INCOME TAXES (Tables)

12 Months Ended

Jun. 30, 2014

Components of Income Tax Expense (Benefit)

The components of income tax expense (benefit) are as follows (in thousands):

	Year ended June 30,
	2014		2013		2012

Current
Federal	$	13	$	-	$	80
State		20		15		8
		33		15		88

Deferred
Federal		-		-		1,038
State		-		-		(3	)
		-		-		1,035
	$	33	$	15	$	1,123

Effective Income Tax Rate Reconciliation

The reconciliation of the statutory income tax rate to the Company’s effective income tax rate for the fiscal years ended June 30, 2014, 2013 and 2012 is as follows:

	Year Ended June 30,
	2014			2013			2012

Statutory rate		34.0	%		34.0	%		34.0	%
State income taxes, net		(6.9	%)		(0.4	%)		0.0	%
Meals and entertainment		1.2	%		(0.5	%)		(0.5	%)
Prior year adjustments and other		(4.0	%)		0.5	%		0.0	%
Effective rate before valuation allowance		24.3	%		33.6	%		33.5	%

Change in valuation allowance		(21.0	%)		(34.2	%)		(78.5	%)
Effective tax rate		3.3	%		(0.6	%)		(45.0	%)

Deferred Tax Assets and Liabilities

At June 30, 2014 and 2013, the significant components of deferred tax assets and liabilities are approximated as follows (in thousands):

	June 30,
	2014			2013
Deferred tax assets relating to:
Stock compensation	$	834		$	695
AMT and research and development credits		410			397
Deferred rent		23			106
Inventory		58			81
Professional fees		51			106
Accrued vacation		23			21
Accounts receivable allowance		8			9
Contribution carryovers		14			4
Net operating loss carryforwards		1,751			2,076
Total deferred tax assets		3,172			3,495

Deferred tax liablities related to depreciation differences		(487	)		(611	)

Net deferred tax assets before valuation allowance		2,685			2,884

Valuation allowance		(2,685	)		(2,884	)
Net deferred tax assets	$	-		$	-