DEFERRED TAX ASSETS

6 Months Ended

Dec. 31, 2012

DEFERRED TAX ASSETS

NOTE 6.  DEFERRED TAX ASSETS

As of June 30, 2012, PHAZAR CORP had deferred tax assets of $787,291 with a valuation allowance of $273,861 against the deferred tax assets related to the net operating losses.  The valuation allowance had been established for the deferred tax assets related to net operating losses because PHAZAR CORP could not demonstrate that it would be more likely than not that this deferred tax asset would be realized.

During the second quarter of the year ending June 30, 2013, PHAZAR CORP has reported large operating losses and projected cash flow shortfalls in the near future.  Based on those facts, it is unlikely the remaining  net deferred tax assets will be realized.  Therefore, an additional valuation allowance of $513,430 has been recorded.  PHAZAR CORP has recorded a deferred tax expense in the amount $513,430 as a result of the additional valuation allowance.