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<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" margin: 0pt 0; font-size: 10pt"><div style="display: inline; font-weight: bold;">Note <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1.</div> Basis of Presentation</div></div> <div style=" margin: 0pt 0; font-size: 10pt"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><div style="display: inline; color: black">The accompanying (a) condensed balance sheet as of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> September 30, 2018, </div>which has been derived from audited financial statements, and (b) unaudited interim condensed financial statements as of and for the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>have been prepared by Clearfield, Inc. (the “Company”) in accordance with accounting principles generally accepted in the United States of America for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission. Pursuant to these rules and regulations, certain financial information and footnote disclosures normally included in the financial statements have been condensed or omitted. However, in the opinion of management, the financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the financial position and results of operations and cash flows of the interim periods presented. </div>Operating results for the interim periods presented are <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> necessarily indicative of results to be expected for the full year or for any other interim period, due to variability in customer purchasing patterns and seasonal, operating and other factors. <div style="display: inline; color: black">These condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">10</div>-K for the year ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> September 30, 2018.</div></div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">In preparation of the Company’s financial statements, management is required to make estimates and assumptions that affect reported amounts of assets and liabilities and related revenues and expenses during the reporting periods. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><div style="display: inline; font-weight: bold;">Recently Adopted Accounting Pronouncements</div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><div style="display: inline; font-weight: bold;"> </div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">Effective <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> October 1, 2018, </div>we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2014</div>-<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">09,</div> <div style="display: inline; font-style: italic;">Revenue from Contracts with Customers (Topic <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">606</div>)</div>, and ASU <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2015</div>-<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">14,</div> <div style="display: inline; font-style: italic;">Revenue from Contracts with Customers (Topic <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">606</div>): Deferral of Effective Date,</div> which deferred the effective date of ASU <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2014</div>-<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">09</div> by <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">one</div> year. ASU <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2014</div>-<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">09</div> supersedes the revenue recognition requirements in ASC <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">605,</div> <div style="display: inline; font-style: italic;">Revenue Recognition,</div> and is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. It also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue, cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The adoption of ASU <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2014</div>-<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">09,</div> using the modified retrospective approach, had <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">no</div> material impact on our results of operations, cash flows, or financial position. Revenue continues to be recognized at a point in time for our product sales when products are delivered to or picked up by the customer and revenue for shipping and handling charges continues to be recognized when products are delivered to or picked up by the customer. Additional information and disclosures required by this new standard are contained in Note <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5,</div> “Revenue.”</div></div>
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<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" margin: 0pt 0; font-size: 10pt; text-align: justify"><div style="display: inline; font-weight: bold;">Note <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3.</div> Cash, Cash Equivalents and Investments</div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify"><div style="display: inline; font-weight: bold;"> </div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><div style="display: inline; color: black">The Company currently invests its excess cash in money market accounts, treasury securities, and bank certificates of deposit (CDs) with a term of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> more than <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">five</div> years. CDs with original maturities of more than <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> months are reported as held-to-maturity investments</div> and are carried at amortized cost. Investments maturing in less than <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">one</div> year are classified as short term investments on the balance sheet, and investments maturing in <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">one</div> year or greater are classified as long term investments on the balance sheet.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">The maturity dates of the Company’s treasury securities and CDs as of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> September 30, 2018 </div>are as follows:</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div> <table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; min-width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid"><div style=" margin-top: 0; margin-bottom: 0">March 31,</div> <div style=" margin-top: 0; margin-bottom: 0">2019</div></td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid"><div style=" margin-top: 0; margin-bottom: 0">September 30,</div> <div style=" margin-top: 0; margin-bottom: 0">2018</div></td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%; font-size: 10pt; text-align: left">Less than one year</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 15%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">17,048,473</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 15%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">8,930,225</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; padding-bottom: 1pt">1-5 years</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">18,574,000</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">17,974,000</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; padding-bottom: 2.5pt">Total</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">35,622,473</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">26,904,225</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> </tr> </table> </div></div>
