v3.25.2
Income Taxes
 12 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The income tax expense for the fiscal years ended June 30, 2025 and 2024 consists of the following (in thousands):
Years ended June 30,
20252024
Income before income taxes:
Domestic$10,397 $2,940 
International1,846 1,410 
$12,243 $4,350 
Current taxes:
Federal$2,925 $1,457 
State708 246 
Foreign491 984 
Total current income tax provision$4,124 $2,687 
Deferred taxes:
Federal$(1,464)$(1,281)
State(341)(151)
Foreign119 158 
Total deferred income tax provision$(1,686)$(1,274)
Net income tax provision$2,438 $1,413 
The effective income tax rate for the fiscal years ended June 30, 2025 and 2024 differs from the U.S. Federal statutory income tax rate due to the following:
Years ended June 30,
20252024
Federal statutory income tax rate21.0 %21.0 %
State income taxes, net of federal benefit3.4 %1.2 %
Foreign tax rate difference(0.4)%8.0 %
Tax return to provision true-up0.4 %(4.3)%
Limit on future stock compensation due to 162(m)4.0 %2.8 %
Foreign withholding tax0.8 %2.6 %
Other differences0.7 %1.6 %
Revalue of deferred for change in federal tax rate0.0 %0.0 %
Permanent differences:
— stock-based compensation(6.2)%(8.3)%
— current year section 162(m) limitation0.9 %7.0 %
— foreign derived intangible income deduction(1.4)%(0.7)%
— tax credits(4.8)%(12.1)%
— meals and entertainment0.6 %1.3 %
— removal of additional permanent reinvestment assertions
0.6 %1.2 %
— change in uncertain tax positions
(0.4)%1.2 %
— accrual for foreign tax audits
0.4 %7.7 %
— other permanent differences0.7 %1.8 %
Change in valuation allowance(0.4)%0.5 %
Net income tax provision 19.9 %32.5 %
The components of the deferred tax assets and liabilities as of June 30, 2025 and 2024 are as follows (in thousands):
June 30,
20252024
Deferred tax assets:
Federal, state, and foreign net operating loss carryovers$234 $271 
Stock option compensation628 360 
Section 174 costs2,798 2,578 
Lease liability2,798 3,223 
Accrued vacation, allowance for returns, bonuses & other2,819 2,119 
Gross deferred tax asset$9,277 $8,551 
Deferred tax liabilities:
Patents and trademarks$(16)$(30)
Property & equipment(239)(798)
Right of use asset(1,942)(2,263)
Other(468)(472)
Gross deferred tax liabilities(2,665)(3,563)
Less: valuation allowance(642)(720)
Deferred tax assets, net$5,970 $4,268 
The Company has adopted accounting guidance for uncertain tax positions (“UTPs”) which provides that in order to recognize an uncertain tax benefit, the taxpayer must be more likely than not of sustaining the position. The measurement of the benefit is calculated as the largest amount that is more than 50% likely to be realized upon recognition of the benefit.
In the fiscal year ended June 30, 2024, the Company began recording a withholding tax obligation on certain rebalanced commission payments to the U.S. parent company it had not obtained treaty rates for. The withholding tax recorded in the fiscal year ended June 30, 2024 has been reversed during the fiscal year ended June 30, 2025 as the Company no longer expects to pay that liability.
The Company has been undergoing income tax audits in foreign jurisdictions. For the fiscal year ended June 30, 2025, the Company accrued a total $0.4 million related to foreign income tax audits. In fiscal year 2025, the Company made payments or deemed payments totaling $0.4 million related to these foreign income tax audits. The UTP related to foreign tax audits is now zero. The Company does not have any other foreign tax audits as of June 30, 2025.
The change in the liability for uncertain tax positions were as follows (in thousands):
Years ended June 30,
20252024
Beginning balance$389 $— 
Gross increases - tax positions in prior year51 — 
Gross decreases - tax positions in prior year(53)— 
Gross increases - tax positions in current year— 389 
Settlement(381)— 
Currency adjustment(6)— 
Ending balance$— $389 
In fiscal year 2022, the Company removed its permanent reinvestment assertion in Japan. In fiscal year 2024, the Company removed its permanent reinvestment assertions in Taiwan and Australia and recorded the tax effects of that change. In fiscal year 2025, the Company removed its permanent reinvestment assertion on all other entities.
The tax years open for examination by the Internal Revenue Service (“IRS”) include returns for fiscal years June 30, 2021 through present and the open tax years by state tax authorities include returns for fiscal years June 30, 2020 through present. In addition, the IRS and state tax authorities may examine net operating losses (“NOLs”) for any previous years if utilized by the Company.
The change in the valuation allowance were as follows (in thousands):
Years ended June 30,
20252024
Beginning balance$720 $704 
Increases(78)16 
Ending balance$642 $720 
The change in valuation allowance during the fiscal year ended June 30, 2025 related to current year income in entities with a full valuation allowance along with a change to the United States valuation allowance based on the Company converting from a blended rate to a state-by-state provision. During the fiscal year ended June 30, 2024, the change in valuation allowance related to current year income in entities with a full valuation allowance along with a change to the United States valuation allowance based on updated projections and changes to the blended rate.
As of June 30, 2025, the Company had utilized all of its Federal NOL carry-forwards. As of June 30, 2025, state NOLs were $4.8 million and foreign NOLs were $0.4 million.
The total recognized tax benefit from settlement of stock-based awards for the fiscal years ended June 30, 2025 and 2024, was $0.8 million and $0.2 million, respectively.
The Company has reflected all changes in tax laws including the changes resulting from expiring Tax Cuts and Jobs Act provisions. The Company will reflect the changes from the One Big Beautiful Bill Act in fiscal year 2026, when the law was enacted.
The Company conducts its business globally. As a result, the Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions, and are subject to examination for the open tax years of June 30, 2021 through June 30, 2025.