Optex Systems Holdings Inc Income Taxes Disclosure

Note 13 — Income Taxes

 

The income tax provision for the twelve months ended September 28, 2025 and September 29, 2024 include the following:

 Schedule of Income Tax Provision

		2025				2024
		(Thousands)
		2025				2024
Current income tax expense:
Current year federal income tax		$	1,456			$	1,045
Prior year tax adjustment			-				(14	)
Current income tax expense			1,456				1,031
Deferred income tax provision (benefit):
Federal			(252	)			(25	)
Provision for income taxes, net		$	1,204			$	1,006

 

As of September 28, 2025 and September 29, 2024, Optex Systems, Inc. had a net carrying value of $1.2 million and $0.9 million, respectively, in deferred tax assets represented by deferred tax assets of $2.0 million and $1.7 million, respectively, and a deferred tax asset valuation allowance of ($0.8) million, against those assets. The valuation allowance has been established due to historical losses resulting in a Net Operating Loss Carryforward for each of the fiscal years 2010 through 2016 which may not be fully recognized due to an IRS Section 382 limitation related to a change in control occurring in fiscal year 2018. As of September 28, 2025 and September 29, 2024, we reviewed the deferred tax assets and determined it was more likely than not that we would be able to utilize a substantial portion of the deferred tax asset balance against future earnings. Our assumptions were based on the previous three years earnings trend as well as anticipated future earnings. During the twelve months ended September 28, 2025, the Company recognized a ($252) thousand tax benefit to deferred tax assets. During the twelve months ended September 29, 2024, the Company recognized a ($25) thousand in tax benefit to deferred tax assets. We will continue to review the deferred tax assets and related valuation reserves in accordance with ASC 740 on an annual basis.

 

 

The income tax provision for Optex Systems Holdings as of September 28, 2025 and September 29, 2024 differs from those computed using the statutory federal tax rate in the respective years due to the following permanent differences:

 Schedule of Effective Income Tax Rate Reconciliation

		($ in Thousands)
		2025				%				2024				%
Tax provision at statutory federal rate		$	1,334				21			$	1,003				21
Nondeductible expenses			1				-				3				-
Other permanent adjustments			(131	)			(2	)			14				-
Prior year federal income tax adjustment			-				-				(14	)			-
Change in deferred tax valuation allowance			-				-				-				-
Provision for income taxes, net		$	1,204				19			$	1,006				21

 

Deferred income taxes recorded in the balance sheets result from differences between financial statement and tax reporting of income and deductions. A summary of the composition of the deferred income tax assets (liabilities) follows:

 Schedule of Deferred Income Tax Assets (Liabilities)

		As of September 28, 2025				As of September 29, 2024
		(Thousands)
		Deferred Tax Asset
		As of September 28, 2025				As of September 29, 2024
Stock Compensation		$	83			$	177
Inventory Reserve			404				232
Unicap			60				59
Deferred Compensation			65				56
Property and Equipment			(213	)			(233	)
Intangible Asset Amortization			188				10
Contract Loss Reserve			28				54
Accrued Paid Time Off			103				92
Net Operating Losses			1,189				1,223
Other			65				50
Subtotal		$	1,972			$	1,720
Valuation allowance			(773	)			(773	)
Net deferred asset		$	1,199			$	947

 

The Company has a net loss carryforward of $5.7 million as of September 28, 2025 as compared to a net loss carryforward of $5.8 million as of September 29, 2024. Due to an IRS section 382 change in control limitation which was effective during the fiscal year ended 2017, it is anticipated that the Company may only realize $2.0 million of the current net operating loss carryforward for a net tax benefit of $0.4 million through fiscal year ending in 2037. Accordingly, a valuation allowance of $0.8 is recorded as of September 28, 2025 and September 29, 2024.

 

The Company applied FASB ASC 740-10 and has no unrecognized tax benefits. By statute, the tax years ended September 28, 2025, September 29, 2024 and October 1, 2023 are open to examination by the major taxing jurisdictions to which the Company is subject.

 

During the twelve months ended September 28, 2025, the Company paid $1.4 million in income taxes. During the twelve months ended September 29, 2024, the Company paid $1.2 million in income taxes. As of September 28, 2025 the Company has recorded a tax liability of $87 thousand.