22. INCOME TAXES

12 Months Ended

Jun. 30, 2017

Notes to Financial Statements

INCOME TAXES

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

	For the Year Ended June 30,
	2017		2016
Current:
Federal	$	-	$	-
State		2		2
Foreign		235		300
	$	237	$	302
Deferred:
Federal	$	-	$	-
State		-		-
Foreign		104		(65	)
		104		(65	)
Total provisions	$	341	$	237

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

	For the Year Ended June 30,
	2017			2016
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		20.23			19.45
NOL Expiration		(0.03	)		(0.21	)
Other		(0.86	)		(0.50	)
Changes in valuation allowance		1.54			3.08
Effective rate		(19.12	)%		(18.18	)%

At June 30, 2017, the Company had net operating loss carry-forward of approximately nil and $148 for U.S. federal and state tax purposes, respectively, expiring through 2033. The Company also had tax credit carry-forward of approximately $211 for U.S. federal income tax purposes expiring through 2020. 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, 2016, the Company had net operating loss carry-forward of approximately $129 and $293 for U.S. 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.

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

	For the Year Ended June 30,
Deferred tax assets:	2017		2016
Net operating losses and credits	$	710	$	1,498
Inventory valuation		99		99
Provision for bad debts		107		128
Accrued vacation		35		40
Accrued expenses		751		1,262
Investment in subsidiaries		60		169
Unrealized gain		23		11
Total deferred tax assets	$	1,785	$	3,207

Deferred tax liabilities:
Unrealized loss		(29	)		(34	)
Depreciation		(266	)		(182	)
Total deferred income tax liabilities	$	(295	)	$	(216	)
Subtotal		1,490			2,991
Valuation allowance		(1,410	)		(2,806	)
Net deferred tax assets	$	80		$	185
Presented as follows in the balance sheets:
Deferred tax assets		375			401
Deferred tax liabilities		(295	)		(216	)
Net deferred tax assets	$	80		$	185

The valuation allowance was decreased by $1,396 and $257 in fiscal year years 2017 and 2016, respectively.

For U.S. income tax purposes, no provision has been made for U.S. taxes on undistributed earnings amounting to $1,283 and $694 as at June 30, 2017 and 2016, 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.