XML 29 R14.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Income tax provision | 12 Months Ended
--- | ---
Oct. 31, 2018
Income Tax Disclosure [Abstract] |
Income tax provision | Note 8 - Income tax provision Reconciliation of provision (benefit) for income taxes for the years ended October 31, 2018 and 2017 are as follows (in thousands):
|  | 2018 |  |  | 2017 |
Continuing operations |  | $ | 1,468 |  |  | $ | 62 |
Discontinued operations |  |  | (41 | ) |  |  | 72 |
Net income |  | $ | 1,427 |  |  | $ | 134 |
The provision (benefit) for income taxes for the fiscal years ended October 31, 2018 and 2017 consists of the following (in thousands):
|  | 2018 |  |  | 2017 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | 1,344 |  |  | $ | 322 |
State |  |  | 236 |  |  |  | 12 |
|  |  | 1,580 |  |  |  | 334 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | (112 | ) |  |  | (273 | )
State |  |  | - |  |  |  | 1 |
|  |  | (112 | ) |  |  | (272 | )
|  | $ | 1,468 |  |  | $ | 62 |
Income tax at the federal statutory rate is reconciled to the Company’s actual net provision (benefit) for income taxes as follows (in thousands, except percentages):
|  | 2018 |  |  | 2017 |
|  |  |  |  | % of Pretax |  |  |  |  |  | % of Pretax |
|  | Amount |  |  | Income |  |  | Amount |  |  | Income |
Income taxes at federal statutory rate |  | $ | 1,737 |  |  |  | 23.2 | % |  | $ | 79 |  |  |  | 34.1 | %
State tax provision, net of federal tax benefit |  |  | 170 |  |  |  | 2.3 | % |  |  | 6 |  |  |  | 2.6 | %
Nondeductible differences: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Rel-Tech earn-out |  |  | (6 | ) |  |  | -0.1 | % |  |  | (9 | ) |  |  | -3.9 | %
Qualified domestic production activities deduction |  |  | (141 | ) |  |  | -1.9 | % |  |  | (59 | ) |  |  | -25.4 | %
Stock compensation |  |  | (204 | ) |  |  | -2.7 | % |  |  | 52 |  |  |  | 22.4 | %
Meals and entertainment |  |  | 8 |  |  |  | 0.1 | % |  |  | 12 |  |  |  | 5.2 | %
Temporary true-ups |  |  | - |  |  |  | 0.0 | % |  |  | - |  |  |  | 0.0 | %
State tax refunds, net of federal expense |  |  | - |  |  |  | 0.0 | % |  |  | (3 | ) |  |  | -1.3 | %
R&D credits |  |  | (111 | ) |  |  | -1.5 | % |  |  | (37 | ) |  |  | -15.9 | %
ASC 740-10 Liability |  |  | 54 |  |  |  | 0.7 | % |  |  | - |  |  |  | 0.0 | %
Tax Cut and Jobs Act |  |  | (34 | ) |  |  | -0.5 | % |  |  | - |  |  |  | 0.0 | %
Other |  |  | (5 | ) |  |  | -0.1 | % |  |  | 21 |  |  |  | 9.1 | %
|  | $ | 1,468 |  |  |  | 19.5 | % |  | $ | 62 |  |  |  | 26.9 | %
The Company’s total deferred tax assets and deferred tax liabilities at October 31, 2018 and 2017 are as follows (in thousands):
|  | 2018 |  |  | 2017 |
Deferred Tax Assets: |  |  |  |  |  |  |  |
Reserves |  | $ | 276 |  |  | $ | 375 |
Accrued vacation |  |  | 116 |  |  |  | 122 |
Stock-based compensation awards |  |  | 113 |  |  |  | 184 |
Uniform capitalization |  |  | 78 |  |  |  | 130 |
Other |  |  | 93 |  |  |  | 70 |
Total deferred tax assets |  |  | 676 |  |  |  | 881 |
Deferred Tax Liabilities: |  |  |  |  |  |  |  |
Amortization / intangible assets |  |  | (544 | ) |  |  | (805 | )
Depreciation / equipment and furnishings |  |  | (132 | ) |  |  | (195 | )
Other |  |  | - |  |  |  | - |
Total deferred tax liabilities |  |  | (676 | ) |  |  | (1,000 | )
Total net deferred tax assets (liabilities) |  | $ | - |  |  | $ | (119 | )
On December 22, 2017, the President signed the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, among other things, lowered the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018, which results in a blended statutory income tax rate for the Company of 23.17% for fiscal 2018. For the fiscal year ending October 31, 2019 (“fiscal 2019”), the Company’s U.S. federal statutory income tax rate will be 21.0%. The Company has completed its accounting for the tax effects of the enactment of the Tax Act, which resulted in a tax benefit of $41,000 from remeasuring our U.S. deferred tax assets and liabilities at the lower 21% U.S. federal statutory rate. The Tax Act also includes items that the Company expects could increase its tax expense in future periods such as the elimination of the domestic production deduction (Section 199). In addition, the actual effective tax rate may be materially different than the statutory Federal tax rate (including being higher) based on the availability and impact of various other adjustments such as state taxes, Federal research and development credits, discrete tax benefits related to stock compensation, and the inclusion or exclusion of various items in taxable income which may differ from U.S. GAAP income. Deferred income tax assets and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has evaluated the available evidence supporting the realization of its gross deferred tax assets, including the amount and timing of future taxable income, and has determined it is more likely than not that the assets will be realized in future tax years. The provision for income taxes from continuing operations was $1.47 million or 19.5% and $62,000 or 26.9% of income before income taxes for fiscal 2018 and 2017, respectively. The decrease in the effective income tax rate from year to year is primarily attributable to the reduction of the federal corporate income tax rate due to the Tax Act, the benefit of R&D credits and the recognition of a stock option windfall benefit related to the exercise of NQSOs resulting from the Company’s adoption of ASU 2016-09. The Company’s adjustments to its uncertain tax positions in fiscal years ended October 31, 2018 and 2017 are as follows:
|  | 2018 |  |  | 2017 |
Balance, at beginning of year |  | $ | - |  |  | $ | - |
Increase for tax positions related to the current year |  |  | 24 |  |  |  | - |
Increase for tax positions related to prior years |  |  | 29 |  |  |  | - |
Increase for interest and penalties |  |  | 6 |  |  |  | - |
Balance, at end of year |  | $ | 59 |  |  | $ | - |
The Company has unrecognized tax benefits of approximately $53,000 related to its U.S. federal and California research tax credits as of October 31, 2018. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. An increase in accrued interest and penalty charges of approximately $6,000 was recorded as a tax expense during the current fiscal year. The Company does not anticipate that its accrual for uncertain tax positions will change by a material amount over the next twelve-month period. The Company is subject to taxation in the United States and state jurisdictions. The Company’s tax years for October 31, 2014 and forward are subject to examination by the United States and October 31, 2013 and forward with state tax authorities.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration