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Note 15 - Income Taxes
12 Months Ended
Sep. 30, 2019
Notes to Financial Statements  
Income Tax Disclosure [Text Block]
1
5
.   Income Taxes
 
The components of the Company’s tax provision for the years ended
September 30, 2019
and
2018
are as follows:
 
   
Years Ended September 30,
 
   
2019
   
2018
 
Current
               
Federal
  $
-
    $
-
 
State
   
4
     
19
 
Foreign
   
-
     
-
 
Total current
   
4
     
19
 
Deferred
               
Federal
   
-
     
(22
)
State
   
-
     
-
 
Total deferred
   
-
     
(22
)
Total
  $
4
    $
(3
)
 
 
The Company’s income tax provision was computed using the federal statutory rate (
21%
) and average state statutory rates (
6.37%
), net of related federal benefit. The provision differs from the amount computed by applying the statutory federal income tax rate to pretax income, as follows:
 
   
Years Ended September 30,
 
   
2019
   
2018
 
Income tax benefit at the federal statutory rate
  $
(1,905
)   $
(1,497
)
Permanent differences, net
   
541
     
1,534
 
State income tax (benefit)
   
(578
)    
(437
)
Change in statutory rate
   
-
     
3,839
 
Change in valuation allowance attributable to operations
   
1,925
     
(3,495
)
Other
   
21
     
53
 
Total
  $
4
    $
(3
)
 
 
As of
September 30, 2019,
the Company has federal net operating loss (NOL) carryforwards of approximately
$34
million that expires on various dates through
2039.
Internal Revenue Code Section
382
places a limitation on the amount of taxable income which can be offset by NOL carryforwards after a change in control of a loss corporation. Due to these “change of ownership” provisions, utilization of NOL carryforwards
may
be subject to an annual limitation in future periods. The Company has
not
performed a Section
382
analysis. However, if performed, Section
382
may
be found to limit potential future utilization of the Company’s NOL carryforwards. The Company also has approximately
$30
million in state NOLs which expire on various dates through
2038.
 
The Company has deferred tax assets that are available to offset future taxable income. A valuation allowance is established if it is more likely than
not
that all or a portion of the deferred tax assets will
not
be realized. Management believes that it is more likely than
not
that all deferred tax assets will
not
be realized, with the exception of the alternative minimum tax (AMT) carryover which has
not
been reserved against. Accordingly, the Company has established a valuation allowance against a portion of its deferred tax assets at
September 30, 2019
and
2018.
For the year ended
September 30, 2019,
the valuation allowance for deferred tax assets increased by
$1.9
million, which was mainly due to increases in the net operating losses. For the year ended
September 30, 2018,
the valuation allowance for deferred tax assets decreased by
$3.5
million, which was mainly due to offsetting increases in the net operating losses and the effect of the change in the federal tax rate to
21%.
 
Significant components of the Company’s deferred tax assets and liabilities are as follows:
 
   
As of September 30,
 
   
2019
   
2018
 
Deferred tax assets:
               
Accrued vacation
  $
46
    $
26
 
Bad debt reserve
   
24
     
49
 
Deferred revenue
   
717
     
90
 
AMT carryforward
   
23
     
22
 
Contribution carryforward
   
1
     
15
 
Depreciation
   
8
     
36
 
Intangibles
   
401
     
437
 
Net operating loss carryforwards
   
8,895
     
7,515
 
Total deferred tax assets
   
10,115
     
8,190
 
Valuation allowance
   
(10,093
)    
(8,168
)
Net deferred tax assets
  $
22
    $
22
 
 
Undistributed losses of the Company’s foreign subsidiaries amounted to approximately (
$108
) and (
$59
) at
September 30, 2019
and
2018,
respectively.
 
The
2017
Tax Act subjects a U.S. shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic
740,
No.
5,
Accounting for Global Intangible Low-Taxed Income provides that an entity
may
make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years, or provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. Additionally, the
2017
Tax Act provides for a tax benefit to U.S. taxpayers that sell goods or services to foreign customers under the new Foreign Derived Intangible Income Deduction ("FDII") rules. As of
September 30, 2019,
the Company had net losses in from all foreign derived income and therefore reported
zero
GILTI tax expense for the year ended
September 30, 2019.
 
The Company recognizes interest accrued related to unrecognized tax benefits in interest expense. Penalties, if incurred, are recognized as a component of tax expense.
 
The Company is subject to U.S. federal income tax as well as income tax in certain state jurisdictions. The Company has
not
been audited by the Internal Revenue Service (IRS) or any states in connection with income taxes. The tax periods from
2015
to
2018
generally remain open to examination by the IRS and state authorities.
 
When accounting for uncertain income tax positions, the impact of uncertain tax positions is recognized in the financial statements if they are more likely than
not
of being sustained upon examination, based on the technical merits of the position. The Company’s management has determined that the Company has
no
uncertain tax positions requiring recognition as of
September 30, 2019
and
2018.
The Company does
not
expect any change to this determination in the next
twelve
months.