XML 33 R21.htm IDEA: XBRL DOCUMENT
v3.24.3

13. INCOME TAXES | 12 Months Ended
--- | ---
Sep. 30, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | 13. INCOME TAXES The Company provides for income taxes under FASB ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently. FASB ASC 740 requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance has been recorded. Due to the enactment of the Tax Reform Act of 2017, the Company has calculated its federal taxes using an estimated corporate tax rate of 21%. U.S. Tax codes and laws may be subject to further reform or adjustment which may have a material impact to the Company’s deferred tax assets and liabilities. For the years ended September 30, 2024, 2023 and 2022 the Company's loss from continuing operations before provision for income taxes were as follows:
|  | For the year ended September 30, |
($ in thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |
Domestic |  | $ | (142,433 | ) |  | $ | (131,303 | ) |  | $ | (40,089 | )
Foreign |  |  | — |  |  |  | — |  |  |  | — |
Loss before income taxes |  | $ | (142,433 | ) |  | $ | (131,303 | ) |  | $ | (40,089 | )
The components of the provision for income taxes in the years ended September 30, 2024, 2023 and 2022 were as follows:
|  | For the year ended September 30, |
($ in thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |  |  | $ | — |
State |  |  | — |  |  |  | — |  |  |  | — |
Deferred: |  |  |  |  |  |  |  |  |
Federal |  | $ | 3,344 |  |  | $ | 2,416 |  |  | $ | — |
State |  |  | — |  |  |  | — |  |  |  | — |
Provision for income taxes |  | $ | 3,344 |  |  | $ | 2,416 |  |  | $ | — |
The effective income tax rate for the periods ended September 30, 2024, 2023 and 2022 as a percentage of pre-tax income is (2.3%), (1.8%) and 0%, respectively. The significant reconciling items between the effective tax rate and the statutory tax rate for the periods ended September 30, 2024, 2023 and 2022 consist of valuation allowance, adjustments to deferred taxes, state taxes, and permanent items. A detailed breakout is provided below:
|  | For the year ended September 30, |
($ in thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |
Tax benefit at federal statutory rate |  | $ | (29,911 | ) |  | $ | (27,574 | ) |  | $ | (8,417 | )
State taxes (net of federal benefit) |  |  | (3,075 | ) |  |  | 5,820 |  |  |  | (303 | )
162(m) Excess Executive Compensation |  |  | 9,806 |  |  |  | 6,823 |  |  |  | — |
Stock Option (Windfall)/Shortfall |  |  | (2,314 | ) |  |  | — |  |  |  | — |
Return to Provision Adjustments |  |  | 2,301 |  |  |  | 29 |  |  |  | — |
Deferred Only Adjustments |  |  | 15,445 |  |  |  | 745 |  |  |  | 4,408 |
Discontinued Operations |  |  | — |  |  |  | — |  |  |  | (3,750 | )
Change in Valuation Allowance |  |  | 10,299 |  |  |  | 15,871 |  |  |  | 6,232 |
Other |  |  | 793 |  |  |  | 702 |  |  |  | 1,830 |
|  | $ | 3,344 |  |  | $ | 2,416 |  |  | $ | — |
Deferred income taxes are the result of timing differences between GAAP accounting and tax basis of certain assets and liabilities, timing of income and expense recognition of certain items, and tax attributes such at net operating loss carry-forwards. These differences result in deferred tax assets and liabilities, which are recorded in the balance sheet, net of valuation allowance. The Company evaluates the realizability of its deferred tax assets and assesses the need for a valuation allowance on an ongoing basis. In evaluating its deferred tax assets, the Company considers whether it is more likely than not that the deferred income tax assets will be realized. The ultimate realization of deferred tax assets depends upon generating sufficient future taxable income prior to the expiration of the tax attributes. This assessment requires significant judgment. The significant components of the Company's deferred tax assets and liabilities as of September 30, 2024 and 2023 were as follows:
($ in thousands) |  | September 30, 2024 |  |  | September 30, 2023 |
Deferred Tax Assets: |  |  |  |  |  |
Right of Use - Lease Liability |  | $ | 340 |  |  | $ | (140 | )
Charitable Contributions |  |  | 98 |  |  |  | 64 |
Tax Credits |  |  | 200 |  |  |  | 200 |
Stock Based Compensation |  |  | 113 |  |  |  | 281 |
Interest Expense Carryforwards |  |  | — |  |  |  | 652 |
Intangible Assets |  |  | 2,926 |  |  |  | 3,784 |
Net Operating Loss carryforwards |  |  | 77,788 |  |  |  | 56,708 |
Other |  |  | 1,134 |  |  |  | 4,085 |
