Note 8 - Income Taxes

9 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

8. INCOME TAXES

At June 30, 2016, the Company had federal net operating losses (“NOLs”) and related state NOLs. The Company released $8,339,000 of its valuation allowance against its deferred tax assets in the quarter ended September 30, 2015 as it determined that it was more likely than not that those assets would be realized. The Company continues to maintain a valuation allowance of $12,175,000 as the Company believes that the negative evidence that it will be able to recover these net deferred tax assets outweighs the positive evidence.

The Company recorded an income tax benefit of $862,720 and income tax expense of $1,600, reflecting effective tax rates of 52.9% and 0.2% for the nine months ended June 30, 2016 and 2015, respectively. The nine months ended June 30, 2015 also included a $9,266 income tax benefit adjustment from the year ended September 30, 2014. The change in the effective tax rate in the nine months ended June 30, 2016, compared to the same period in the prior year, is primarily due to the partial release of our valuation allowance in the prior year, resulting in current year tax benefit.

ASC 740,

Accounting for Uncertainty in Income Taxes

, requires the Company to recognize in its consolidated financial statements uncertainties in tax positions taken that may not be sustained upon examination by the taxing authorities. If interest or penalties are assessed, the Company would recognize these charges as income tax expense. The Company has not recorded any income tax expense or benefit for uncertain tax positions.