(Loss) income from our operations before income taxes for U.S. and foreign operations was as follows (in thousands):

	2020			2019
U.S.	$	476		$	(661	)
Foreign		(4,115	)		(6,342	)
Total	$	(3,639	)	$	(7,003	)

The income tax (provision) benefit reflected in the statement of operations consists of the following (in thousands):

	2020			2019
Current (provision) benefit:
U.S. Federal, State & Other	$	(118	)	$	305
Foreign		(101	)		(289	)
Deferred taxes
U.S.		-			(274	)
Foreign		(113	)		470
Total (provision) benefit	$	(332	)	$	212

	2020			2019
Benefit of net operating losses	$	9,187		$	8,749
Tax credit carry-forwards		5,804			6,776
Deferred revenue		499			781
Impaired investment		688			691
Property and intangible assets		302			436
Other		1,330			1,390
Deferred tax asset		17,810			18,823
Valuation allowance		(17,229	)		(17,976	)
Total deferred tax assets		581			847
Deferred tax liabilities - basis difference and amortization		(115	)		(268	)
Net deferred taxes	$	466		$	579

The reconciliation of income tax rate to effective tax rate was as follows (in thousands):

	2020			2019
Provision at U.S. statutory rate		21.0	%		21.0	%
Net effect of taxes on foreign activities		(29.6	%)		(7.2	%)
Tax effect of U.S. permanent differences		(17.8	%)		(5.8	%)
State taxes and other, net		(0.4	%)		(4.1	%)
Stock-based compensation		0.0	%		0.1	%
Valuation allowance		17.6	%		(1.0	%)
Effective tax rate		(9.2	%)		3.0	%

At June 30, 2020, we had net operating loss carry-forwards for U.S. federal income tax purposes of $31.4 million; $28.1 million that expire in the years 2021 through 2035 and $3.3 million that will carry forward indefinitely. We also had tax credit carry-forwards of $5.8 million of which $4.1 million expire in the years 2021 through 2034. Included in the U.S. federal net operating loss carry-forward is $8.3 million from the exercise of employee stock options, the tax benefit of which was recognized on July 1, 2017 in accordance with ASU 2016-09 “Compensation- Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. A corresponding valuation allowance was also recorded.

Our deferred tax assets are substantially represented by the tax benefit of U.S. net operating losses (“NOL’s”), tax credit carry-forwards and the tax benefit of future deductions represented by timing differences for deferred revenue, inventory obsolescence, allowances for bad debts, warranty expenses and unrealized losses on investments. We assess the realizability of the NOL’s and tax credit carry-forwards based on a number of factors including our net operating history, the volatility of our earnings, our accuracy of forecasted earnings for future periods and the general business climate.

As of the end of our fiscal year 2018, we had been in a three-year cumulative loss position in the U.S., therefore, at that time, we determined that it was not more likely than not that none of our U.S. deferred tax assets would be realized as benefits in the future.

Accordingly, we established a full valuation allowance against our U.S. net deferred tax assets as of June 30, 2018 and this valuation allowance remains at June 30, 2020. Additionally, during fiscal years 2018, 2019 and 2020, we established full valuation allowances against our Germany, Japan, Singapore, Brazil, Netherlands and India, net deferred tax assets for similar reasons. While our U.S. location had pre-tax income during fiscal year 2019 and 2020, however, we have determined that it remains more likely than not that none of our deferred tax assets will be realized as benefits in the future in these jurisdictions. The net change in the total valuation allowance for the fiscal years ended June 30, 2020 and 2019 was $717,000 and ($131,000), respectively.

On June 30, 2020 and 2019, we had $482,000 and $234,000 of unrecognized tax benefits and reserves for uncertain tax positions that would affect the effective tax rate if recognized absent valuation considerations. Our policy is to classify interest and penalties related to uncertain tax positions as interest expense and income tax expense, respectively. As of June 30, 2020, there was $261,000 of accrued interest and penalties related to uncertain tax positions recorded on our Consolidated Balance Sheets and Consolidated Statements of Operations. For U.S. federal income tax purposes, the tax years 2017 through 2020 remain open to examination by government tax authorities. For German income tax purposes, tax years 2016 through 2020 remain open to examination by government tax authorities. For our China income tax purposes, tax years 2017 through 2020 remain open to examination by government tax authorities generally.

The aggregate changes in the balance of unrecognized tax benefits and uncertain tax positions were as follows (in thousands):

	2020

Balance, at June 30, 2019	$	234
Increases for tax positions related to the current year		248
Increases for tax positions related to the prior year		-
Reduction due to lapse in statute of limitation		-
Balance, at June 30, 2020	$	482

The CARES Act is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions related to net operating loss carryback periods, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act did not have material impact on the Company’s income tax provisions for fiscal year 2020. The Company plans on taking advantage of the cash deferral programs available for payment of federal and state income taxes. The Company will continue to evaluate the impact of the CARES Act on its financial position, results of operations, and cash flows. Additionally, on April 16, 2020, the Company entered into an unsecured loan pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act. See Note 14 of the Notes to the Consolidated Financial Statements, “Credit Facilities”, for details of the PPP Loan.