22. INCOME TAXES

12 Months Ended

Jun. 30, 2015

Notes to Financial Statements

INCOME TAXES (IN THOUSANDS, EXCEPT EARNINGS PER SHARE AND NUMBER OF SHARES)

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

	For the Year Ended June 30,
	2015		2014
Current:
Federal	$	—	$	—
State		2		5
Foreign		439		(175	)
	$	441		(170	)
Deferred:
Federal	$	—	$	—
State		—		—
Foreign		66		(174	)
		66		(174	)
Total provisions	$	507		(344	)

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

	For the Year Ended June 30,
	2015			2014
Statutory federal tax rate		(34.00	)%		(34.00	)%
State taxes, net of federal benefit		(6.00	)		(6.00	)
Foreign tax related to profits making subsidiaries		4.69			(400.00	)
NOL Expiration		(0.24	)		5.00
Other		(0.27	)		5.00
Changes in valuation allowance		(2.71	)		95.00
Effective rate		(38.53	)%		(335.00	)%

At June 30, 2015, the Company had net operating loss carry-forward of approximately $353 and $658 for federal and state tax purposes, respectively, expiring through 2024. The Company also had tax credit carry-forward of approximately $834 for federal income tax purposes expiring through 2033. 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,
		2015			2014
Deferred tax assets:
Net operating losses and credits	$		1,645	$		1,572
Inventory valuation			99			99
Depreciation			-			-
Provision for bad debts			144			788
Accrued vacation			32			15
Capital loss			66			78
Accrued expenses			1,338			217
Investment in subsidiaries			169			182
Deferred Income			-			201
Other			23			112
Total deferred tax assets	$		3,516	$		3,264

Deferred tax liabilities:
Accrued expenses		(56	)	(10	)
Depreciation		(277	)	(19	)
Other		—		—
Total deferred income tax liabilities	$	(333	)	(202	)
Subtotal		3,183		3,062
Valuation allowance		(3,063	)	(2,876	)
Net deferred tax assets	$	120		186
Presented as follows in the balance sheets:
Deferred tax assets		453		388
Deferred tax liabilities		(333	)	(202	)
Net deferred tax assets / (liability)	$	120		186

The valuation allowance was increased by $187 and increased by $1,869 in fiscal year years 2015 and 2014, respectively.

For U.S. income tax purposes no provision has been made for U.S. taxes on undistributed earnings amounting to $617 and $1,152 as at June 30, 2015 and 2014, respectively, 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.