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<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" margin: 0pt 0; font-size: 10pt; text-align: justify"><div style="display: inline; font-weight: bold;">Note <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">7.</div> Major Customer Concentration</div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">For the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div>Customers A and B comprised <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">17%</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">10%,</div> respectively, of the Company’s net sales. Both Customers A and B are distributors. For the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div>Customers A and C comprised <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">18%</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">11%,</div> respectively, of the Company’s net sales. Customer C is a private label original equipment manufacturer. For the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2018, </div>Customers A and B comprised <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">25%</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">16%,</div> respectively, of the Company’s net sales. For the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2018, </div>Customers A and B comprised <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">24%</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">14%,</div> respectively, of the Company’s net sales.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">As of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div>Customer B comprised <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13%</div> of the Company’s accounts receivable. As of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> September 30, 2018, </div>Customers C, A, and B comprised <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">35%,</div> <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">10%,</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">10%,</div> respectively, of the Company’s accounts receivable.</div></div>
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<div style="display: inline; font-family: times new roman; font-size: 10pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; min-; min-width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="6" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">Three Months Ended March 31,</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="6" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">Six Months Ended March 31,</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2019</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2018</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2019</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2018</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; font-size: 10pt; text-align: left">United States</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">17,136,328</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">16,065,902</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">35,640,795</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">31,563,562</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1pt">All other countries</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,948,037</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">764,993</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3,532,720</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2,134,217</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; padding-bottom: 2.5pt">Total Net Sales</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">19,084,365</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">16,830,895</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">39,173,515</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">33,697,779</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> </tr> </table></div><div style="display: inline; font-family: times new roman; font-size: 10pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; min-; min-width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="6" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">Three Months Ended March 31,</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="6" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">Six Months Ended March 31,</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2019</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2018</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2019</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2018</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; font-size: 10pt; text-align: left">Broadband service providers</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">94</div></td> <td style="width: 1%; font-size: 10pt; text-align: left">%</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">95</div></td> <td style="width: 1%; font-size: 10pt; text-align: left">%</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">94</div></td> <td style="width: 1%; font-size: 10pt; text-align: left">%</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">95</div></td> <td style="width: 1%; font-size: 10pt; text-align: left">%</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1pt">Build-to-print customers</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">6</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left">%</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left">%</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">6</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left">%</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left">%</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; padding-bottom: 2.5pt">Total Net Sales</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">100</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left">%</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">100</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left">%</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">100</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left">%</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">100</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left">%</td> </tr> </table></div>
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" margin: 0pt 0; font-size: 10pt"><div style="display: inline; font-weight: bold;">Note <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">4.</div> Stock-Based Compensation</div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify"><div style="display: inline; font-weight: bold;"> </div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">The Company recorded <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$563,666</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$1,102,190</div> of compensation expense related to current and past stock option grants, restricted stock grants and the Company’s Employee Stock Purchase Plan (“ESPP”) for the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div>respectively. For the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$532,425</div> of this expense is included in selling, general and administrative expense, and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$31,241</div> is included in cost of sales. For the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$1,039,709</div> of this expense is included in selling, general and administrative expense, and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$62,481</div> is included in cost of sales. The Company recorded <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$485,794</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$969,081</div> of compensation expense related to current and past stock option grants, restricted stock grants and the Company’s ESPP for the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2018, </div>respectively. For the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2018, </div><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$443,763</div> of this expense is included in selling, general and administrative expense, and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$42,031</div> is included in cost of sales. For the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2018, </div><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$885,020</div> of this expense is included in selling, general and administrative expense, and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$84,061</div> is included in cost of sales. As of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$2,965,292</div> of total unrecognized compensation expense related to non-vested equity awards is expected to be recognized over a period of approximately <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5.4</div> years.