Income Taxes (Tables)

12 Months Ended

Sep. 30, 2019

Components of Income (Loss) Before 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	)

Computation of Provision (Benefit) for Income Taxes

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	)

Reconciliation of Actual Income Tax Expenses (Benefits)

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	%

Components of Net Deferred Income Tax Asset

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

Net Classification of Deferred Income Tax Assets and Liabilities in Balance Sheet

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