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Income Taxes | 12 Months Ended
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Sep. 30, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | 17. Income Taxes: Components of income (loss) before income taxes were as follows (in thousands):
|  | YEAR ENDED SEPTEMBER 30, |
|  | 2019 |  |  | 2018 |
United States |  | $ | 4,105 |  |  | $ | (19,231 | )
Foreign |  |  | (1,834 | ) |  |  | (561 | )
|  | $ | 2,271 |  |  | $ | (19,792 | )
The provision (benefit) for income taxes consisted of the following (in thousands):
|  | YEAR ENDED SEPTEMBER 30, |
|  | 2019 |  |  | 2018 |
Current |  |  |  |  |  |  |  |
Federal |  | $ | (16 | ) |  | $ | (613 | )
Foreign |  |  | 2,401 |  |  |  | 51 |
State |  |  | 16 |  |  |  | — |
|  |  | 2,401 |  |  |  | (562 | )
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | — |  |  |  | — |
Foreign |  |  | 16 |  |  |  | (18 | )
|  |  | 16 |  |  |  | (18 | )
|  | $ | 2,417 |  |  | $ | (580 | )
Actual income tax expense (benefit) differs from income tax expense computed by applying the U.S. statutory federal tax rate of 21% and 24% (blended) for the fiscal years ended September 30, 2019 and 2018 as follows (in thousands):
|  | YEAR ENDED SEPTEMBER 30, |
|  | 2019 |  |  | 2018 |
Expense (benefit) for U.S federal income tax at statutory rate |  | $ | 477 |  |  | $ | (4,849 | )
Effect of foreign income taxes |  |  | (101 | ) |  |  | (47 | )
Research and experimentation tax credit |  |  | (812 | ) |  |  | (320 | )
State income taxes, net of federal income tax benefit |  |  | (161 | ) |  |  | (23 | )
Nondeductible expenses |  |  | 105 |  |  |  | 33 |
Resolution of prior years’ tax matters |  |  | 14 |  |  |  | (657 | )
Change in valuation allowance |  |  | 964 |  |  |  | (4,237 | )
Impact on deferred taxes due to change in tax rate |  |  | — |  |  |  | 8,116 |
Difference in U.S. tax rate from assumed rate |  |  | — |  |  |  | 511 |
Change in fair value of contingent consideration |  |  | (444 | ) |  |  | — |
Foreign income tax withholding |  |  | 2,358 |  |  |  | 11 |
Disallowance of stock compensation adjustments in excess of book |  |  | 31 |  |  |  | 895 |
Other items |  |  | (14 | ) |  |  | (13 | )
|  | $ | 2,417 |  |  | $ | (580 | )
Effective tax rate |  |  | 106.4 | % |  |  | 2.9 | %
The income tax expense for fiscal year 2019 primarily reflects foreign withholding tax on rental income earned in Nigeria and Brunei. The income tax benefit for fiscal year 2018 primarily reflects a $0.7 million tax refund resulting from the filing of an amended U.S. tax return. The Company is currently unable to record any tax benefits for its tax losses in the U.S. and Canada due to the uncertainty surrounding its ability to utilize such losses in the future to offset taxable income. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred income tax asset were as follows (in thousands):
|  | AS OF SEPTEMBER 30, 2019 |  |  | AS OF SEPTEMBER 30, 2018 |
|  | U.S. |  |  | Non U.S. |  |  | Total |  |  | U.S. |  |  | Non U.S. |  |  | Total |
Deferred income tax assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for doubtful accounts |  | $ | 189 |  |  | $ | 3 |  |  | $ | 192 |  |  | $ | 545 |  |  | $ | 8 |  |  | $ | 553 |
Inventories |  |  | 7,652 |  |  |  | 79 |  |  |  | 7,731 |  |  |  | 6,870 |  |  |  | 68 |  |  |  | 6,938 |
Loss and tax credit carry-forwards |  |  | 18,156 |  |  |  | 4,221 |  |  |  | 22,377 |  |  |  | 17,056 |  |  |  | 4,151 |  |  |  | 21,207 |
Stock-based compensation |  |  | 691 |  |  |  | — |  |  |  | 691 |  |  |  | 614 |  |  |  | — |  |  |  | 614 |
Accrued product warranty |  |  | 43 |  |  |  | 4 |  |  |  | 47 |  |  |  | 136 |  |  |  | 8 |  |  |  | 144 |
Accrued compensated absences |  |  | 313 |  |  |  | — |  |  |  | 313 |  |  |  | 259 |  |  |  | — |  |  |  | 259 |
Property and equipment |  |  | — |  |  |  | 462 |  |  |  | 462 |  |  |  | — |  |  |  | 457 |  |  |  | 457 |
Prepaid income taxes |  |  | 753 |  |  |  | — |  |  |  | 753 |  |  |  | 714 |  |  |  | — |  |  |  | 714 |
Other reserves |  |  | 13 |  |  |  | 8 |  |  |  | 21 |  |  |  | 56 |  |  |  | 6 |  |  |  | 62 |
|  |  | 27,810 |  |  |  | 4,777 |  |  |  | 32,587 |  |  |  | 26,250 |  |  |  | 4,698 |  |  |  | 30,948 |
Deferred income tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for doubtful accounts |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (6 | ) |  |  | (6 | )