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><div style="display: inline; font-weight: bold;">Stock Options</div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><div style="display: inline; font-weight: bold;"> </div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">The Company uses the Black-Scholes option pricing model to determine the weighted average fair value of stock options granted. During the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div>the Company granted employees non-qualified stock options to purchase an aggregate of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">172,000</div> shares of common stock with a weighted average contractual term of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">four</div> years, a <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> year vesting term, and a weighted average exercise price of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$12.17.</div> There were <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">no</div> stock options granted during the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2018. </div>The weighted-average fair value at the grant date for options issued during the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>was <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$3.53.</div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt"></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">This fair value was estimated at the grant date using the assumptions listed below:</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div> <table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; min-width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt; text-align: center"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">Six months ended <br />March 31, 2019</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 82%; font-size: 10pt; text-align: left">Dividend yield</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 15%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">0</div></td> <td style="width: 1%; font-size: 10pt; text-align: left">%</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt">Weighted average expected volatility</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">37.77</div></td> <td style="font-size: 10pt; text-align: left">%</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt">Weighted average risk-free interest rate</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2.92</div></td> <td style="font-size: 10pt; text-align: left">%</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt">Weighted average expected life (years)</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3.0</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt">Vesting period (years)</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3.0</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> </table> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">The expected stock price volatility is based on the historical volatility of the Company’s stock for a period approximating the expected life. The expected life represents the period of time that options are expected to be outstanding after their grant date. The risk-free interest rate reflects the interest rate at grant date on <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">zero</div>-coupon U.S. governmental bonds having a remaining life similar to the expected option term.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">Options are granted at fair market values determined on the date of grant and vesting normally occurs over a <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> to <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">five</div>-year period. However, options granted to directors have a <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">one</div> year vesting period and a <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div>-year contractual term. The maximum contractual term is normally <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> years. Shares issued upon exercise of a stock option are issued from the Company’s authorized but unissued shares.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">The following is a summary of stock option activity during the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019:</div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div> <table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; min-width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt; text-align: center"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">Number of <br />options</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid"><div style=" margin-top: 0; margin-bottom: 0">Weighted average</div> <div style=" margin-top: 0; margin-bottom: 0">exercise price</div></td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%; font-size: 10pt">Outstanding as of September 30, 2018</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 15%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">138,500</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 15%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">10.99</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; padding-left: 10pt">Granted</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">172,000</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">12.17</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; padding-left: 10pt">Exercised</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">(6,750</div></td> <td style="font-size: 10pt; text-align: left">)</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2.58</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1pt; padding-left: 10pt">Cancelled or Forfeited</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">- </div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">- </div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; padding-bottom: 2.5pt">Outstanding as of March 31, 2019</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">303,750</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">11.85</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> </tr> </table> </div> <div style=" margin: 0pt 0 0pt 9.35pt; font-size: 10pt; text-indent: -0.35pt"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. As of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div>the weighted average remaining contractual term for all outstanding and exercisable stock options was <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1.4</div> years and their aggregate intrinsic value was <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$287,850.</div> During the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div>the Company received proceeds of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$24</div> from the exercise of stock options. During the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2018, </div>exercised stock options totaled <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">6,100</div> shares, resulting in proceeds of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$17,949</div> from the exercise of stock options.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><div style="display: inline; font-weight: bold;">Restricted Stock</div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">The Company’s <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2007</div> Stock Compensation Plan permits its Compensation Committee to grant stock-based awards, including stock options and restricted stock, to key employees and non-employee directors. The Company has made restricted stock grants that vest over <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">one</div> to <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">ten</div> years.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">During the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div>the Company granted non-employee directors elected at the Company’s <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2019</div> Annual Meeting of Shareholders restricted stock awards totaling <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">4,340</div> shares of common stock, with a vesting term of approximately <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">one</div> year and a fair value of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$14.40</div> per share.