationship with IDT after the Spin-Off, and a Tax Separation Agreement, which sets forth the responsibilities of the Company and IDT with respect to, among other things, liabilities for federal, state, local and foreign taxes for periods before and including the Spin-Off, the preparation and filing of tax returns for such periods and disputes with taxing authorities regarding taxes for such periods. Pursuant to Separation and Distribution Agreement, among other things, the Company indemnifies IDT and IDT indemnifies the Company for losses related to the failure of the other to pay, perform or otherwise discharge, any of the liabilities and obligations set forth in the agreement. Pursuant to the Tax Separation Agreement, among other things, IDT indemnifies the Company from all liability for taxes of the Company and any of its subsidiaries or relating to its business with respect to taxable periods ending on or before the Spin-Off, and the Company indemnifies IDT from all liability for taxes of the Company and any of its subsidiaries or relating to its business accruing after the Spin-Off. Notwithstanding the foregoing, the Company is responsible for, and IDT has no obligation to indemnify the Company for, any tax liability of the Company resulting from an audit, examination or other proceeding related to any tax returns that relate solely to it and its subsidiaries regardless of whether such tax return relates to a period prior to or following the Spin-Off.

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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=121826272&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=122134291&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=121826272&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=122134291&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=121826272&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 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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