22. INCOME TAXES

12 Months Ended

Jun. 30, 2016

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 were as follows:

		For the Year Ended June 30,
		2016			2015
Current:
Federal	$	-		$	-
State		2			2
Foreign		300			439
	$	302		$	441
Deferred:
Federal	$	-		$	-
State		-			-
Foreign		(65	)		66
		(65	)		66
Total provisions	$	237		$	507

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

	For the Year Ended June 30,
	2016			2015
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		19.45			4.69
NOL Expiration		(0.21	)		(0.24	)
Other		(0.50	)		(0.27	)
Changes in valuation allowance		3.08			(2.71	)
Effective rate		(18.18	)%		(38.53	)%

At June 30, 2016, the Company had net operating loss carry-forward of approximately $129 and $293 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 was established.

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,
		2016			2015
Deferred tax assets:
Net operating losses and credits	$	1,498		$	1,645
Inventory valuation		99			99
Depreciation		-			-
Provision for bad debts		128			144
Accrued vacation		40			32
Capital loss		-			66
Accrued expenses		1,262			1,338
Investment in subsidiaries		169			169
Other		11			23
Total deferred tax assets	$	3,207		$	3,516
Deferred tax liabilities:		(34	)		(56	)
Accrued expenses		(182	)		(277	)
Depreciation		-			-
Other		(216	)		(333	)
Total deferred income tax liabilities
Subtotal		2,991			3,183
Valuation allowance		(2,806	)		(3,063	)
Net deferred tax assets / (liability)		185			120
Presented as follows in the balance sheets:
Deferred tax assets		401			453
Deferred tax liabilities		(216	)		(333	)
Net deferred tax assets / (liability)		185			120

The valuation allowance was decreased by $257 and increased by $187 in fiscal year years 2016 and 2015, respectively.

For U.S. income tax purposes, no provision has been made for U.S. taxes on undistributed earnings amounting to $694 and $617 as at June 30, 2016 and 2015, 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.