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">During the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2018, </div>the Company granted non-employee directors elected at the Company’s <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2018</div> Annual Meeting of Shareholders restricted stock awards totaling <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">4,235</div> shares of common stock, with a vesting term of approximately <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">one</div> year and a fair value of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$14.75</div> per share.</div> <div style=" margin: 0pt 0; font-size: 10pt"> </div> <div style=" margin: 0pt 0; font-size: 10pt"></div> <!-- Field: Page; Sequence: 9; Value: 3 --> <div style=" margin: 0pt 0; font-size: 10pt"></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">Restricted stock transactions during the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>are summarized as follows:</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div> <table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; min-width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt; text-align: center"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid"><div style=" margin-top: 0; margin-bottom: 0">Number of</div> <div style=" margin-top: 0; margin-bottom: 0">shares</div></td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid"><div style=" margin-top: 0; margin-bottom: 0">Weighted average</div> <div style=" margin-top: 0; margin-bottom: 0">grant date fair value</div></td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%; font-size: 10pt">Unvested shares as of September 30, 2018</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 15%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">248,613</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 15%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">14.65</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; padding-left: 10pt">Granted</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">4,340</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">14.40</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; padding-left: 10pt">Vested</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">(5,935</div></td> <td style="font-size: 10pt; text-align: left">)</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">14.43</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; padding-bottom: 1pt; padding-left: 10pt">Forfeited</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">(4,692</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left">)</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">15.05</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; padding-bottom: 2.5pt">Unvested as of March 31, 2019</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">242,326</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">14.64</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> </tr> </table> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><div style="display: inline; font-weight: bold;">Employee Stock Purchase Plan </div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><div style="display: inline; font-weight: bold;"> </div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">The Company’s ESPP allows participating employees to purchase shares of the Company’s common stock at a discount through payroll deductions. The ESPP is available to all employees subject to certain eligibility requirements. Terms of the ESPP provide that participating employees <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> may </div>purchase the Company’s common stock on a voluntary after-tax basis. Employees <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> may </div>purchase the Company’s common stock at a price that is <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">no</div> less than the lower of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">85%</div> of the fair market value of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">one</div> share of common stock at the beginning or end of each stock purchase period or phase. The ESPP is carried out in <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> month phases, with phases beginning on <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> January 1 </div>and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> July 1 </div>of each calendar year. For the phases that ended on <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> December 31, 2018 </div>and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> December 31, 2017, </div>employees purchased <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">17,312</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">14,242</div> shares at a price of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$8.43</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$10.41</div> per share, respectively. After the employee purchase on <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> December 31, 2018, </div><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">69,769</div> shares of common stock were available for future purchase under the ESPP.</div></div>
0.02
-0.02
0.10
0.05
0.02
-0.02
0.10
0.05
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" margin: 0pt 0; font-size: 10pt"><div style="display: inline; font-weight: bold;">Note <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2.</div> Net Income (Loss) Per Share</div></div> <div style=" margin: 0pt 0; font-size: 10pt"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">Basic net income (loss) per common share (“EPS”) is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the reporting period. Diluted EPS equals net income (loss) divided by the sum of the weighted average number of shares of common stock outstanding plus all additional common stock equivalents, such as stock options and restricted stock awards, when dilutive.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div><div style=" margin: 0pt 0; font-size: 10pt"></div> <div style=" margin: 0pt 0; font-size: 10pt"></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">The following is a reconciliation of the numerator and denominator of the net income (loss) per common share computations for the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2018:</div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div> <table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; min-width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt; text-align: justify"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="6" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">Three Months Ended March 31,</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="6" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">Six Months Ended March 31,</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt; text-align: justify"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2019</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2018</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2019</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2018</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; font-size: 10pt; text-align: left; text-indent: 0in">Net income (loss)</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">367,942</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">(305,376</div></td> <td style="width: 1%; font-size: 10pt; text-align: left">)</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,377,902</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">637,782</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; text-indent: 0in">Weighted average common shares</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,422,222</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,450,482</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,411,183</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,447,178</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1pt; text-indent: 