Income Taxes

9 Months Ended

Jun. 30, 2022

Income Taxes

Income Taxes

12.            Income Taxes

An income tax expense of $11 thousand was recorded for the three months ended June 30, 2022 compared to an income tax expense of $35 thousand for the same period of 2021. An income tax expense of $28 thousand was recorded for the nine months ended June 30, 2022 compared to an income tax expense of $868 thousand for the same period of 2021. The income tax expense for the three and nine months ended June 30, 2022 is primarily driven by minimum state tax expenses, as the Company continues to maintain a full valuation allowance on their operations. The income tax expense for the three and nine months ended June 30, 2021 was driven by an increase in the valuation allowance against deferred tax assets in the period, offset by a benefit recorded for a change in tax law, allowing for the immediate deduction of covered expenses incurred through the Paycheck Protection Program.

We have in general historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full calendar year to ordinary income or loss for the reporting period. However, we used a discrete effective tax rate method to calculate income taxes for the quarter ended June 30, 2022 because we determined that our ordinary income or loss cannot be reliably estimated and small changes in estimated ordinary income would result in significant changes in the estimated annual effective tax rates.