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Income Taxes | 12 Months Ended
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Sep. 30, 2023
Income Taxes |
Income Taxes | 5. Income Taxes The components of income (loss) before income tax (benefit) expense and income tax (benefit) expense are comprised of the following:
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Years Ended
​ | ​ | September 30,
​ |  | 2023 |  | 2022
​ | ​ | (Amounts in thousands)
Income (loss) before income tax expense | ​ | ​ | ​ | ​ | ​ | ​
U.S. | ​ | $ | 5,202 |  | $ | 417
Foreign | ​ |  | (467) |  |  | 1,522
​ | ​ | $ | 4,735 |  | $ | 1,939
Income tax expense: | ​ | ​ | ​ |  | ​ | ​
Current: | ​ | ​ | ​ |  | ​ | ​
Federal | ​ | $ | 1,551 |  | $ | —
State | ​ |  | 326 |  |  | 50
​ | ​ | $ | 1,877 |  | $ | 50
Deferred: | ​ | ​ | ​ |  | ​ | ​
Federal | ​ | $ | (1,971) |  | $ | —
State | ​ |  | (375) |  |  | —
​ | ​ |  | (2,346) |  |  | —
​ | ​ | ​ | ​ | ​ | ​ | ​
Total income tax (benefit) expense | ​ | $ | (469) |  | $ | 50
​ ​ The effective income tax rate differed from the statutory federal income tax rate due to the following:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Years Ended September 30, |
​ | ​ | 2023 | ​ | 2022 |
​ | ​ | (Dollar amounts in thousands) |
Computed “expected” tax expense |  | $ | 994 |  | 21.0 | % | $ | 407 |  | 21.0 | %
Increases (reductions) in taxes resulting from: | ​ |  |  |  |  | ​ |  |  |  |  | ​
State income taxes, net of federal tax benefit | ​ |  | 106 |  | 2.2 | % |  | 27 |  | 1.5 | %
Foreign rate differential | ​ |  | 9 |  | 0.2 | % |  | (30) |  | (1.5) | %
Employee Retention Credit | ​ | ​ | (134) | ​ | (2.8) | % | ​ | — | ​ | — | %
Permanent differences | ​ |  | (7) |  | (0.2) | % |  | (19) |  | (1.0) | %
Change in valuation allowance | ​ |  | (1,746) |  | (36.8) | % |  | (226) |  | (11.5) | %
Research and development credit | ​ |  | (112) |  | (2.4) | % |  | (131) |  | (6.8) | %
Deferred Tax True Ups | ​ | ​ | 322 | ​ | 6.8 | % | ​ | — | ​ | — | %
FIN 48 Reserves | ​ | ​ | 166 | ​ | 3.5 | % | ​ | — | ​ | — | %
Return to Provision Adjustments | ​ | ​ | (64) | ​ | (1.3) | % | ​ | 14 | ​ | 0.7 | %
Other items | ​ |  | (3) |  | (0.1) | % |  | 8 |  | 0.2 | %
Income tax (benefit) expense | ​ | $ | (469) |  | (9.9) | % | $ | 50 |  | 2.6 | %
​ Significant components of the Company's net deferred tax assets and liabilities as of September 30, 2023 and 2022 are as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, | ​ | September 30,
​ |  | 2023 |  | 2022
​ | ​ | (Amounts in thousands)
Deferred tax assets: | ​ |  | ​ | ​ |  | ​
Pension | ​ | $ | 321 | ​ | $ | 373
Intangibles | ​ |  | — | ​ |  | 29
Capitalized research and development expenses | ​ | ​ | 651 | ​ | ​ | —
Other reserves and accruals | ​ |  | 1,118 | ​ |  | 596
Inventory reserves and other | ​ |  | 278 | ​ |  | 244
Federal and state tax credits | ​ |  | 771 | ​ |  | 1,273
Federal and state net operating loss carryforwards | ​ |  | — | ​ |  | 151
Foreign net operating loss carryforwards | ​ |  | 2,945 | ​ |  | 2,693
Lease Liability | ​ | ​ | 239 | ​ | ​ | —
Gross deferred tax assets | ​ | ​ | 6,323 | ​ | ​ | 5,359
Less: valuation allowance | ​ |  | (3,283) | ​ |  | (5,029)
Realizable deferred tax asset | ​ | ​ | 3,040 | ​ | ​ | 330
​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred tax liabilities: | ​ | ​ | ​ | ​ | ​ | ​
Depreciation and amortization | ​ | ​ | (84) | ​ | ​ | (121)
ROU Asset | ​ | ​ | (235) | ​ | ​ | —
Pension | ​ | ​ | (372) | ​ | ​ | (209)
Intangibles | ​ | ​ | (3) | ​ | ​ | —
Realizable deferred tax liabilities | ​ | ​ | (694) | ​ | ​ | (330)
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax assets | ​ | $ | 2,346 | ​ | $ | —
​ The Company undertakes a review of its valuation allowance at each financial statement period, reviewing the positive and negative evidence to help determine whether it is more likely than not that the Company will realize the future tax benefits from its deferred tax balances. In the fiscal year ended September 30, 2020, the Company established a partial valuation allowance against its deferred tax assets in light of results at the time, the COVID-19 pandemic, and the resulting economic fallout, and established a full valuation during the fiscal year ended September 30, 2021. Since that time, the COVID-19 pandemic has ended, and the Company’s Technology Solutions business has grown its revenue and operating income in fiscal years 2023 and 2022. As a result, the