Income Taxes (Tables)

12 Months Ended

Jul. 31, 2026

Income before provision for income taxes

Loss from continuing operations before income taxes consists of the following:


	Fiscal Years Ended July 31,
	2026		2025
U.S.	$	(14,470,000)	(19,347,000)
Foreign	(2,964,000)		71,000
	$	(17,434,000)	(19,276,000)

Provision for income taxes

The provision for (benefit from) income taxes included in the accompanying Consolidated Statements of Operations consists of the following:


	Fiscal Years Ended July 31,
	2026		2025
Federal – current	$	44,000	673,000
Federal – deferred	—		—

State and local – current	(88,000)		371,000
State and local – deferred	—		—

Foreign – current	(141,000)		(136,000)
Foreign – deferred	1,032,000		(1,187,000)
Provision for (benefit from) income taxes	$	847,000	(279,000)

Provision for income taxes differed from amounts computed by applying the U.S. Federal income tax rate

Income taxes differed from the amounts computed by applying the U.S. Federal income tax rate as a result of the following:


	Fiscal Year Ended July 31, 2026
	Amount		Rate
Loss from continuing operations before income taxes	$	(17,434,000)

U.S. Federal statutory income tax rate (computed "expected" tax benefit)	(3,661,000)		21.0	%

Nontaxable or nondeductible items:
Revaluation of warrants and embedded derivatives	(4,639,000)		26.6
Compensation	686,000		(3.9)
Other	(93,000)		0.5
Effect of cross border tax laws:
Global Intangible Low Taxed Income ("GILTI")	1,148,000		(6.6)
Change in valuation allowance	5,936,000		(34.0)
State and local income taxes (net of Federal benefit) (1)	(84,000)		0.5
Other	(28,000)		0.2
Foreign tax effects:
Canada
Change in valuation allowance	1,718,000		(9.9)
Other	(4,000)		—
Other foreign jurisdictions	35,000		(0.2)
Changes in unrecognized tax benefits	(167,000)		0.9
Provision for income taxes	$	847,000	(4.9)	%

(1) The jurisdictions that comprise the majority of the domestic state and local income taxes is Texas and Pennsylvania.


	Fiscal Year Ended July 31, 2025
	Amount		Rate
Loss from continuing operations before income taxes	$	(19,276,000)

U.S. Federal statutory income tax rate (computed "expected" tax benefit)	$	(4,048,000)	21.0	%
Increase (reduction) in income taxes due to:
State and local income taxes, net of valuation allowance and Federal benefit	371,000		(1.9)
Stock-based compensation	931,000		(4.8)
Research and experimentation credits	(374,000)		1.9


Revaluation of warrants and embedded derivatives	(8,085,000)		41.9
Nondeductible executive compensation	102,000		(0.5)


Change in U.S. Federal and foreign valuation allowances	9,936,000		(51.5)

Foreign income tax rate differential	7,000		—
Goodwill impairment	1,114,000		(5.8)
Other, net	(233,000)		1.2
Benefit from income taxes	$	(279,000)	1.5	%

Tax effects of temporary differences

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at July 31, 2026 and 2025 are presented below:


	2026		2025
Deferred tax assets:
Inventory and contract reserves	$	339,000	347,000
Compensation and commissions	3,420,000		3,408,000
Federal, state and foreign research and experimentation credits	8,770,000		7,598,000
Capitalized U.S. research and experimental expenditures	2,240,000		7,029,000
Stock-based compensation	1,735,000		1,656,000
Foreign scientific research and experimental development expenditures	2,014,000		2,006,000
Federal, state and foreign net operating losses	6,364,000		5,367,000
Federal and state capital losses	—		14,473,000
Lease liabilities	3,318,000		3,286,000
Deferred revenue, non-current	2,834,000		3,371,000
Interest expense limitation	23,768,000		13,411,000
Other	2,240,000		2,098,000
Less: valuation allowance	(24,134,000)		(29,102,000)
Total deferred tax assets, net	32,908,000		34,948,000
Deferred tax liabilities:
Plant and equipment	(2,350,000)		(2,009,000)
Lease right-of-use assets	(2,707,000)		(2,584,000)
Intangibles	(27,633,000)		(29,106,000)
Total deferred tax liabilities	(32,690,000)		(33,699,000)
Net deferred tax assets	$	218,000	1,249,000

Summary of unrecognized tax benefits

The following table summarizes the activity related to our unrecognized tax benefits for fiscal years 2026 and 2025 (excluding interest):


	2026		2025
Balance at beginning of period	$	3,875,000	4,267,000
Increase related to current period	34,000		66,000
Increase related to prior periods	63,000		8,000
Expiration of statute of limitations	(128,000)		(458,000)
Decrease related to prior periods	(77,000)		(8,000)
Balance at end of period	$	3,767,000	3,875,000

Schedule of cash paid for income taxes

During fiscal 2026, net cash paid (received) related to income taxes, by taxing jurisdiction, for continuing operations was as follows:


Federal:
State:
California	$	(54,000)
Connecticut	(129,000)
Pennsylvania	124,000
Texas	85,000
Virginia	(78,000)
Other	(121,000)
Foreign:
Australia	60,000

Russia	(149,000)
Total	$	(262,000)