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Income and Other Taxes
 12 Months Ended
Sep. 30, 2023
Income Tax Disclosure [Abstract]  
Income and Other Taxes Income and Other Taxes
The Company’s loss from continuing operations before income taxes consisted of the following:
Year Ended September 30,
(in thousands)20232022
Domestic$(49,371)$(40,608)
Foreign— (292)
Loss before income taxes$(49,371)$(40,900)

The Company’s income tax expense (benefit) consisted of the following:
Year Ended September 30,
(in thousands)20232022
Federal:
Current$— $(125)
Deferred(12)12 
(12)(113)
State:
  Current65 (37)
  Deferred(11)11 
54 (26)
Foreign:
Current— — 
Deferred— — 
Total income tax expense (benefit)$42 $(139)

A reconciliation of the provision for income taxes, with the amount computed by applying the statutory U.S. federal and state income tax rates to continuing operations loss before provision for income taxes is as follows:
Year Ended September 30,
(in thousands)20232022
Income tax benefit computed at U.S. federal statutory rate$(10,368)$(8,589)
State tax expense (benefit), net of U.S. federal effect54 (27)
Foreign tax rate differential355 (7)
Shortfall from stock based compensation1,204 141 
Other20 85 
Federal benefit on PPP loan forgiveness15 — 
Net operating loss carryforward expiration12,839 11,705 
Change in valuation allowance(4,077)(3,447)
Income tax expense (benefit)$42 $(139)
Effective tax rate0.1  %(0.3) %

Significant components of deferred tax assets (liabilities) are as follows:
September 30,
(in thousands)20232022
Federal net operating loss carryforwards$78,872 $94,691 
Foreign net operating loss carryforwards— 1,135 
Income tax credit carryforwards355 592 
Inventory reserves1,666 735 
Accounts receivable reserves60 57 
Accrued warranty reserve103 115 
State net operating loss carryforwards7,547 7,888 
Stock compensation1,203 1,352 
Deferred compensation1,022 465 
Fixed assets and intangibles5,276 1,212 
ROU lease liability5,751 5,862 
ROU lease assets(5,195)(5,724)
Capitalized Research expense3,385 — 
Other2,935 2,443 
Total deferred tax assets102,981 110,823 
Valuation allowance(102,981)(110,846)
Net deferred tax liabilities$— $(23)

For the fiscal years ended September 30, 2023 and 2022, the Company recorded income tax expense of approximately $42.0 thousand and income tax benefit of approximately $0.1 million, respectively. Income tax expense for the fiscal year ended September 30, 2023 is comprised primarily of state minimum tax expense. Income tax benefit for the fiscal year ended September 30, 2022 is comprised primarily federal refund of AMT credit and state minimum tax expense.

For the fiscal years ended September 30, 2023 and 2022, the effective tax rate on operations was 0.1%, and (0.3)%, respectively. The lower tax rate for the fiscal year ended September 30, 2023 is primarily due to the reversal of tax expense related to the change on indefinite-lived intangible assets. The Company uses some estimates to forecast permanent differences between book and tax accounting.

We have not provided for income taxes on non-U.S. subsidiaries’ undistributed earnings as of September 30, 2023 because we plan to indefinitely reinvest the unremitted earnings of the non-U.S. subsidiaries and all of the non-U.S. subsidiaries historically have negative earnings and profits.

All deferred tax assets have a full valuation allowance at September 30, 2023. On a quarterly basis, the Company evaluates the positive and negative evidence to assess whether the more likely than not criteria, has been satisfied in determining whether there will be further adjustments to the valuation allowance.

As of September 30, 2023, the Company had net operating loss carryforwards for U.S. federal income tax purposes of approximately $391.5 million which begin to expire in 2024. As of September 30, 2023, the Company had state net operating loss carryforwards of approximately $95.0 million which begin to expire in 2024. As of September 30, 2023, the Company also had tax credits (primarily foreign income and U.S. research and development tax credits) of approximately $0.3 million. The research credits begin to expire in 2024. Utilization of net operating loss and tax credit carryforwards are subject to a substantial annual limitation due to the ownership change limitations set forth in Section 382 (“Section 382”) of the Internal Revenue Code of 1986, as amended (the “Code”) and similar state provisions. The Company prepared an Internal Revenue Code 382 analysis to determine the annual limitations on the Company’s consolidated net operating loss carryforwards. As a result of the $391.5 million of U.S. net operating loss carryforwards, approximately $111.6 million is subject to an annual limitation and $279.9 million of the net operating losses are not subject to an annual limitation. Such annual limitations could result in the expiration of the net operating loss and tax credit carryforwards before utilization.