Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.23.4
Income Taxes
 12 Months Ended
Sep. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes
Note 18:    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, 2023 and 2022 is as follows (in $000’s):
Year Ended
September 30,
2023		 Year Ended
September 30,
2022
Current expense:
Federal $ 3,821  $ 524 
State 603  329 
4,424  853 
Deferred (benefit) expense:
Federal (2,228) 5,051 
State (625) 971 
(2,853) 6,022 
Total income tax expense $ 1,571  $ 6,875 
A reconciliation of the differences between the effective and statutory income tax rates for years ended September 30, 2023 and 2022:
Year Ended
September 30,
2023		 Year Ended
September 30,
2022
Federal statutory rates 21.0  % 21.0  %
State income taxes, net of federal benefit 5.9  % 4.0  %
Permanent differences (2.9  %) 3.2  %
Transaction costs
 27.9  % —  %
Investments
 (71.9) % —  %
Bankruptcy gain exclusion —  % (9.0  %)
Stock compensation 4.9  % 3.8  %
Change in tax rates
 41.4  % —  %
Tax credits
 (3.1  %) —  %
Change in valuation allowance 73.4  % (0.2) %
Other 0.4  % (1.0  %)
Effective rate 97.0  % 21.8  %
At September 30, 2023 and 2022, deferred income tax assets and liabilities were comprised of (in $000’s):
September 30,
2023		 September 30,
2022
Deferred income tax assets (liabilities):
Allowance for bad debts $ 167  $ 53 
Accrued expenses/reserves
 (25) (172)
Inventory 1,841  1,132 
Accrued compensation 180  150 
Research and development
 121  — 
Net operating loss 2,321  508 
Tax credits 499  475 
Stock compensation 235  265 
Intangibles (7,273) (2,952)
Property & equipment (12,681) (8,843)
Right of use assets (13,933) (8,817)
Lease liabilities 15,256  9,609 
Interest carryforwards
 1,452  — 
Investments
 253  560 
Capital loss carryforwards
 1,156  — 
Less: Valuation allowance (3,604) (786)
Total deferred income tax (liability)
 $ (14,035) $ (8,818)

The Company has federal and state net operating loss carryforwards of approximately $7.8 million and $10.8 million, respectively, as of September 30, 2023. The Company has placed a valuation allowance of approximately $7.0 million on the federal net operating loss carryforward due to Sec. 382 limitations. Additionally, the Company has placed a full valuation allowance against their state net operating loss carryforwards due to Sec. 382 and separate return limitations. The Company has Sec. 163(j) interest carryforwards of approximately $5.1 million as of September 30, 2023, which have an indefinite carryforward period. The Company has state tax credit carryforwards as of September 30, 2023 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 $3.6 million at September 30, 2023 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, 2023. The Company is not under examination in any jurisdiction as of September 30, 2023. 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.