INCOME TAXES (Tables)

12 Months Ended

Jun. 28, 2020

Provision for income taxes from continuing operations consists of the following (in thousands):

	Fiscal Year Ended
	June 28, 2020		June 30, 2019
Current - Federal	$	–	$	–
Current - Foreign		18		131
Current - State		–		15
Deferred - Federal		4,053		(189	)
Deferred - State		7		(8	)
Provision for income taxes	$	4,078	$	(51	)

Effective Income Tax Rate Reconciliation

The effective income tax rate varied from the statutory rate for the fiscal years ended June 28, 2020 and June 30, 2019 as reflected below (in thousands):

	June 28, 2020			June 30, 2019
Federal income taxes (benefit) based on a statutory rate of 21.0%	$	(33	)	$	(168	)
State income tax, net of federal effect		20			93
Foreign taxes		–			15
Permanent adjustments		4			8
Change in valuation allowance		4,081			–
Other		6			1
	$	4,078		$	(51	)

Deferred Tax Assets

The tax effects of temporary differences that give rise to the net deferred tax assets consisted of the following (in thousands):

	June 28, 2020			June 30, 2019
Reserve for bad debt	$	61		$	48
Deferred fees		—			17
Other reserves and accruals		568			795
Operating lease liabilities		937			—
Credit carryforwards		171			156
Net operating loss carryforwards		5,371			5,206
Depreciable assets		306			263
Total gross deferred tax asset		7,414			6,485
Valuation allowance		(6,515	)		(2,425	)
Total deferred tax asset	$	899		$	4,060

Right-of-use asset		(815	)		—
Other deferred tax liabilities		(84	)		—
Total deferred tax liabilities	$	(899	)	$	—
Net deferred tax asset	$	—		$	4,060