INCOME TAXES (Tables)

12 Months Ended

Jun. 30, 2012

Components of Income Tax Expense (Benefit)

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

	Year ended June 30,
	2012			2011			2010

Current
Federal	$	80		$	(1,161	)	$	3,206
State		8			(65	)		322
		88			(1,226	)		3,528

Deferred
Federal		1,038			(305	)		1,535
State		(3	)		15			16
		1,035			(290	)		1,551
	$	1,123		$	(1,516	)	$	5,079

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, 2012, 2011 and 2010 is as follows:

	Year Ended June 30,
	2012			2011			2010

Statutory rate		34.0	%		34.0	%		35.0	%
State income taxes, net		0.0	%		1.0	%		1.3	%
Meals and entertainment		(0.5	%)		(0.4	%)		0.2	%
Section 199 deduction (1)		0.0	%		(1.3	%)		(1.0	%)
Return to provision differences and other		0.0	%		0.5	%		(0.3	%)
		33.5	%		33.8	%		35.2	%

Change in valuation allowance		(78.5	%)		0.0	%		0.0	%
Effective tax rate		(45.0	%)		33.8	%		35.2	%

(1) Section 199 refers to Internal Revenue Service deduction for Income Attributable to Manufacturing Activities

Deferred Tax Assets and Liabilities

At June 30, 2012 and 2011, the significant components of deferred tax assets and liabilities are approximated as follows (in thousands):

	June 30,
	2012			2011
Deferred tax assets relating to:
Stock compensation	$	583		$	413
AMT and research and development credits		397			317
Deferred rent		145			132
Inventory		119			124
Professional fees		72			50
Accrued vacation		21			21
Accounts receivable allowance		9			9
Contribution carryovers		3			-
Net operating loss carryforwards		1,215			556
Total deferred tax assets		2,564			1,622

Deferred tax liablities related to depreciation differences		(603	)		(671	)

Net deferred tax assets before valuation allowance		1,961			951

Valuation allowance		(1,961	)		-
Net deferred tax assets	$	-		$	951

Summary of Operating Loss and Tax Credit Carryforwards

At June 30, 2012, the Company had net operating loss and various tax credit carryforwards which expire as follows (dollars in millions):

Carryforwards	June 30, 2012		Expiration Date

Net operating loss	$	3.6	June 30, 2032
Research and development credit		0.2	June 30, 2031
Mininum tax credit		0.2	Indefinite