Income Taxes (Tables)

12 Months Ended

Sep. 30, 2020

Components of Income (Loss) Before Income Taxes

Components of income (loss) before income taxes were as follows (in thousands):

	YEAR ENDED SEPTEMBER 30,
	2020			2019
United States	$	(14,109	)	$	4,105
Foreign		(2,484	)		(1,834	)
	$	(16,593	)	$	2,271

Computation of Provision (Benefit) for Income Taxes

The provision (benefit) for income taxes consisted of the following (in thousands):

	YEAR ENDED SEPTEMBER 30,
	2020			2019
Current
Federal	$	(4	)	$	(16	)
Foreign		2,467			2,401
State		5			16
		2,468			2,401
Deferred:
Federal		—			—
Foreign		181			16
		181			16
	$	2,649		$	2,417

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% for each of the fiscal years ended September 30, 2020 and 2019 as follows (in thousands):

	YEAR ENDED SEPTEMBER 30,
	2020			2019
Expense (benefit) for U.S federal income tax at statutory rate	$	(3,484	)	$	477
Effect of foreign income taxes		(64	)		(101	)
Research and experimentation tax credit		(1,201	)		(812	)
State income taxes, net of federal income tax benefit		(158	)		(161	)
Nondeductible expenses		63			105
Resolution of prior years’ tax matters		(7	)		14
Change in valuation allowance		4,882			964
Impact on deferred taxes due to change in tax rate		196			—
Change in fair value of contingent consideration		214			(444	)
Foreign income tax withholding		1,928			2,358
Disallowance of stock compensation adjustments in excess of book		255			31
Other items		25			(14	)
	$	2,649		$	2,417
Effective tax rate		(16.0	)%		106.4	%

Components of Net Deferred Income Tax Asset

The income tax expense for fiscal years 2020 and 2019 primarily reflects withholding tax on rental income earned in foreign jurisdictions. 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, 2020									AS OF SEPTEMBER 30, 2019
	U.S.			Non U.S.			Total			U.S.			Non U.S.			Total
Deferred income tax assets:
Allowance for doubtful accounts	$	2,813		$	3		$	2,816		$	189		$	3		$	192
Inventories		7,809			33			7,842			7,652			79			7,731
Loss and tax credit carry-forwards		17,431			4,596			22,027			18,156			4,221			22,377
Stock-based compensation		506			—			506			691			—			691
Accrued product warranty		52			2			54			43			4			47
Accrued compensated absences		328			—			328			313			—			313
Property and equipment		—			501			501			—			462			462
Prepaid income taxes		—			517			517			—			753			753
Other reserves		1,009			9			1,018			13			8			21
		29,948			5,661			35,609			27,057			5,530			32,587
Deferred income tax liabilities:
Allowance for doubtful accounts		—			(11	)		(11	)		—			—			—
Intangible assets		(960	)		—			(960	)		(1,386	)		(5	)		(1,391	)
Property, plant and equipment and other		(3,271	)		(31	)		(3,302	)		(4,919	)		(59	)		(4,978	)
Subtotal deferred income tax assets		25,717			5,619			31,336			20,752			5,466			26,218
Valuation allowance		(25,717	)		(5,646	)		(31,363	)		(20,752	)		(5,281	)		(26,033	)
Net deferred income tax assets (liabilities)	$	—		$	(27	)	$	(27	)	$	—		$	185		$	185

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,
	2020			2019
Deferred income tax assets, net	$	—		$	236
Deferred income tax liabilities, net		(27	)		(51	)
	$	(27	)	$	185