Company has determined that it is more likely than not that substantially all of its net deferred tax assets in the U.S. jurisdiction will be utilized and associated valuation allowances should be reversed during the fiscal year ended September 30, 2023. The valuation reversed during the period and resulted in a $1.8 million benefit. The Company separately analyzed the realizability of its federal and state credits and determined $710 thousand (net of federal benefit) of state credits are expected to expire unutilized and kept a valuation allowance against these credits. The Company will continue to maintain a valuation allowance against certain state tax credits in the U.S. and a full valuation allowance against the net deferred tax assets in the U.K. jurisdiction. As of September 30, 2023, the Company did not have U.S. net operating loss carryforwards for federal purposes or U.S. tax credit carryforwards for federal purposes. As of September 30, 2022, the Company had $162 thousand of U.S. net operating loss carryforwards for federal purposes and $884 thousand of U.S. tax credit carryforwards for federal purposes. As of September 30, 2023, and 2022, the Company had U.S. net operating loss carryforwards for state purposes of approximately $12 thousand and $3.7 million, respectively, which are available to offset future taxable income through 2034. As of September 30, 2023, the Company had state tax credit carryforwards of $1.1 million available to reduce future state tax expense, of which $55 thousand has unlimited carryover status and the remainder of the credits are available through FY 2038. As of September 30, 2023, the Company had U.K. net operating loss carryforwards of approximately $15.5 million that have an indefinite life with no expiration. Undistributed earnings of the Company's foreign subsidiaries amounted to approximately $4.8 million and $6.1 million as of September 30, 2023 and 2022, respectively. The Company is considering cash distribution of undistributed foreign earnings in the future and will continue to assess the potential impact of any future distributions on U.S. taxes. The state tax impact of a distribution of foreign earnings and profits would not be material. In addition, the calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions. The Company records liabilities for estimated tax obligations in the U.S. and other tax jurisdictions. These estimated tax liabilities include the provision for taxes that may become payable in the future. As of September 30, 2023, the total amount of uncertain tax liabilities relates to federal and state tax credit carryforwards which are partially recorded net in deferred taxes and partially as a long term tax payable. A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | For the Year Ended |  | For the Year Ended
​ | ​ | September 30, 2023 | ​ | September 30, 2022
​ | ​ | (Amounts in thousands)
Balance, beginning of year | ​ | $ | 502 | ​ | $ | 433
Additions for tax positions of current year | ​ |  | 22 | ​ | ​ | 68
(Subtractions) additions for tax positions of prior years | ​ |  | (201) | ​ | ​ | 1
Balance, end of period | ​ | $ | 323 | ​ | $ | 502
​ If the unrecognized tax benefits of $323 thousand as of September 30, 2023 are recognized, they would reduce our annual effective tax rate, subject to the valuation allowance. The Company does not expect our unrecognized tax benefits to change significantly over the next 12 months. We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company has reviewed the tax positions taken on returns filed domestically and in its foreign jurisdictions for all open years, generally fiscal 2020 through 2023, and believes that any tax adjustments not currently reserved in any audited year will not be material.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: 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 2: 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 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: 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 5: 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 6: 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//1943274/2147482526/740-270-50-1 Reference 7: 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 8: 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 9: 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 10: 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
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