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Income Taxes | 12 Months Ended
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Sep. 30, 2024
Income Taxes |
Income Taxes | 6. Income Taxes The components of income (loss) before income tax benefit and income tax benefit are comprised of the following:
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Years Ended
​ | ​ | September 30,
​ |  | 2024 |  | 2023
​ | ​ | (Amounts in thousands)
Income (loss) before income tax benefit | ​ | ​ | ​ | ​ | ​ | ​
U.S. | ​ | $ | 74 |  | $ | 5,202
Foreign | ​ |  | (493) |  |  | (467)
​ | ​ | $ | (419) |  | $ | 4,735
Income tax expense: | ​ | ​ | ​ |  | ​ | ​
Current: | ​ | ​ | ​ |  | ​ | ​
Federal | ​ | $ | 123 |  | $ | 1,551
State | ​ |  | 172 |  |  | 326
​ | ​ | $ | 295 |  | $ | 1,877
Deferred: | ​ | ​ | ​ |  | ​ | ​
Federal | ​ | $ | (372) |  | $ | (1,971)
State | ​ |  | (15) |  |  | (375)
​ | ​ | $ | (387) |  | $ | (2,346)
​ | ​ | ​ | ​ | ​ | ​ | ​
Total income tax benefit | ​ | $ | (93) |  | $ | (469)
​ ​ The effective income tax rate differed from the statutory federal income tax rate due to the following:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Years Ended September 30, |
​ | ​ | 2024 | ​ | 2023 |
​ | ​ | (Dollar amounts in thousands) |
Computed “expected” tax expense |  | $ | (88) |  | 21.0 | % | $ | 994 |  | 21.0 | %
Increases (reductions) in taxes resulting from: | ​ |  |  |  |  | ​ |  |  |  |  | ​
State income taxes, net of federal tax benefit | ​ |  | (87) |  | 20.8 | % |  | 106 |  | 2.2 | %
Foreign rate differential | ​ |  | 10 |  | (2.4) | % |  | 9 |  | 0.2 | %
Employee Retention Credit | ​ | ​ | — | ​ | — | % | ​ | (134) | ​ | (2.8) | %
RSA Windfall | ​ | ​ | (189) | ​ | 45.1 | % | ​ | (16) | ​ | (0.3) | %
Permanent differences | ​ |  | 19 |  | (4.5) | % |  | 9 |  | 0.2 | %
Change in valuation allowance | ​ |  | 180 |  | (43.0) | % |  | (1,746) |  | (36.9) | %
Research and development credit | ​ |  | (90) |  | 21.5 | % |  | (112) |  | (2.4) | %
Deferred Tax True Ups | ​ | ​ | 4 | ​ | (1.0) | % | ​ | 322 | ​ | 6.8 | %
FIN 48 Reserves | ​ | ​ | 89 | ​ | (21.2) | % | ​ | 166 | ​ | 3.5 | %
Return to Provision Adjustments | ​ | ​ | 39 | ​ | (9.3) | % | ​ | (64) | ​ | (1.4) | %
Other items | ​ |  | 20 |  | (4.8) | % |  | (3) |  | (0.1) | %
Income tax benefit | ​ | $ | (93) |  | 22.2 | % | $ | (469) |  | (9.9) | %
​ Significant components of the Company's net deferred tax assets and liabilities as of September 30, 2024 and 2023 are as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | September 30, | ​ | September 30,
​ |  | 2024 |  | 2023
​ | ​ | (Amounts in thousands)
Deferred tax assets: | ​ |  | ​ | ​ |  | ​
Pension | ​ | $ | 331 | ​ | $ | 321
Capitalized research and development expenses | ​ | ​ | 1,155 | ​ | ​ | 651
Other reserves and accruals | ​ |  | 975 | ​ |  | 1,118
Inventory reserves and other | ​ |  | 303 | ​ |  | 278
Federal and state tax credits | ​ |  | 829 | ​ |  | 771
Federal and state net operating loss carryforwards | ​ |  | 4 | ​ |  | —
Foreign net operating loss carryforwards | ​ |  | 2,554 | ​ |  | 2,945
Lease Liability | ​ | ​ | 121 | ​ | ​ | 239
Gross deferred tax assets | ​ | ​ | 6,272 | ​ | ​ | 6,323
Less: valuation allowance | ​ |  | (2,800) | ​ |  | (3,283)
Realizable deferred tax asset | ​ | ​ | 3,472 | ​ | ​ | 3,040
​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred tax liabilities: | ​ | ​ | ​ | ​ | ​ | ​
Depreciation and amortization | ​ | ​ | (69) | ​ | ​ | (84)
ROU Asset | ​ | ​ | (119) | ​ | ​ | (235)
Pension | ​ | ​ | (550) | ​ | ​ | (372)
Intangibles | ​ | ​ | — | ​ | ​ | (3)
Realizable deferred tax liabilities | ​ | ​ | (738) | ​ | ​ | (694)
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax assets | ​ | $ | 2,734 | ​ | $ | 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. 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 that associated valuation allowances should not be reversed at September 30, 2024 or 2023. The Company separately analyzed the realizability of its federal and state credits and determined $796 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, 2024, and 2023, the Company had no U.S. net operating loss or tax credit carryforwards for federal purposes. As of September 30, 2024, and 2023, the Company had U.S. net operating loss carryforwards for state purposes of approximately $60 thousand and $12 thousand, respectively, which are available to offset future taxable income through 2035. As of September 30, 2024, 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, 2024, the Company had U.K. net operating loss carryforwards of approximately $10.6 million that have an indefinite life with no expiration. Undistributed earnings of the Company's foreign subsidiaries amounted to approximately $10.3 million and $4.8 million as of September 30, 2024 and 2023, 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, 2024, 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
​ | ​ | September 30, 2024 | ​ | September 30, 2023
​ | ​ | (Amounts in thousands)
Balance, beginning of year | ​ | $ | 323 | ​ | $ | 502
Additions for tax positions of current year | ​ |  | 11 | ​ | ​ | 22
Additions for tax positions of prior years | ​ | ​ | (8) | ​ | ​ | (201)
Reduction for lapse of the applicable statute of limitations | ​ | ​ | (13) | ​ | ​ | —
Accrued penalties and interest | ​ |  | 22 | ​ | ​ | —
Balance, end of period | ​ | $ | 335 | ​ | $ | 323
​ The unrecognized tax benefits of $350 thousand as of September 30, 2024, if recognized, 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 2021 through 2024, and believes that any tax adjustments not currently reserved in any audited year will not be material.

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