INCOME TAXES

12 Months Ended

Jun. 30, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

6. INCOME TAXES

The provision for income taxes consists of the following amounts (in thousands):

	Years Ended June 30,
	2024			2023
Current:
Federal	$	1,493		$	1,745
State		577			345
Deferred:
Federal		(1,210	)		6
State		(353	)		258
Income tax expense	$	507		$	2,354

The effective income tax rate from income from continuing operations differs from the United States statutory income tax rates for the reasons set forth in the table below (in thousands, except percentages).

	Years Ended June 30,
	2024						2023
	Amount			Percent Pretax Income			Amount			Percent Pretax Income
Income before income taxes	$	2,634			100	%	$	9,428			100	%
Computed “expected” income tax expense on income before income taxes	$	553			21	%	$	1,979			21	%
State tax, net of federal benefit		212			8	%		672			7	%
Tax incentives		(214	)		(8	%)		(229	)		(2	%)
Uncertain tax position		(88	)		(3	%)		(119	)		(1	%)
Stock based compensation		2			—			(114	)		(1	%)
Other		42			1	%		165			1	%
Income tax expense	$	507			19	%	$	2,354			25	%

Deferred income taxes reflect the net effects of loss and credit carryforwards and temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities for federal and state income taxes are as follows (in thousands):

	June 30,
	2024			2023
Deferred tax assets:
Federal and state NOL carryforward	$	23		$	22
Research and other credits		65			65
Reserves		146			122
Accruals		309			267
Stock based compensation		1,008			814
Section 174 capitalization		738			830
Lease liability		488			599
Inventory		596			351
Deferred state tax		5			31
Total gross deferred tax assets	$	3,378		$	3,101
Less: valuation allowance		(90	)		(91	)
Total deferred tax assets		3,288			3,010
Deferred tax liabilities:
Property and equipment, principally due to differing depreciation methods	$	(675	)	$	(767	)
Right of use asset		(439	)		(546	)
Deferred state tax		(78	)		—
Unrealized gains		(541	)		(1,705	)
Total gross deferred tax liabilities		(1,733	)		(3,018	)
Net deferred tax assets (liabilities)	$	1,555		$	(8	)

Realization of our deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. As of June 30, 2024, our deferred tax asset valuation allowance primarily consists of state net operating loss carryforwards for states in which we have filed a final return. For the fiscal years ended June 30, 2024 and 2023, we recorded a net decrease to our valuation allowance of $1,000 and $7,000, respectively, on the basis of management’s reassessment of the amount of our deferred tax assets that are more likely than not to be realized.

As of June 30, 2024, we did not have any net operating losses for federal and state income tax purposes for state jurisdictions in which we currently operate. We have no federal or state research and development and alternative minimum tax credit carry forwards at June 30, 2024.

As of June 30, 2024, we have accrued $262,000 of unrecognized tax benefits related to federal and state income tax matters that would reduce our income tax expense if recognized. If we are eventually able to recognize our uncertain tax positions, our effective tax rate would be reduced. Any adjustment to our uncertain tax positions would result in a cash outlay.

Information with respect to our accrual for unrecognized tax benefits is as follows (in thousands):

	June 30,
	2024			2023
Unrecognized tax benefits:
Beginning balance	$	345		$	509
Additions based on federal tax positions related to the current year		15			16
Additions based on state tax positions related to the current year		17			19
Additions (reductions) for tax positions of prior years		3			(95	)
Reductions due to lapses in statutes of limitation		(118	)		(104	)
Ending balance	$	262		$	345

Although it is reasonably possible that certain unrecognized tax benefits may increase or decrease within the next twelve months due to tax examinations, settlement activities, expirations of statute of limitations, or the impact on recognition and measurement considerations related to the results of published tax cases or other similar activities, we do not anticipate any significant changes to unrecognized tax benefits over the next twelve months.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense when applicable. As of June 30, 2024, $41,000 of interest applicable to our unrecognized tax benefits have been accrued.

We are subject to U.S. federal income tax, as well as income tax of California, Colorado, and Massachusetts. We are currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended June 30, 2021, and later.  However, because of our prior net operating losses and research credit carryovers, our tax years from June 30, 2013, are open to audit.