0in">Dilutive potential common shares</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">27,990</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">- </div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,995</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">47,255</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; text-indent: 0in">Weighted average dilutive common shares outstanding</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,450,212</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,450,482</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,425,178</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,494,433</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; text-indent: 0in">Net income (loss) per common share:</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; text-indent: 0in; padding-left: 10pt">Basic</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">0.02</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">(0.02</div></td> <td style="font-size: 10pt; text-align: left">)</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">0.10</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">0.05</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; text-indent: 0in; padding-left: 10pt">Diluted</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">0.02</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">(0.02</div></td> <td style="font-size: 10pt; text-align: left">)</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">0.10</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">0.05</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> </table> </div></div>
0.212
0.223
-0.249
-0.911
2965292
P5Y146D
P20Y
-1594
4708511
4708511
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" margin: 0pt 0; font-size: 10pt"><div style="display: inline; font-weight: bold;">Note <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">8.</div> Goodwill and Patents</div></div> <div style=" margin: 0pt 0; font-size: 10pt"><div style="display: inline; font-weight: bold;"> </div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">The Company analyzes its goodwill for impairment annually or at an interim period when events occur or changes in circumstances indicate potential impairment. The result of the analysis performed in the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">fourth</div> quarter ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> September 30, 2018 </div>did <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> indicate an impairment of goodwill. During the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div>there were <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">no</div> triggering events that indicate potential impairment exists.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">The Company capitalizes legal costs incurred to obtain patents. Once accepted by either the U.S. Patent Office or the equivalent office of a foreign country, these legal costs are amortized using the straight-line method over the remaining estimated lives, <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> exceeding <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">20</div> years. As of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div>the Company has <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">17</div> patents granted and multiple pending applications both inside and outside the United States.</div></div>
0
0
7025243
6779834
14971941
13888241
35622473
26904225
18574000
17974000
17048473
8930225
466942
-406376
1772902
333782
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" margin: 0pt 0; font-size: 10pt"><div style="display: inline; font-weight: bold;">Note <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">9.</div> Income Taxes</div></div> <div style=" margin: 0pt 0; font-size: 10pt"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><div style="display: inline; color: black">For the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019, </div>the Company recorded a provision for income taxes of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$99,000</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$395,000,</div> respectively, reflecting an effective tax rate of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">21.2%</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">22.3%,</div> respectively. </div>The Tax Cut and Jobs Act of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2017</div> (the “Tax Reform Act”) was enacted on <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> December </div><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">22,</div> <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2017.</div> The Tax Reform Act reduced certain federal corporate income tax rates effective <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> January 1, 2018 </div>and changed certain other provisions. Additionally, differences between the effective tax rate and the statutory tax rate are related to nondeductible meals and entertainment, research and development credits and nondeductible stock compensation.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"></div> <!-- Field: Page; Sequence: 11; Value: 3 --> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">As of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> September 30, 2018, </div>the Company had a remaining valuation allowance of approximately <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$105,000</div></div> related to state net operating loss carry forwards the Company does <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> expect to utilize. As a result of recording the impact of the Tax Reform Act on its deferred assets and liabilities, the Company recorded an increase in its valuation allowance against state net operating losses carried forward of approximately <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$32,000</div> in the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2018. </div>Based on the Company’s analysis and review of long-term forecasts and all available evidence, the Company determined that there should be <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">no</div> further change in the valuation allowance for the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019.</div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><div style="display: inline; color: black">For the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2018, </div>the Company recorded a benefit for income taxes of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$101,000</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$304,000,</div> respectively, reflecting an effective tax rate of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">24.9%</div> and negative <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">91.1%,</div> respectively. </div>The effective tax rate for the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2018 </div>was a blended rate reflecting the anticipated benefit of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> quarters of federal tax rate reductions for fiscal <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2018.</div> Our <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months tax benefit reflected a lower tax rate and a <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">one</div>-time benefit of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$384,000</div> related to the favorable impact of a revaluation of our net deferred tax liability that decreased the income tax provision for the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2018 </div>and reduced long-term deferred tax liabilities during the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2018. </div>Additionally, differences between the effective tax rate and the statutory tax rate were related to nondeductible meals and entertainment, <div style="display: inline; color: black">expenses related to equity award compensation, </div>favorable domestic manufacturing deduction, and research and development credits.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">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 <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not”</div> criteria by assessing the available positive and negative factors surrounding its recoverability.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><div style="display: inline; color: black">As of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>we do <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> have any unrecognized tax benefits. It is the Company’s practice to recognize interest and penalties accrued on any unrecognize</div>d tax benefits as a component of income tax expense. The Company does <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> expect any material changes in its unrecognized tax positions over the next <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">12</div> months.</div></div>
