Income Taxes

12 Months Ended

Sep. 30, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Note 16: 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, 2025 and 2024 is as follows (in $000’s):

	Year Ended September 30, 2025		Year Ended September 30, 2024
Current expense:
Federal	$	2,411	$	1,696
State	361		528
	2,772		2,224
Deferred expense (benefit):
Federal	2,443		(5,311)
State	445		(1,571)
	2,888		(6,882)
Total income tax (benefit) expense	$	5,660	$	(4,658)

A reconciliation of the differences between the effective and statutory income tax rates for years ended September 30, 2025 and 2024:

	Year Ended September 30, 2025		Year Ended September 30, 2024
Federal statutory rates	21.0	%	(21.0	%)
State income taxes, net of federal benefit	5.6	%	(6.2	%)
Goodwill impairment	—	%	8.8	%
Non-taxable income	(2.6	%)	—	%
Permanent differences	0.2	%	0.1	%
Investments	—	%	4.6	%
Stock compensation	0.5	%	—	%
Change in tax rates	(0.6	%)	3.6	%
Tax credits	(0.3	%)	(0.2)	%
Change in valuation allowance	0.4	%	(4.4)	%
Other	(4.3)	%	(0.4	%)
Effective rate	19.9	%	(15.2	%)

At September 30, 2025 and 2024, deferred income tax assets and liabilities were comprised of (in $000’s):

	September 30, 2025		September 30, 2024
Deferred income tax assets (liabilities):
Allowance for bad debts	$	149	$	192
Accrued expenses/reserves	4		24
Inventory	2,201		2,594
Accrued compensation	200		197
Research and development	496		564
Net operating loss	2,203		2,320
Tax credits	581		508
Stock compensation	144		247
Intangibles	(10,394)		(4,972)
Property & equipment	(10,997)		(12,544)
Right of use assets	(14,113)		(15,201)
Lease liabilities	15,381		17,192
Interest carryforwards	7,321		4,827
Subtotal income tax assets (liabilities)	(6,824)		(4,052)
Less: Valuation allowance	(2,332)		(2,215)
Total deferred income tax liability	$	(9,156)	$	(6,267)

The Company has federal and state net operating loss carryforwards of approximately $7.4 million and $9.1 million, respectively, as of September 30, 2025. 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 separate return limitations. The Company has IRC Sec. 163(j) interest carryforwards of approximately $27.6 million as of September 30, 2025, which have an indefinite carryforward period. The Company has state tax credit carryforwards as of September 30, 2025 of approximately $0.7 million. For the year ended September 30, 2025, the Company received approximately $2.1 million in Employer Retention Credit refunds related to the 2020 and 2021 calendar years. These refunds were recorded as other income in the Company’s consolidated statements of income (loss) for the year ended September 30, 2025.

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 $2.3 million at September 30, 2025 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, 2025. The Company is currently not under audit in any jurisdictions. The 2020 through 2023 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.

On July 4, 2025, the One Big Beautiful Bill Act was enacted, making permanent and expanding several corporate tax provisions originally introduced under the Tax Cuts and Jobs Act of 2017. The key changes include, immediate expensing of research and experimentation costs, restoration of EBITDA-based interest deductibility under §163(j), and extension of 100% bonus depreciation through 2030. The Company has evaluated the impact of these provisions and anticipates improvement in near-term cash flows related to income taxes beginning in fiscal year 2026.