Income Taxes

12 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

13.Income Taxes

The provision for income taxes consists of the following:

	Year Ended September 30,
	2023			2022			2021
	(in thousands)
Current
Federal	$	—		$	—		$	(39	)
State		560		231			202
	$	560		$	231		$	163
Deferred
Federal		(7,392	)		(47,879	)		4,494
State		(1,913	)		(4,342	)		1,171
	$	(9,305	)	$	(52,221	)	$	5,665
(Benefit) provision for income taxes	$	(8,745	)	$	(51,990	)	$	5,828

The reconciliation between the effective tax rate on income from continuing operations and the statutory tax rate is as follows:

	Year Ended September 30,
	2023			2022			2021
	(in thousands)
Income tax (benefit) provision at federal statutory rate	$	(26,555	)	$	(49,280	)	$	4,707
(Reduction) increase in income taxes resulting from:
State taxes, net of federal tax benefit		(2,062	)		(3,953	)	669
Nondeductible stock compensation expenses		313		251			(241)
Permanent items		225		206			292
Change in valuation allowances		18,201		(22)			(140)
162(m) limitation		285		11			12
Impact of changing rates on deferred tax assets		499		(247)			509
Expired tax attributes		200		964			152
Other		149		80				(132	)
Income tax (benefit) provision	$	(8,745	)	$	(51,990	)	$	5,828

The components of the Company's deferred taxes as of September 30, 2023 and 2022 are as follows:

	Year Ended September 30,
	2023			2022
	(in thousands)
Net operating loss carryforwards	$	125,306		$	131,897
Deferred credits		1,057			703
Other accrued expenses		1,234			1,769
Prepaids and other		556			1,175
Warrant liabilities		5,748			5,725
State alternative minimum tax		—			1
Other reserves and estimated losses		937			873
Operating lease liabilities		2,991			8,012
Deferred revenue		4,829			5,506
Interest expense carryforward		6,457			—
Gross deferred tax assets	$	149,115		$	155,661
Less: valuation allowance		(21,102	)		(2,901	)
Total net deferred tax assets	$	128,013		$	152,760
Intangible assets		—			(877	)
Operating lease right-of-use assets		(2,475	)		(2,055	)
Property and equipment		(131,805	)		(166,586	)
Unrealized gain on equity investments		(2,148	)		(961	)
Total deferred tax liabilities	$	(136,427	)	$	(170,479	)
Net deferred tax liabilities	$	(8,414	)	$	(17,719	)

The Company has federal and state income tax net operating losses (“NOL”) carryforwards of $562.6 million and $233.5 million, which expire in fiscal years 2027-2038 and 2023-2043, respectively. Approximately $194.2 million of our federal NOL carryforwards are not subject to expiration. These NOL carryovers are only available to offset 80% of taxable income in years in which they are utilized due to tax law changes as a result of the Tax Cuts and Jobs Act. The Company also has $29.1 million of interest expense carryovers as a result of 163j limitations as of September 30, 2023.

The Company cannot conclude that it is more likely than not that the benefit from certain federal and state NOL carryforwards will not be realized. In recognition of this uncertainty, the Company has provided a valuation allowance of $21.1 million as of September 30, 2023 and $2.9 million as of September 30, 2022 on the deferred tax assets related to these state NOL carryforwards. If or when recognized, the tax benefits related to any reversal of the valuation allowance on deferred tax assets will be recognized as a reduction of income tax expense.

The federal and state NOL carryforwards in the income tax returns filed included unrecognized tax benefits. The deferred tax assets recognized for those NOLs are presented net of these unrecognized tax benefits.

Because of the change of ownership provisions of the Tax Reform Act of 1986, use of a portion of our NOL and tax credit carryforwards may be limited in future periods. Further, a portion of the carryforwards may expire before being applied to reduce future income tax liabilities. The Company determined it had an ownership change in February of 2009. Based on the study conducted at that time, a portion of the federal NOLs were determined to be limited by IRC Section 382, resulting in the Company writing off a portion of its NOLs at that time. Additionally, the Company’s initial public offering in August of 2018 resulted in a change in ownership under Section 382 of the Internal Revenue Code. The Company completed an update to the analysis of any potential limitation on the use of its net operating losses under Section 382 for the fiscal year ended September 30, 2023. Based on such analysis, the Company does not believe any ownership changes during the review period will further limit its ability to use its current net operating losses to offset future taxable income, if any.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:

	Year Ended September 30,
	2023		2022		2021
	(in thousands)
Unrecognized tax benefits — October 1	$	4,866	$	4,866	$	4,866
Gross decreases — tax positions in prior period		—		—		—
Gross increases — tax positions in prior period		—		—		—
Unrecognized tax benefits — September 30	$	4,866	$	4,866	$	4,866

The Company’s unrecognized tax benefits of $4.9 million, $4.9 million and $4.9 million as of September 30, 2023, 2022, and 2021, respectively, is included as an offset to the net deferred tax asset balance. If recognized, the balance of the uncertain tax benefits would impact the effective tax rate.

We recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense. We have not recorded accrued penalties or interest related to the unrecognized tax benefits noted above as the amounts would result in an adjustment to NOL carryforwards.

We are subject to taxation in the United States and various states. As of September 30, 2023, the Company is no longer subject to U.S. federal or state examinations by taxing authorities for fiscal years prior to 2003.