Income Taxes

6 Months Ended

Mar. 31, 2023

Income Taxes

Income Taxes

12.            Income Taxes

An income tax expense of $71 thousand was recorded for the three months ended March 31, 2023 compared to an income tax expense of $5 thousand in the same period in the prior year. An income tax expense of $204 thousand was recorded for the six months ended March 31, 2023 compared to an income tax expense of $17 thousand in the same period in the prior year. The income tax expense for the for the three and six months ended March 31, 2023 was primarily driven by minimum state tax expenses and the required capitalization of R&D expenses under IRC Section 174, partially offset by the use of federal NOL and R&D credits. The Company continues to maintain a full valuation allowance on our operations but will continue to evaluate this need going forward. The income tax expense for the three and six months ended March 31, 2022 was primarily driven by minimum state tax expenses due to the full valuation allowance in place during the period.

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 March 31, 2023 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.