Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.24.4
Income Taxes
 12 Months Ended
Sep. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
Note 17: Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
Income tax expense for the years ended September 30, 2024 and 2023 is as follows (in $000’s):
Year Ended
September 30,
2024		 Year Ended
September 30,
2023
Current expense:
Federal $ 1,696  $ 3,821 
State 528  603 
2,224  4,424 
Deferred (benefit) expense:
Federal (5,311) (2,228)
State (1,571) (625)
(6,882) (2,853)
Total income tax (benefit) expense
 $ (4,658) $ 1,571 
A reconciliation of the differences between the effective and statutory income tax rates for years ended September 30, 2024 and 2023:
Year Ended
September 30,
2024		 Year Ended
September 30,
2023
Federal statutory rates (21.0  %) 21.0  %
State income taxes, net of federal benefit (6.2  %) 5.9  %
Goodwill impairment
 8.8  % —  %
Permanent differences 0.1  % (2.9) %
Transaction costs
 —  % 27.9  %
Investments
 4.6  % (71.9  %)
Stock compensation —  % 4.9  %
Change in tax rates
 3.6  % 41.4  %
Tax credits
 (0.2  %) (3.1) %
Change in valuation allowance (4.4) % 73.4  %
Other (0.4) % 0.4  %
Effective rate (15.2  %) 97.0  %
At September 30, 2024 and 2023, deferred income tax assets and liabilities were comprised of (in $000’s):
September 30,
2024		 September 30,
2023
Deferred income tax assets (liabilities):
Allowance for bad debts $ 192  $ 167 
Accrued expenses/reserves
 24  (25)
Inventory 2,594  1,841 
Accrued compensation 197  180 
Research and development
 564  121 
Net operating loss 2,320  2,321 
Tax credits 508  499 
Stock compensation 247  235 
Intangibles (4,972) (7,273)
Property & equipment (12,544) (12,681)
Right of use assets (15,201) (13,933)
Lease liabilities 17,192  15,256 
Interest carryforwards
 4,827  1,452 
Investments
 —  253 
Capital loss carryforwards
 —  1,156 
Subtotal income tax assets (liabilities)
 (4,052) (10,431)
Less: Valuation allowance (2,215) (3,604)
Total deferred income tax liability
 $ (6,267) $ (14,035)

The Company has federal and state net operating loss carryforwards of approximately $7.6 million and $9.3 million, respectively, as of September 30, 2024. The Company has placed a valuation allowance of approximately $6.3 million on the federal net operating loss carryforward due to Internal Revenue Code Section ("IRC Sec.") 382 limitations. Additionally, the Company has placed a full valuation allowance against their state net operating loss carryforwards due to IRC Sec. 382 and separate return limitations. The Company has IRC Sec. 163(j) interest carryforwards of approximately $17.5 million as of September 30, 2024, which have an indefinite carryforward period. The Company has state tax credit carryforwards as of September 30, 2024 of approximately $0.6 million.
The Company evaluates all available evidence to determine if a valuation allowance is needed to reduce its deferred tax assets. Management has concluded that it is more likely than not that a portion of its existing tax benefits will not be realized. Accordingly, the Company has recorded a valuation allowance of approximately $2.2 million at September 30, 2024 to reduce its deferred tax assets.
The Company annually conducts an analysis of its tax positions and has concluded that it has no uncertain tax positions as of September 30, 2024. The Company is currently under audit in the state of Wisconsin, however, the Company does not anticipate any material adjustments by the state. The 2019 through 2022 tax years are open to examination by the various federal and state jurisdictions in which the Company operates. The Company’s policy is to record uncertain tax positions as a component of income tax expense.