Income Taxes (Tables)

12 Months Ended

Jun. 30, 2020

The income tax expense for the fiscal years ended June 30, 2020, 2019 and 2018 consists of the following (in thousands):


	Year ended June 30,
	2020		2019		2018
Income Before Income Taxes:
Domestic	$	12,817	$	6,596	$	8,234
International	1,844		2,634		1,315
	$	14,661	$	9,230	$	9,549
Current Taxes:
Federal	$	1,297	$	222	$	2,413
State	332		176		407
Foreign	1,113		833		150
Total Current Income Tax Provision	$	2,742	$	1,231	$	2,970
Deferred Taxes:
Federal	$	316	$	502	$	377
State	71		109		59
Foreign	(17)		(41)		381
Total Deferred Income Tax Provision	$	370	$	570	$	817
Net Income Tax Provision	$	3,112	$	1,801	$	3,787

The Effective Income Tax Rate Differs from the U.S. Federal Statutory Income Tax Rate

The effective income tax rate for the fiscal years ended June 30, 2020, 2019 and 2018 differs from the U.S. Federal statutory income tax rate due to the following:


	Year ended June 30,
	2020		2019		2018
Federal statutory income tax rate	21.0	%	21.0	%	28.0	%
State income taxes, net of federal benefit	3.8	%	3.1	%	2.5	%
Foreign tax rate difference	1.4	%	4.5	%	1.6	%
Tax return to provision true-up	0.0	%	(1.1)	%	(7.4)	%
Limit on future stock compensation due to 162(m)	2.3	%	2.6	%	0.0	%
Foreign withholding tax	3.3	%	0.0	%	0.0	%
Other differences	1.9	%	(0.1)	%	0.2	%
Revalue of deferred for change in federal tax rate	(0.1)	%	(0.6)	%	14.9	%
Permanent differences:
— stock based compensation	(13.6)	%	(7.7)	%	0.7	%
— current year section 162(m) limitation	1.6	%	0.0	%	0.0	%
— foreign derived intangible income deduction	(0.5)	%	(0.1)	%	0.0	%
— domestic production activities deduction	0.0	%	0.0	%	(1.5)	%
— tax credits	(2.3)	%	(3.7)	%	(1.3)	%
— meals and entertainment	0.4	%	0.7	%	0.9	%
— other permanent differences	1.8	%	1.7	%	1.0	%
Change in valuation allowance	0.2	%	(0.8)	%	0.1	%
Net income tax provision	21.2	%	19.5	%	39.7	%

The Components of the Deferred Tax Assets and Liabilities

The components of the deferred tax assets and liabilities as of June 30, 2020 and 2019 are as follows (in thousands):


	June 30,
	2020		2019
Deferred tax assets:
Federal, state, and foreign net operating loss carryovers	$	501	$	448
Stock option compensation	824		1,262
Accrued vacation, allowance for returns, bonuses & other	2,067		2,672
Gross deferred tax asset	$	3,392	$	4,382

Deferred tax liabilities:
Patents and trademarks	$	(117)	$	(132)

Property & equipment	(801)		(1,194)
Other	(59)		(104)
Gross deferred tax liabilities	(977)		(1,430)
Less: valuation allowance	(251)		(259)
Deferred tax assets, net	$	2,164	$	2,693

Schedule of Unrecognized Tax Benefits Roll Forward

There were no liabilities for uncertain tax positions for the years ending June 30, 2019 and June 30, 2018. The beginning balance, ending balance, and changes to the liability for uncertain tax positions for the year ending June 30, 2020 are as follows (in thousands):


	2020
Unrecognized tax benefits, July 1	$	—
Gross increases - tax positions in prior period	—
Gross decreases - tax positions in prior period	—
Gross increases - tax positions in current period	480
Settlement	—
Lapse of statute of limitations	—
Currency adjustment	—
Unrecognized tax benefits, June 30	$	480