Note 10 - Income Taxes

9 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

10.

Income Taxes

For the

three

and

nine

months ended

June 30, 2017,

the Company recorded a provision for income taxes of

$593,000

and

$1,393,000,

respectively, reflecting an effective tax rate of

42.5%

and

35.0%,

respectively. The primary difference between the effective tax rate and the statutory tax rate is related to nondeductible meals and entertainment, favorable domestic manufacturing deduction and research and development credits, expenses related to equity award compensation and unfavorable discrete items for the

three

and

nine

months ended

June 30, 2017

from tax shortfalls related to stock-based compensation awards.

As of both

June 30, 2017

and

September 30, 2016,

the Company had a remaining valuation allowance of approximately

$322,000

related to state net operating loss carry forwards the Company does

not

expect to utilize. Based on the Company’s analysis and review of long-term forecasts and all available evidence, the Company has determined that there should be

no

change in this existing valuation allowance in the quarter ended

June 30, 2017.

For the

three

and

nine

months ended

June 30, 2016,

the Company recorded a provision for income taxes of

$1,141,392

and

$2,356,945,

respectively, reflecting an effective tax rate of

32.6%

and

30.6%,

respectively. The primary difference between the effective tax rate and the statutory tax rate is related to nondeductible meals and entertainment, expenses related to equity award compensation and favorable discrete items for the

three

and

nine

months ended

June 30, 2016

from tax benefits related to stock-based compensation awards and research and development credits which were permanently extended in

December 2015

by the federal government.

Deferred taxes recognize the impact of temporary differences between the amounts of the assets and liabilities recorded for financial statement purposes and these amounts measured in accordance with tax laws. The Company’s realization of deferred tax temporary differences is contingent upon future taxable earnings. The Company reviewed its deferred tax assets for expected utilization using a “more likely than

not”

criteria by assessing the available positive and negative factors surrounding its recoverability.

As of

June 30, 2017,

we do

not

have any unrecognized tax benefits. It is the Company’s practice to recognize interest and penalties accrued on any unrecognize

d tax benefits as a component of income tax expense. The Company does

not

expect any material changes in its unrecognized tax positions over the next

12

months.