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INCOME TAXES | 12 Months Ended
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Jun. 30, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES | (Loss)/Income before provision for income taxes consists of the following:
|  | For the Year Ended June 30, |
|  | 2020 |  |  | 2019 |
United States |  |  | (662 | ) |  |  | (308 | )
International |  |  | 1,857 |  |  |  | 1,717 |
Total |  | $ | 1,195 |  |  | $ | 1,409 |
The components of the provision for income taxes are as follows:
|  | For the Year Ended June 30, |
|  | 2020 |  |  | 2019 |
Current: |  |  |  |  |  |
Federal |  | $ | (1 | ) |  | $ | (337 | )
State |  |  | 2 |  |  |  | 2 |
Foreign |  |  | 212 |  |  |  | 289 |
|  | $ | 213 |  |  | $ | (46 | )
Deferred: |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | - |
State |  |  | - |  |  |  | - |
Foreign |  |  | (225 | ) |  |  | 4 |
|  |  | (225 | ) |  |  | 4 |
Total provisions |  | $ | (12 | ) |  | $ | (42 | )
A reconciliation of income tax benefit compared to the amount of income tax benefit that would result by applying the U.S. federal statutory income tax rate to pre-tax income is as follows:
|  | For the Year Ended June 30, |
|  | 2020 |  |  | 2019 |
Statutory federal tax rate |  |  | 21.00 | % |  |  | 21.00 | %
State taxes, net of federal benefit |  |  | (0.50 | ) |  |  | (0.22 | )
Permanent items and credits |  |  | 13.95 |  |  |  | 11.23 |
Foreign rate differential |  |  | (33.86 | ) |  |  | (4.76 | )
Other |  |  | 2.14 |  |  |  | 4.71 |
Changes in valuation allowance |  |  | (3.73 | ) |  |  | (11.11 | )
Tax reform related to one-time repatriation tax |  |  | - |  |  |  | (23.83 | )
Effective rate |  |  | (1.00 | )% |  |  | (2.98 | )%
The provision for income taxes has been determined based upon the tax laws and rates in the countries in which we operate. The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. Significant judgment is required in determining the provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws. Due to the enactment of Tax Cuts and Jobs Act, the Company is subject to a tax on global intangible low-taxed income (“GILTI”). GILTI is a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. Companies subject to GILTI have the option to account for the GILTI tax as a period cost if and when incurred, or to recognize deferred taxes for temporary differences including outside basis differences expected to reverse as GILTI. The Company has elected to account for GILTI as a period cost, and therefore has included GILTI expense in its effective tax rate calculation for the year ended June 30, 2020. On March 27, 2020, The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted by the US Government in response to the COVID-19 pandemic. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act did not have a materially impact to the financial statements as of June 30, 2020. The Company has maintained an indefinite reinvestment assertion as of June 30, 2020. Accordingly, no deferred taxes related to withholding taxes or unrealized foreign currency gains or losses have been recorded. In assessing the ability to realize the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on these criteria, management believes it is more likely than not the Company will not realize the benefits of the federal, state, and foreign deductible differences. Accordingly, a full valuation allowance has been established. Temporary differences that give rise to a significant portion of deferred tax assets and deferred tax liabilities is as follows for the year ended June 30:
|  | For the Year Ended June 30, |
Deferred tax assets: |  | 2020 |  |  | 2019 |
Net operating losses and credits |  | $ | 487 |  |  | $ | 363 |
Inventory valuation |  |  | 121 |  |  |  | 64 |
Provision for bad debts |  |  | 785 |  |  |  | 296 |
Accrued vacation |  |  | 37 |  |  |  | 94 |
Accrued expenses |  |  | 188 |  |  |  | 325 |
Fixed asset basis |  |  | 1 |  |  |  | 23 |
Investment in subsidiaries |  |  | 277 |  |  |  | - |
Unrealized gain |  |  | 24 |  |  |  | 55 |
Other |  |  | 51 |  |  |  | 73 |
Total deferred tax assets |  | $ | 1,971 |  |  | $ | 1,293 |
Deferred tax liabilities: |  |  |  |  |  |
Depreciation |  |  | (359 | ) |  |  | (390 | )
Others |  |  | (76 | ) |  |  | (78 | )
Total deferred income tax liabilities |  | $ | (435 | ) |  | $ | (468 | )
Subtotal |  |  | 1,536 |  |  |  | 825 |
Valuation allowance |  |  | (1,289 | ) |  |  | (762 | )
Net deferred tax assets |  | $ | 247 |  |  | $ | 63 |
Presented as follows in the balance sheets: |  |  |  |  |  |  |  |
Deferred tax assets |  |  | 247 |  |  |  | 390 |
Deferred tax liabilities |  |  | - |  |  |  | (327 | )
Net deferred tax assets |  | $ | 247 |  |  | $ | 63 |
The valuation allowance increased by $527 and decreased by $355 in fiscal years 2020 and 2019, respectively. At June 30, 2020, the Company had federal net operating loss carry-forwards and state net operating loss carryforward of $1,236, which expire through 2033. These carryovers may be subject to limitations under I.R.C. Section 382. 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. Generally, U.S. federal, state, and foreign authorities may examine the Company’s tax returns for three years, four years, and five years, respectively, from the date an income tax return is filed. However, the taxing authorities may continue to adjust the Company’s net operating loss carryforwards until the statute of limitations closes on the tax years in which the net operating losses are utilized.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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