Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provision (benefit) for income taxes for the year ended December 31, 2022, the transition period of three months ended December 31, 2021, and the year ended September 30, 2021 consists of, in thousands:

	Year Ended		Three Months Ended		Year Ended
	December 31,		December 31,		September 30,
	2022		2021		2021
Current	$	8	$	—	$	(53)
Deferred	—		—		—
Total provision (benefit) for income taxes	$	8	$	—	$	(53)

The following table summarizes the differences between the U.S. federal statutory rate and the Company’s effective tax rate for continuing operations financial statement purposes for the year ended December 31, 2022, the transition period of three months ended December 31, 2021, and the year ended September 30, 2021:

	Year Ended		Three Months Ended		Year Ended
	December 31,		December 31,		September 30,
	2022		2021		2021
Statutory tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of U.S. federal tax benefit	(3.2)	%	1.9	%	5.4	%
Return to accrual adjustment	—	%	—	%	5.8	%
Change in rate	(4.1	%)	—	%	—	%
Permanent differences	(14.5)	%	—	%	—	%
Valuation allowance	20.5	%	(21.4	%)	(32.7	%)
Other exclusions	(18.0)	%	(1.5)	%	1.3	%
Company’s effective tax rate	1.7	%	0.0%		0.8	%

The Company continues to provide a valuation allowance of $9.1 million for all net deferred tax assets where the Company believes it is more likely than not that those deferred taxes will not be realized.

The tax effects of temporary differences related to deferred taxes at December 31, 2022, 2021, and September 30, 2021 consist of the following, in thousands:

	December 31,		December 31,		September 30,
	2022		2021		2021
Deferred tax assets:
Net operating loss carryforwards	$	6,376	$	6,382	$	5,895
Accounts receivable	72		69		69
Inventory	1,071		994		966
Intangibles	2,079		2,320		2,370
Accrued expenses	312		271		334
Stock options	—		5		5
Other	64		64		64
Total deferred tax assets	9,974		10,105		9,703
Deferred tax liabilities:
Financial basis in excess of tax basis of certain assets	803		855		815
Other	120		294		365
Total deferred tax liabilities	923		1,149		1180
Less valuation allowance	9,051		8,956		8,523
Net deferred taxes	$	—	$	—	$	—

The Company’s U.S. Federal net operating loss (“NOL”) carryforwards consist of the following, in thousands:

	NOL carryforward	Year Expires
Year ended December 31, 2022	—
Transition period ended December 31, 2021	2,100	No expiry
Year ended September 30, 2021	9,500	No expiry
Year ended September 30, 2020	9,270	No expiry
Year ended September 30, 2019	1,495	No expiry

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized.  In making such determination, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial performance. The Company has concluded, based on its recent cumulative losses, that it is more likely than not that the Company will not be able to realize the full effect of the deferred tax assets and a valuation allowance of $9.1 million is needed.

Based upon a review of its income tax positions, the Company believes that its positions would be sustained upon an examination by the Internal Revenue Service and does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded. Generally, the Company is no longer subject to examinations by the U.S. federal, state or local tax authorities for tax years before 2019.