INCOME TAXES (Tables)

12 Months Ended

Jun. 30, 2013

Components of Income Tax Expense (Benefit)

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

	Year ended June 30,
	2013		2012			2011

Current
Federal	$	-	$	80		$	(1,161	)
State		15		8			(65	)
		15		88			(1,226	)

Deferred
Federal		-		1,038			(305	)
State		-		(3	)		15
		-		1,035			(290	)
	$	15	$	1,123		$	(1,516	)

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, 2013, 2012 and 2011 is as follows:

	Year Ended June 30,
	2013			2012			2011

Statutory rate		34.0	%		34.0	%		34.0	%
State income taxes, net		(0.4	%)		0.0	%		1.0	%
Meals and entertainment		(0.5	%)		(0.5	%)		(0.4	%)
Section 199 deduction (1)		0.0	%		0.0	%		(1.3	%)
Return to provision differences and other		0.5	%		0.0	%		0.5	%
Effective rate before valuation allowance		33.6	%		33.5	%		33.8	%

Change in valuation allowance		(34.2	%)		(78.5	%)		0.0	%
Effective tax rate		(0.6	%)		(45.0	%)		33.8	%

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

Deferred Tax Assets and Liabilities

At June 30, 2013 and 2012, the significant components of deferred tax assets and liabilities are approximated as follows (in thousands):

	June 30,
	2013			2012
Deferred tax assets relating to:
Stock compensation	$	695		$	583
AMT and research and development credits		397			397
Deferred rent		106			145
Inventory		81			119
Professional fees		106			72
Accrued vacation		21			21
Accounts receivable allowance		9			9
Contribution carryovers		4			3
Net operating loss carryforwards		2,076			1,215
Total deferred tax assets		3,495			2,564

Deferred tax liablities related to depreciation differences		(611	)		(603	)

Net deferred tax assets before valuation allowance		2,884			1,961

Valuation allowance		(2,884	)		(1,961	)
Net deferred tax assets	$	-		$	-