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Income Taxes
 3 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

12. Income Taxes

The provision for income taxes consists of the following:

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

September 30,

 

 

2024

 

 

2024

 

 

2023

 

 

2022

 

 

 

 

 

(in thousands)

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

State

 

 

893

 

 

 

761

 

 

 

560

 

 

231

 

 

$

893

 

 

$

761

 

 

$

560

 

 

$

231

 

Deferred

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

(2,914

)

 

 

(494

)

 

 

(7,392

)

 

 

(47,879

)

State

 

 

(2,322

)

 

 

252

 

 

 

(1,913

)

 

 

(4,342

)

 

$

(5,236

)

 

$

(242

)

 

$

(9,305

)

 

$

(52,221

)

Provision/(Benefit) for income taxes

 

$

(4,343

)

 

$

519

 

 

$

(8,745

)

 

$

(51,990

)

 

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

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

September 30,

 

 

2024

 

 

2024

 

 

2023

 

 

2022

 

 

 

 

 

(in thousands)

 

Income tax (benefit) provision at federal statutory rate

 

$

(24,420

)

 

$

(19,004

)

 

$

(26,555

)

 

$

(49,280

)

(Reduction) increase in income taxes resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

State taxes, net of federal tax benefit

 

 

(1,862

)

 

 

(1,321

)

 

 

(2,062

)

 

 

(3,953

)

Nondeductible stock compensation expenses

 

 

—

 

 

 

173

 

 

 

313

 

 

251

 

Permanent items

 

 

45

 

 

 

232

 

 

 

225

 

 

206

 

Change in valuation allowances

 

 

20,817

 

 

 

20,141

 

 

 

18,201

 

 

(22)

 

162(m) limitation

 

 

(44

)

 

 

67

 

 

 

285

 

 

11

 

Impact of changing rates on deferred tax assets

 

 

(442

)

 

 

501

 

 

 

499

 

 

(247)

 

Expired tax attributes

 

 

(387

)

 

 

(612

)

 

 

200

 

 

964

 

Other

 

 

1,950

 

 

 

342

 

 

 

149

 

 

80

 

Income tax provision (benefit)

 

$

(4,343

)

 

$

519

 

 

$

(8,745

)

 

$

(51,990

)

 

The components of the Company's deferred taxes as of December 31, 2024 and September 30, 2024 and 2023 are as follows:

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

September 30,

 

 

2024

 

 

2024

 

 

2023

 

 

 

 

 

(in thousands)

 

Net operating loss carryforwards

 

$

80,898

 

 

$

114,366

 

 

$

125,306

 

Deferred credits

 

 

466

 

 

 

695

 

 

 

1,057

 

Other accrued expenses

 

 

1,316

 

 

 

1,562

 

 

 

1,234

 

Prepaids and other

 

 

328

 

 

 

252

 

 

 

556

 

Warrant liabilities

 

 

5,737

 

 

 

5,767

 

 

 

5,748

 

Other reserves and estimated losses

 

 

1,008

 

 

 

1,090

 

 

 

937

 

Operating lease liabilities

 

 

1,887

 

 

 

2,306

 

 

 

2,991

 

Deferred revenue

 

 

3,500

 

 

 

2,217

 

 

 

4,829

 

Interest expense carryforward

 

 

18,176

 

 

 

9,257

 

 

 

6,457

 

Unrealized gain on equity investments

 

 

107

 

 

 

99

 

 

 

—

 

Gross deferred tax assets

 

$

113,423

 

 

$

137,611

 

 

$

149,115

 

Less: valuation allowance

 

 

(62,465

)

 

 

(41,648

)

 

 

(21,102

)

Total net deferred tax assets

 

$

50,958

 

 

$

95,963

 

 

$

128,013

 

 

 

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

(1,507

)

 

 

(1,883

)

 

 

(2,475

)

Property and equipment

 

 

(52,388

)

 

 

(102,253

)

 

 

(131,805

)

Unrealized loss on equity investments

 

 

—

 

 

 

—

 

 

 

(2,147

)

Total deferred tax liabilities

 

$

(53,895

)

 

$

(104,136

)

 

$

(136,427

)

Net deferred tax liabilities

 

$

(2,937

)

 

$

(8,173

)

 

$

(8,414

)

 

As of December 31, 2024, The Company has federal income tax NOL carryforwards of $358.0 million, $185.9 million of which do not expire. The unlimited lived NOL carryovers are only available to offset 80%

of taxable income in years in which they are utilized. The remaining federal NOL carryforwards of $172.1 million expire between 2027 and 2038. As of December 31, 2024, the Company has $195.4 million of state NOL carryforwards that expire between 2025 and 2042.

As of December 31, 2024, the Company also has $81.6 million of interest expense carryovers arising under IRC section 163(j). The 163(j) interest carryforwards do not expire. However, the interest limitation carryforwards can only be utilized to the extent that 30% of adjusted taxable income in a tax period exceeds business interest deductions for the period.

The Company cannot conclude that it is more likely than not that the benefit from its federal and state NOL carryforwards and 163(j) interest limitation carryforwards will be realized. In recognition of this uncertainty, the Company has provided a valuation allowance of $62.5 million as of December 31, 2024 and $41.6 million as of September 30, 2024, on the deferred tax assets related to the NOL and interest limitation carryforwards. If and when recognized, any tax benefits related to the 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. On a quarterly basis, the Company updates its Section 382 ownership change analysis in order to identify ownership changes which may have arisen after August 2018. Based on the ownership change analysis, the Company does not believe any ownership changes have arisen after August 2018 which would further limit the Company's ability to utilize its current net operating losses to offset future taxable income.

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

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

September 30,

 

 

2024

 

 

2024

 

 

2023

 

 

 

 

 

(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 December 31, 2024 and September 30, 2024 and 2023, 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 December 31, 2024, the Company is no longer subject to U.S. federal or state examinations by taxing authorities for fiscal years prior to 2020.