Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.20.1
Income Taxes
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provision for income taxes consists of the following at December 31, 2019 and 2018:
  2019 2018
Current tax provision $ —    $ —   
Deferred tax benefit (334,394)   —   
Total tax benefit $ (334,394)   $ —   

A reconciliation of the expected Federal statutory rate to our actual rate as reported for each of the periods presented is as follows:
  2019 2018
Federal statutory rate 21  % 21  %
State income tax rate, net of federal benefit % (1  %)
Permanent differences (3  %) (2  %)
Change in valuation allowance (12  %) (18  %)
  % —  %

Deferred Income Taxes
 
Deferred income taxes are the result of temporary differences between book and tax basis of certain assets and liabilities, timing of income and expense recognition of certain items and net operating loss carry-forwards.
 
We assess temporary differences resulting from different treatments of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are recorded in the consolidated balance sheets. We evaluate the realizability of our deferred tax assets on a regular basis, an exercise that requires significant judgment. In the course of this evaluation we
considered our recent history of tax losses, the economic conditions in which we operate, recent organizational changes and our forecasts and projections. We believe it is more likely than not that essentially none of our deferred tax assets will be realized, and we have recorded a valuation allowance for the net deferred tax assets that may not be realized as of December 31, 2019 and 2018.

The following is a schedule of the deferred tax assets and liabilities as of December 31, 2019 and 2018:
  2019 2018
Deferred tax assets:    
Net operating loss carry forward $ 32,742,350    $ 31,473,506   
Intangible assets 686,400    863,400   
Accrued expense 223,100    142,000   
Deferred rent 15,700    27,000   
Allowance for doubtful accounts 61,700    17,500   
Other 258,600    140,300   
Subtotal 33,987,850    32,663,706   
Less valuation allowance (33,987,850)   (32,663,706)  
Total —    —   
Deferred tax liabilities:    
Intangible assets and property and equipment 1,989,800    2,162,500   
Other 29,400    177,332   
Total 2,019,200    2,339,832   
Total deferred tax liabilities $ (2,019,200)   $ (2,339,832)  
 
The net operating losses amounted to approximately $92,335,523 and expire beginning 2022 through 2037. Pursuant to Internal Revenue Service Code Section 382, the use of certain of the Company’s net operating loss carry forwards are limited due to a cumulative change in ownership.
 
We are currently open to audit under the statute of limitations by the Internal Revenue Service for the years ending December 31, 2016 through 2018. Our state income tax returns are open to audit under the statute of limitations for the same periods.
We recognize interest and penalties related to income taxes in income tax expense. We have incurred no penalties and interest for the years ended December 31, 2019 and 2018.