Entity information:

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.