99000
395000
-101000
-304000
-384000
1051716
23987
-3623266
-78265
-1776613
-354984
486554
71117
27990
13995
47255
5302721
5482555
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" margin: 0pt 0; font-size: 10pt"><div style="display: inline; font-weight: bold;">Note <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">6.</div> Inventories, net</div></div> <div style=" margin: 0pt 0; font-size: 10pt"><div style="display: inline; font-weight: bold;"> </div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">Inventories consist of the following as of:</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div> <table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; min-width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid"><div style=" margin-top: 0; margin-bottom: 0">March 31,</div> <div style=" margin-top: 0; margin-bottom: 0">2019</div></td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid"><div style=" margin-top: 0; margin-bottom: 0">September 30,</div> <div style=" margin-top: 0; margin-bottom: 0">2018</div></td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%; font-size: 10pt; text-align: left">Raw materials</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 15%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5,755,357</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 15%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">6,013,166</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt">Work-in-progress</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">712,003</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">560,988</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1pt">Finished goods</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,806,162</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3,475,981</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; padding-bottom: 2.5pt">Inventories, net</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">8,273,522</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">10,050,135</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> </tr> </table> </div></div>
1806162
3475981
8273522
10050135
5755357
6013166
712003
560988
169443
119379
304580
215101
<div style="display: inline; font-family: times new roman; font-size: 10pt"><table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; min-; min-width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid"><div style=" margin-top: 0; margin-bottom: 0">March 31,</div> <div style=" margin-top: 0; margin-bottom: 0">2019</div></td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid"><div style=" margin-top: 0; margin-bottom: 0">September 30,</div> <div style=" margin-top: 0; margin-bottom: 0">2018</div></td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%; font-size: 10pt; text-align: left">Less than one year</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 15%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">17,048,473</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 15%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">8,930,225</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; padding-bottom: 1pt">1-5 years</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">18,574,000</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">17,974,000</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; padding-bottom: 2.5pt">Total</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">35,622,473</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">26,904,225</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> </tr> </table></div>
5174742
5353766
76668998
74228642
4811310
4980791
363432
372975
18574000
17974000
139288
-79078
-9254000
-11578416
8472562
2262580
1377902
637782
1377902
367942
367942
637782
-305376
-305376
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" font-size: 10pt; font-style: italic; font-weight: bold; margin: 0pt 0"><div style="display: inline; font-style: normal">Note <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">10.</div> Accounting Pronouncements</div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">In <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> February 2016, </div>the FASB issued ASU <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2016</div>-<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">02,</div> <div style="display: inline; font-style: italic;">Leases</div>, which requires lessees to present right-of-use assets and lease liabilities on the balance sheet for all leases with terms longer than <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">12</div> months. The guidance is to be applied using a modified retrospective approach at the beginning of the earliest comparative period in the financial statements and is effective for fiscal years beginning after <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> December 15, 2018, </div>including interim periods within those fiscal years. Early adoption is permitted. <div style="display: inline; color: black">The Company has begun evaluating the new lease standard, including the review and implementation of the necessary changes to our existing processes and systems that will be required to implement this new standard. While we are unable to quantify the impact at this time, it is expected the adoption of this standard will lead to a material increase in the assets and liabilities recorded on the consolidated balance sheets.</div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><div style="display: inline; font-weight: bold;"> </div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">In <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> January 2017, </div>the FASB issued ASU <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2017</div>-<div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">04</div> which offers amended guidance to simplify the accounting for goodwill impairment by removing Step <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2</div> of the goodwill impairment test. A goodwill impairment will now be measured as the amount by which a reporting unit’s carrying value exceeds its fair value, limited to the amount of goodwill allocated to that reporting unit. This guidance is to be applied on a prospective basis effective for the Company’s interim and annual periods beginning after <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> January 1, 2020, </div>with early adoption permitted for any impairment tests performed after <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> January 1, 2017. </div>The Company does <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> believe the adoption of this ASU will have a material impact on our financial statements.</div></div>
297499
-525755
1468322
118681
105000
105000
1253635
742136
202516
227461
236024
6676
9262
10350000
12274393
4181075
551607
516341
0.01
0.01
500000
500000
0
0
0
0
145940
148259
3572000
3469000
24
17949
4412001
4744584
14632553
13254651
17136328
16065902
35640795
31563562
1948037
764993
3532720
2134217
19084365
16830895
39173515
33697779
