INCOME TAXES

12 Months Ended

Jun. 30, 2012

Income Taxes

Note 12. INCOME TAXES (In Thousands)

The Company generates income or loss before income taxes and non-controlling interest in the U.S., Singapore, Thailand and Malaysia and files income tax returns in these countries.  The summarized income or loss before income taxes and non-controlling interest in the U.S. and foreign countries for fiscal 2012 and 2011 were as follows:

	For the Year Ended June 30,
	2012			2011
U.S.	$	(206	)	$	(413	)
Foreign		(4,219	)		286
Total	$	(4,425	)	$	(127	)

On a consolidated basis, the Company’s net income tax provisions (benefits) were as follows:

	For the Year Ended June 30,
	2012			2011
Current:
Federal	$	-		$	-
State		8			2
Foreign		(473	)		428
	$	(465	)	$	430
Deferred:
Federal	$	-		$	-
State		-			-
Foreign		400			(235	)
	$	400		$	(235	)
Total provision	$	(65	)	$	195

The reconciliation between the U.S. federal tax rate and the effective income tax rate was as follows:

	For the Year Ended June 30,
	2012			2011
Statutory federal tax rate		(34	)%		(34)	%
State taxes, net of federal benefit		(6	)		(6)
Foreign tax related to profits making subsidiaries		36			64
Other		3			24
Changes in valuation allowance		0			107
Effective rate		(1	)%		155	%

At June 30, 2012, the Company had net operating loss carry forwards of approximately $443 and $1,005 for federal and state tax purposes, respectively, expiring through 2022. The Company also had tax credit carry forwards of approximately $834 for federal income tax purposes expiring through 2032. Management of the Company is uncertain whether it is more likely than not that these future benefits will be realized. Accordingly, a full valuation allowance has been established.

The components of deferred income tax assets (liabilities) were as follows:

	For the Year Ended June 30,
	2012			2011
Deferred tax assets:
Net operating losses and credits	$	1,086		$	998
Inventory valuation		99			112
Depreciation		-			-
Provision for bad debts		53			2
Accrued vacation		15			12
Accrued expenses		(103	)		314
Other		24			(31	)
Total deferred tax assets	$	1,174		$	1,407
Deferred tax liabilities:
Depreciation		(714	)		(630	)
Other		(2	)		-
Total deferred income tax liabilities	$	(716	)	$	(630	)
Subtotal		458			777
Valuation allowance		(1,342	)		(1,261	)
Net deferred tax liabilities	$	(884	)	$	(484	)

The valuation allowance was increased by $81 and $48 in fiscal 2012 and 2011, respectively.

For U.S. income tax purposes no provision has been made for U.S. taxes on undistributed earnings of overseas subsidiaries with which the Company intends to continue to reinvest. It is not practicable to estimate the amount of additional tax that might be payable on the foreign earnings if they were remitted as dividends or lent to the Company, or if the Company should sell its stock in the subsidiary.  However, the Company believes that the existing U.S. foreign tax credits and net operating losses available would substantially eliminate any additional tax effects.