INCOME TAXES

12 Months Ended

Jun. 30, 2013

Income Taxes

Note 12. INCOME TAXES (In Thousands)

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

	For the Year Ended June 30,
	2013			2012
Current:
Federal	$	-		$	-
State		2			8
Foreign		(956	)		(473	)
	$	(954	)	$	(465	)
Deferred:
Federal	$	-		$	-
State		-			-
Foreign		694			400
		694			400
Total provision	$	(260	)	$	(65	)

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

	For the Year Ended June 30,
	2013			2012
Statutory federal tax rate		(34	)%		(34	)%
State taxes, net of federal benefit		(6	)%		(6	)%
Foreign tax related to profits making subsidiaries		(1	)%		36	%
Other		5	%		3	%
Changes in valuation allowance		0	%		0	%
Effective rate		(41	)%		(1	)%

At June 30, 2013, the Company had net operating loss carry forwards of approximately $134 and $869 for federal and state tax purposes, respectively, expiring through 2023. 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,
	2013			2012
Deferred tax assets:
Net operating losses and credits	$	956		$	1,086
Inventory valuation		99			99
Depreciation		-			-
Provision for bad debts		3			53
Accrued vacation		16			15
Accrued expenses		135			147
Other		3			24
Total deferred tax assets	$	1,212		$	1,424
Deferred tax liabilities:
Accrued expenses	$	-		$	(251	)
Depreciation		(193	)		(715	)
Other		-			-
Total deferred income tax liabilities	$	(193	)	$	(966	)
Subtotal	$	1,019		$	458
Valuation allowance		(1,208	)		(1,342	)
Net deferred tax liabilities	$	(191	)	$	(884	)

The valuation allowance was decreased by $134 and $81 in fiscal 2013 and 2012, 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.