<div style="display: inline; font-family: times new roman; font-size: 10pt"><div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0in"><div style="display: inline; font-weight: bold;">Note <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5.</div> Revenue</div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><div style="display: inline; font-weight: bold;">Revenue Recognition</div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">Net sales include products and shipping and handling charges. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract. We recognize revenue by transferring the promised products to the customer, with substantially all revenue recognized at the point in time the customer obtains control of the products. Revenue which has been recognized but <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> yet billed to the customer is recorded as a contract asset and is included in Other Current Assets on the condensed balance sheet. We recognize revenue for shipping and handling charges at the time the products are delivered to or picked up by the customer. The majority of our contracts have a single performance obligation and are short term in nature. Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-indent: 0.5in"><div style="display: inline; font-weight: bold;">Disaggregation of Revenue</div></div> <div style=" margin: 0pt 0; font-size: 10pt"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">The Company allocates sales from external customers to geographic areas based on the location to which the product is transported. Sales outside the United States are principally to countries in the Caribbean, Canada, Central and South America.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">Our revenues related to the following geographic areas were as follows for the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended:</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; min-width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="6" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">Three Months Ended March 31,</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="6" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">Six Months Ended March 31,</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2019</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2018</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2019</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2018</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; font-size: 10pt; text-align: left">United States</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">17,136,328</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">16,065,902</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">35,640,795</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">31,563,562</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1pt">All other countries</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,948,037</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">764,993</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3,532,720</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2,134,217</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; padding-bottom: 2.5pt">Total Net Sales</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">19,084,365</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">16,830,895</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">39,173,515</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">33,697,779</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> </tr> </table> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">In addition to a proprietary product line designed for the broadband service provider marketplace, Clearfield provides build-to-print services for original equipment manufacturers requiring copper and fiber cable assemblies built to their specification.</div> <div style=" margin: 0pt 0; font-size: 10pt"> </div> <div style=" margin: 0pt 0; font-size: 10pt"></div> <!-- Field: Page; Sequence: 10; Value: 3 --> <div style=" margin: 0pt 0; font-size: 10pt"></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">The percentages of our sales by markets were as follows for the <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">three</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">six</div> months ended:</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; min-width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="6" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">Three Months Ended March 31,</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="6" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">Six Months Ended March 31,</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2019</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2018</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2019</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2018</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; font-size: 10pt; text-align: left">Broadband service providers</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">94</div></td> <td style="width: 1%; font-size: 10pt; text-align: left">%</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">95</div></td> <td style="width: 1%; font-size: 10pt; text-align: left">%</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">94</div></td> <td style="width: 1%; font-size: 10pt; text-align: left">%</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">95</div></td> <td style="width: 1%; font-size: 10pt; text-align: left">%</td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1pt">Build-to-print customers</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">6</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left">%</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left">%</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">6</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left">%</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left">%</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; padding-bottom: 2.5pt">Total Net Sales</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">100</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left">%</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">100</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left">%</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">100</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left">%</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">100</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left">%</td> </tr> </table> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"><div style="display: inline; font-weight: bold;">Accounts Receivable</div></div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">Credit is extended based on the evaluation of a customer’s financial condition and collateral is generally <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">not</div> required. Accounts that are outstanding longer than the contractual payment terms are considered past due. The Company writes off accounts receivable when they become uncollectible; payments subsequently received on such receivables are credited to the allowance for doubtful accounts. As of <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> March 31, 2019 </div>and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;"> September 30, 2018, </div>the balance in the allowance for doubtful accounts was <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$289,085</div> and <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">$79,085,</div> respectively.</div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in"> </div> <div style=" margin: 0pt 0; font-size: 10pt; text-align: justify; text-indent: 0.5in">See Note <div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">7,</div> “Major Customer Concentration” for further information regarding accounts receivable and net sales.</div></div>