Intangible assets |  |  | (1,386 | ) |  |  | (5 | ) |  |  | (1,391 | ) |  |  | (1,681 | ) |  |  | — |  |  |  | (1,681 | )
Property, plant and equipment and other |  |  | (4,919 | ) |  |  | (59 | ) |  |  | (4,978 | ) |  |  | (3,622 | ) |  |  | (59 | ) |  |  | (3,681 | )
Subtotal deferred income tax assets |  |  | 21,505 |  |  |  | 4,713 |  |  |  | 26,218 |  |  |  | 20,947 |  |  |  | 4,633 |  |  |  | 25,580 |
Valuation allowance |  |  | (21,502 | ) |  |  | (4,531 | ) |  |  | (26,033 | ) |  |  | (20,931 | ) |  |  | (4,448 | ) |  |  | (25,379 | )
Net deferred income tax assets |  | $ | 3 |  |  | $ | 182 |  |  | $ | 185 |  |  | $ | 16 |  |  | $ | 185 |  |  | $ | 201 |
Deferred income tax assets and liabilities are reported as follows in the accompanying consolidated balance sheets (in thousands):
|  | AS OF SEPTEMBER 30, |
|  | 2019 |  |  | 2018 |
Deferred income tax assets, net |  | $ | 236 |  |  | $ | 246 |
Deferred income tax liabilities, net |  |  | (51 | ) |  |  | (45 | )
|  | $ | 185 |  |  | $ | 201 |
The 2017 Tax Act was enacted in December 2017. The 2017 Tax Act, among other things, reduces the U.S. federal corporate tax rate from 35% to 21%, effective January 1, 2018, creates new taxes on certain foreign earnings and may require companies to pay a one-time transition tax on undistributed earnings of certain foreign subsidiaries that were previously tax deferred. The Company is not required to pay a one-time transition tax on earnings of our foreign subsidiaries since there were no accumulated earnings on a consolidated basis. As a result of the 2017 Tax Act, during the fiscal year ended September 30, 2018, the Company revalued its U.S. deferred tax assets based on a U.S. federal tax rate of 21%, which resulted in a reduction to our deferred tax assets of approximately $8.1 million. The reduction in deferred tax assets was completely offset by a like reduction to the valuation allowance. The financial reporting basis of investments in foreign subsidiaries exceed their tax basis. A deferred tax liability is not recorded for this temporary difference because the investment is deemed to be permanent. A reversal of the Company’s plans to permanently invest in these foreign operations would cause the excess to become taxable. At September 30, 2019, the Company had $7.0 million of cash and cash equivalents held by its foreign subsidiaries. At September 30, 2019 and 2018, the temporary difference related to undistributed earnings for which no deferred taxes have been provided was approximately $12.9 million and $12.9 million, respectively. Tax return filings which are subject to review by local tax authorities by major jurisdiction are as follows:
| • | United States—fiscal years ended September 30, 2016 through 2019
| • | State of Texas—fiscal years ended September 30, 2016 through 2019
| • | State of New York—fiscal years ended September 30, 2017
| • | State of California – fiscal years ended September 30, 2016 through 2019
| • | State of Pennsylvania – fiscal years ended September 30, 2017
| • | Russian Federation—calendar years 2017 through 2019
| • | Canada—fiscal years ended September 30, 2016 through 2019
| • | United Kingdom—fiscal years ended September 30, 2018 through 2019
| • | Colombia—calendar years 2017 through 2019
The Company had no unrecognized tax liabilities as of September 30, 2019 and 2018. As of September 30, 2019, the Company had net operating loss (“NOL”) carry-forwards of approximately $61.7 million in the United States, $15.2 million in Canada and $0.5 million in Russia which are available to offset future taxable income in those jurisdictions. The NOL carry-forwards for Canada and Russia begin to expire in 2033 and 2026, respectively. The NOL carry-forward for the United States which originated prior to the 2017 Tax Act of $41.4 million begins to expire in 2028. The Company’s NOLs originating after the 2017 Tax Act of $17.5 million do not expire. Management of the Company has concluded that it was more-likely-than-not that its U.S. and Canadian net deferred tax assets will not be realized in accordance with U.S. GAAP. At September 30, 2019 and September 30, 2018, the Company had a valuation allowance against its U.S. net deferred tax assets of $21.5 million and $20.9 million, respectively, and a valuation allowance against its Canadian net deferred tax assets of $4.5 million and $4.4 million, respectively.

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