INCOME TAXES

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



	Year ended June 30,
	2019			2018			2017
Current:
Federal	$	(123	)	$	—		$	—
State	42			29			4
Total Current	$	(81	)	$	29		$	4

Deferred:
Federal	$	217		$	(8	)	$	—
State	34			—			—
Total Deferred	251			(8		)	—
Net Income Tax Expense	$	170		$	21		$	4

The reconciliation of the statutory income tax rate to the Company’s effective income tax rate for the fiscal years ended June 30, 2019, 2018 and 2017 is as follows:



	Year Ended June 30,
	2019		2018		2017
Statutory rate	21.0	%	27.6	%	34.0	%
State income taxes, net	22.9	%	(3.7	)%	(4.5	)%
Impact of 2017 tax reform	—	%	(107.0	)%	—	%
Meals and entertainment	2.7	%	(1.8	)%	(1.5	)%
Stock-based compensation	16.1	%	22.6	%	—	%
Research and development credits	7.3	%	22.4	%	—	%
Other	1.5	%	(2.0	)%	0.2	%
Effective rate before valuation allowance	71.5	%	(41.9	)%	28.2	%
Change in valuation allowance	(27.2	)%	38.7	%	(28.5	)%
Effective tax rate	44.3	%	(3.2	)%	(0.3	)%

The statutory rate for the year ended June 30, 2018 is a blended rate which was calculated based on the Company's fiscal year and the date that the tax rate changes were effective.

A valuation allowance has been recorded to reduce the Company’s net deferred tax assets to an amount that is more likely than not to be realized and is based upon the uncertainty of the realization of certain federal and state deferred tax assets related to net operating loss carryforwards and other tax attributes. The establishment of valuation allowances requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets.

At June 30, 2019 and 2018, the significant components of deferred tax assets and liabilities are as follows (in thousands):



	June 30,
	2019			2018
Deferred tax assets relating to:
Stock-based compensation	$	261		$	283
AMT and research and development credits	517			668
Deferred rent	41			58
Inventory	158			147
Professional fees	124			91
Accrued vacation	27			31
Accounts receivable allowance	33			26
Contribution carryovers	8			13
Net operating loss carryforwards	1,067			1,153
Total deferred tax assets	2,236			2,470
Deferred tax liabilities related to depreciable and amortizable assets	(728		)	(587		)
Deferred tax liabilities related to other items	(63		)	—
Net deferred tax assets before valuation allowance	1,445			1,883
Valuation allowance	(1,688		)	(1,875		)
Net deferred tax (liability) asset	$	(243	)	$	8

At June 30, 2019, the Company had net operating loss carryforwards of $5.0 million, which will expire, if unused, between June 30, 2032 and June 30, 2038. At June 30, 2019, the Company had various tax credit carryforwards of $0.5 million, of which $0.4 million will expire beginning on June 30, 2030 and $0.1 million related to alternative minimum tax credits which will be refunded as described below.

The Tax Cuts and Jobs Act of 2017, enacted on December 22, 2017, contained significant changes to U.S. tax law, including lowering the U.S. corporate tax rate to 21% and the repeal of the corporate alternative minimum tax for tax years beginning on or after January 1, 2018. Other provisions in the 2017 tax reform such as interest deductibility, changes to executive compensation plans, full expensing provisions for business assets, other new minimum taxes and international taxation modifications are not expected to have material implications to the Company's financial statements. Given the repeal of the corporate alternative minimum tax, existing alternative minimum tax credit carryovers are to be refunded beginning in 2018. Therefore, a deferred tax asset is recorded for $0.1 million as of June 30, 2019 and no valuation allowance is in place related to this deferred tax asset. The deferred tax asset is offset by deferred tax liabilities related to indefinite lived assets, such as goodwill, in the amount of $0.3 million, which cannot be used as a source of future taxable income in evaluating the need for a valuation allowance against deferred tax assets for a net deferred tax liability of $0.2 million. A deferred tax asset of $0.2 million was recorded as of June 30, 2018 for the alternative minimum tax credit carryforward which was offset by deferred tax liabilities related to indefinite lived assets, such as goodwill, in the amount of $0.2 million for a net deferred tax asset of $8,000.