<div style="display: inline; font-family: times new roman; font-size: 10pt"><table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; min-; min-width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt; text-align: justify"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="6" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">Three Months Ended March 31,</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="6" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">Six Months Ended March 31,</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom"> <td style="font-size: 10pt; text-align: justify"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2019</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2018</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2019</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid">2018</td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; font-size: 10pt; text-align: left; text-indent: 0in">Net income (loss)</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">367,942</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">(305,376</div></td> <td style="width: 1%; font-size: 10pt; text-align: left">)</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,377,902</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 12%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">637,782</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; text-indent: 0in">Weighted average common shares</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,422,222</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,450,482</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,411,183</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,447,178</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1pt; text-indent: 0in">Dilutive potential common shares</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">27,990</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">- </div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,995</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">47,255</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; text-indent: 0in">Weighted average dilutive common shares outstanding</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,450,212</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,450,482</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,425,178</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">13,494,433</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; text-indent: 0in">Net income (loss) per common share:</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"> </td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; text-indent: 0in; padding-left: 10pt">Basic</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">0.02</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">(0.02</div></td> <td style="font-size: 10pt; text-align: left">)</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">0.10</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">0.05</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; text-indent: 0in; padding-left: 10pt">Diluted</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">0.02</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">(0.02</div></td> <td style="font-size: 10pt; text-align: left">)</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">0.10</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left">$</td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">0.05</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> </table></div>
<div style="display: inline; font-family: times new roman; font-size: 10pt"><table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; min-; min-width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid"><div style=" margin-top: 0; margin-bottom: 0">March 31,</div> <div style=" margin-top: 0; margin-bottom: 0">2019</div></td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid"><div style=" margin-top: 0; margin-bottom: 0">September 30,</div> <div style=" margin-top: 0; margin-bottom: 0">2018</div></td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%; font-size: 10pt; text-align: left">Raw materials</td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 15%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">5,755,357</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 15%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">6,013,166</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt">Work-in-progress</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">712,003</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">560,988</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; text-align: left; padding-bottom: 1pt">Finished goods</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">1,806,162</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">3,475,981</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; text-align: left; padding-bottom: 2.5pt">Inventories, net</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">8,273,522</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">10,050,135</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> </tr> </table></div>
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font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 15%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">138,500</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> <td style="width: 1%; font-size: 10pt"> </td> <td style="width: 1%; font-size: 10pt; text-align: left">$</td> <td style="width: 15%; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">10.99</div></td> <td style="width: 1%; font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; padding-left: 10pt">Granted</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">172,000</div></td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">12.17</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 10pt; padding-left: 10pt">Exercised</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">(6,750</div></td> <td style="font-size: 10pt; text-align: left">)</td> <td style="font-size: 10pt"> </td> <td style="font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">2.58</div></td> <td style="font-size: 10pt; 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background-color: rgb(204,238,255)"> <td style="font-size: 10pt; padding-bottom: 2.5pt">Outstanding as of March 31, 2019</td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">303,750</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> <td style="font-size: 10pt; padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: left">$</td> <td style="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">11.85</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> </tr> </table></div>
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<div style="display: inline; font-family: times new roman; font-size: 10pt"><table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; min-; min-width: 700px;"> <tr style="vertical-align: bottom"> <td style="font-size: 10pt; text-align: center"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid"><div style=" margin-top: 0; margin-bottom: 0">Number of</div> <div style=" margin-top: 0; margin-bottom: 0">shares</div></td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td colspan="2" style="font-size: 10pt; text-align: center; border-bottom: Black 1pt solid"><div style=" margin-top: 0; margin-bottom: 0">Weighted average</div> <div style=" margin-top: 0; margin-bottom: 0">grant date fair value</div></td> <td style="padding-bottom: 1pt; font-size: 10pt"> </td> </tr> <tr style="vertical-align: bottom; 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text-align: left"> </td> <td style="font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">14.43</div></td> <td style="font-size: 10pt; text-align: left"> </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-size: 10pt; padding-bottom: 1pt; padding-left: 10pt">Forfeited</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; font-style: italic; font-weight: inherit; font-style: normal;">(4,692</div></td> <td style="padding-bottom: 1pt; font-size: 10pt; text-align: left">)</td> <td style="font-size: 10pt; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: left"> </td> <td style="border-bottom: Black 1pt solid; font-size: 10pt; text-align: right"><div style="display: inline; 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font-weight: inherit; font-style: normal;">14.64</div></td> <td style="padding-bottom: 2.5pt; font-size: 10pt; text-align: left"> </td> </tr> </table></div>
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