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.