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INCOME TAXES | 12 Months Ended
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Sep. 30, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income (loss) before taxes for the fiscal years ended September 30, 2017, 2016, and 2015 is comprised of the following (amounts shown in thousands):
| 2017 |  | 2016 |  | 2015
Domestic | $ | 4,057 |  |  | $ | 2,732 |  |  | $ | 1,994 |
Foreign | (886 | ) |  | (774 | ) |  | (11 | )
Total | $ | 3,171 |  |  | $ | 1,958 |  |  | $ | 1,983 |
For the fiscal years ended September 30, 2017, 2016, and 2015 the income tax (provision) benefit was as follows (amounts shown in thousands):
| 2017 |  | 2016 |  | 2015
Federal—current | $ | (127 | ) |  | $ | (129 | ) |  | $ | (84 | )
Federal—deferred | 8,291 |  |  | — |  |  | 621 |
State—current | (20 | ) |  | (16 | ) |  | (10 | )
State—deferred | 2,748 |  |  | — |  |  | 13 |
Foreign—current | 29 |  |  | 146 |  |  | 3 |
Total | $ | 10,921 |  |  | $ | 1 |  |  | $ | 543 |
Significant components of the Company’s net deferred tax assets and liabilities as of September 30, 2017 and 2016 are as follows (amounts shown in thousands):
| 2017 |  | 2016
Deferred tax assets: |  |  |
Stock based compensation | $ | 3,671 |  |  | $ | 2,898 |
Net operating loss carryforwards | 3,453 |  |  | 7,095 |
Research credit carryforwards | 3,171 |  |  | 44 |
AMT credit carryforwards | 392 |  |  | 279 |
Foreign net operating losses | 386 |  |  | 327 |
Other, net | 770 |  |  | 320 |
Total deferred assets | 11,843 |  |  | 10,963 |
Deferred tax liabilities: |  |  |
Intangibles | (393 | ) |  | (473 | )
Foreign deferred liabilities | (280 | ) |  | (356 | )
Net deferred tax asset | 11,170 |  |  | 10,134 |
Valuation allowance for net deferred tax assets | (105 | ) |  | (10,163 | )
Net deferred tax asset (liability) | $ | 11,065 |  |  | $ | (29 | )
The net change in the total valuation allowance for the fiscal years ended September 30, 2017 and 2016 was a decrease of $10.1 million and $1.9 million, respectively. In assessing the realizability of deferred tax assets, the Company 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 periods in which those temporary differences become deductible. The Company considers projected future taxable income and planning strategies in making this assessment. Based on the level of historical operating results and the projections for future taxable income, the Company has determined that it is more likely than not that the deferred tax assets may be realized. Accordingly, the Company has removed the valuation allowance for all deferred tax assets with the exception of the net foreign deferred tax assets. As of September 30, 2017, the Company has available net operating loss carryforwards of $29.4 million for federal income tax purposes, which will start to expire in 2032. The net operating losses for state purposes are $29.4 million and will begin to expire in 2028. Included in these amounts are federal and state net operating losses of $21.1 million attributable to stock option deductions of which the tax benefit will be credited to equity when realized. As of September 30, 2017, the Company has available federal research and development credit carryforwards, net of reserves, of $1.9 million and alternative minimum tax credit carryforwards of $0.4 million. The federal research and development credits will start to expire in 2027. As of September 30, 2017, the Company has available California research and development credit carryforwards, net of reserves, of $1.6 million, which do not expire. Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the "IRC") limit the utilization of tax attribute carryforwards that arise prior to certain cumulative changes in a corporation’s ownership. The Company has completed an IRC Section 382/383 analysis through March 31, 2017 and any identified ownership changes had no impact to the utilization of tax attribute carryforwards. Any future ownership changes may have an impact on the utilization of the tax attribute carryforwards. The difference between the income tax (provision) benefit and income taxes computed using the U.S. federal income tax rate was as follows for the fiscal years ended September 30, 2017, 2016, and 2015 (amounts shown in thousands):
| 2017 |  | 2016 |  | 2015
Amount computed using statutory rate | $ | (1,078 | ) |  | $ | (666 | ) |  | $ | (674 | )
Net change in valuation allowance for net deferred tax assets | 10,058 |  |  | 1,889 |  |  | 1,619 |
AMT and other | 20 |  |  | (148 | ) |  | 151 |
Foreign rate differential | (169 | ) |  | (70 | ) |  | (1 | )
Non-deductible items | (370 | ) |  | (1,136 | ) |  | (182 | )
State income tax | (34 | ) |  | (15 | ) |  | (370 | )
Foreign net operating loss | — |  |  | 147 |  |  | — |
Research and development credits | $ | 2,494 |  |  | $ | — |  |  | $ | — |
Income tax (provision) benefit | $ | 10,921 |  |  | $ | 1 |  |  | $ | 543 |
On November 20, 2015, the FASB issued ASU No 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which requires all deferred tax assets and liabilities to be classified as noncurrent on the balance sheet. The new accounting guidance is effective for annual reporting periods beginning after December 15, 2016 and interim periods therein. The Company has adopted the standard prospectively as of September 30, 2017 and no adjustment was made to prior periods. In accordance with authoritative guidance, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The following table reconciles the beginning and ending amount of unrecognized tax benefits for the fiscal years ended September 30, 2017, 2016, and 2015 (amounts shown in thousands):
| 2017 |  | 2016 |  | 2015
Gross unrecognized tax benefits at the beginning of the year | $ | — |  |  | $ | — |  |  | $ | — |
Additions from tax positions taken in the current year | 140 |  |  | — |  |  | — |
Additions from tax positions taken in prior years | 1,041 |  |  | — |  |  | — |
Reductions from tax positions taken in prior years | — |  |  | — |  |  | — |
Tax settlements | — |  |  | — |  |  | — |
Gross unrecognized tax benefits at end of the year | $ | 1,181 |  |  | $ | — |  |  | $ | — |
Of the total unrecognized tax benefits at September 30, 2017, $1.2 million will impact the Company's effective tax rate. The Company does not anticipate that there will be a substantial change in unrecognized tax benefits within the next 12 months. The Company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of September 30, 2017, no accrued interest or penalties related to uncertain tax positions are recorded in the consolidated financial statements. The Company is subject to income taxation in the U. S. at the Federal and state levels. All tax years are subject to examination by US, California, and other state tax authorities due to the carryforward of unutilized net operating losses and tax credits. We are also subject to foreign income taxes in the countries in which we operate. The Company is not currently under examination by any taxing authorities.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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