Gross Deferred Tax Assets |  | $ | 82,599 |  |  | $ | 65,634 |
Valuation Allowance |  |  | (54,926 | ) |  |  | (44,627 | )
Total deferred tax assets, net of valuation allowance |  | $ | 27,673 |  |  | $ | 21,007 |
Deferred Tax Liabilities |  |  |  |  |  |
Right of Use - Lease Asset |  | $ | (691 | ) |  | $ | 138 |
Prepaid Expenses |  |  | (927 | ) |  |  | (636 | )
Change in Fair Value of Digital Currency |  |  | (22,706 | ) |  |  | — |
Other |  |  | (1,070 | ) |  |  | (1,451 | )
Fixed Assets & Intangible Assets |  |  | (8,040 | ) |  |  | (21,474 | )
Gross Deferred Tax Liabilities |  | $ | (33,434 | ) |  | $ | (23,423 | )
Net Deferred Tax Liabilities |  | $ | (5,761 | ) |  | $ | (2,416 | )
For balance sheet presentation, the Company nets non-current deferred tax assets (net of valuation allowance) and liabilities. The following table summarizes the presentation:
|  | September 30, 2024 |  |  | September 30, 2023 |
Net Non-current Deferred Tax Liabilities |  | $ | (5,761 | ) |  | $ | (2,416 | )
In accordance with ASC 740, Accounting for Income Taxes, the Company evaluates its deferred income taxes to determine if valuation allowances are required. Pursuant to U.S. income tax accounting standards, companies assess whether valuation allowances should be established against their deferred tax assets based on the consideration of all available evidence using a “more-likely-than-not” standard. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. The Company considers the scheduled reversal of deferred tax liabilities. To fully utilize the net operating loss (“NOL”) carryforward, the Company will need to generate sufficient future taxable income in each respective jurisdiction. Due primarily to the Company’s history of losses, it is more likely than not that all or a portion of its deferred tax assets as of September 30, 2024 will not be realized. The Company recorded a valuation allowance to offset the DTA that is not considered realizable for the tax year ended September 30, 2024 and September 30, 2023.
|  | As of September 30, |
|  | 2024 |  |  | 2023 |
Valuation Allowance |  | $ | (54,926 | ) |  | $ | (44,627 | )
As of September 30, 2024, the Company had $332,586 of federal and $146,973 of state net operating loss carryforwards available to reduce future taxable income, of which federal net operating loss carryforwards of $325,943 have an indefinite life. The federal net operating losses will begin to expire on September 30, 2025, while state net operating losses will begin to expire in the year ending September 30, 2036. The Company's ability to utilize its federal and state net operating loss carryforwards and federal tax credit carryforwards to reduce future taxable income and future taxes, respectively, may be subject to restrictions attributable to equity transactions that may have resulted in a change in ownership as defined by Internal Revenue Code Section 382 ("Section 382") or comparable provisions of state law. Tax attributes that exceed the Section 382 limitation in any year continue to be allowed as carryforwards until they expire and can be used to offset taxable income for years within the carryover period subject to the limitation in each year. Given the Company’s significant U.S. tax attributes, we continuously monitor potential ownership changes under Section 382. During the year, the Company completed a detailed study and determined an ownership change (as defined under Section 382) occurred during the third quarter of 2020, fourth quarter of 2020, and second quarter of 2023, triggering the application of Section 382. We do not currently expect any resulting Section 382 limitations on the use of our tax attributes to have a significant impact on our financial statements. The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than a 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in income tax expense, if applicable. The Company has no liability, interest or penalties for unrecognized tax benefits as of September 30, 2024. The Company does not anticipate the need to record a liability for unrecognized tax benefits within the coming year. The Company files income tax returns in the U.S. federal and state jurisdictions. The 2020-2023 tax years generally remain subject to examination by the IRS and various state taxing authorities, although the Company is not currently under examination in any jurisdiction.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration