XML 47 R31.htm IDEA: XBRL DOCUMENT
v3.21.1

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES | 25. INCOME TAXES Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. Significant components of the Company's deferred tax assets are as follows:
|  | 2020 |  |  | 2019 |
Deferred tax asset: |  |  |  |  |  |  |  |
Allowance for doubtful accts |  | $ | 359,598 |  |  | $ | 163,123 |
UNICAP |  |  | 9,904 |  |  |  | 16,314 |
Obsolete inventory |  |  | 2,811 |  |  |  | 41,131 |
Reserves |  |  | — |  |  |  | 1,641,874 |
Warrant liability |  |  | — |  |  |  | 2,330 |
Accrued compensation |  |  | 138,283 |  |  |  | 89,089 |
Credit carryforwards |  |  | 142,484 |  |  |  | 142,484 |
Stock compensation |  |  | 880,766 |  |  |  | 430,274 |
Fixed assets, net |  |  | 483,923 |  |  |  | 1,278,863 |
Contribution, carryforward |  |  | 70 |  |  |  | 62 |
Accrued interest expense |  |  | 68,148 |  |  |  | 22,414 |
Net operating loss carryforwards |  |  | 5,912,511 |  |  |  | 11,602,532 |
Lease liability |  |  | 798,047 |  |  |  | 899,722 |
Credit loss |  |  | 559,593 |  |  |  | 995,184 |
Accrued expenses |  |  | 461,973 |  |  |  |  |
Excess of capital losses over capital gains |  |  | 123,297 |  |  |  |  |
Total deferred tax asset |  |  | 9,941,408 |  |  |  | 17,325,396 |
Deferred tax liability: |  |  |  |  |  |  |  |
ROU assets |  |  | (756,204 | ) |  |  | (870,886 | )
Intangible assets, net |  |  | (160,318 | ) |  |  | (209,044 | )
State taxes |  |  | (1,119 | ) |  |  | — |
Total deferred income tax liabilities |  |  | (917,641 | ) |  |  | (1,079,930 | )
Net deferred income tax assets |  |  | 9,023,766 |  |  |  | 16,245,466 |
Valuation allowance |  |  | (9,037,861 | ) |  |  | (16,308,197 | )
Deferred tax asset (liability), net |  | $ | (14,095 | ) |  | $ | (62,731 | )
At December 31, 2020, the Company had Federal net operating loss carry forwards (“NOLs”) for income tax purposes of approximately $18,568,667 after applying the §382 limitation. The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) signed in to law on March 27, 2020, provided that NOLs generated in a taxable year beginning in 2018, 2019, or 2020, may now be carried back five years and forward indefinitely. In addition, the 80% taxable income limitation is temporarily removed, allowing NOLs to fully offset net taxable income. In accordance with Section 382 of the Internal Revenue Code, the future utilization of the Company’s net operating loss to offset future taxable income is subject to an annual limitation as a result of ownership changes that have occurred previously. Management believes that such an ownership change may have occurred at various points in 2019 and 2020. The Company has estimated the Section 382 annual limitation due to this ownership change to be approximately $41,969,444. This has been used to reduce the amount of the net operating losses for which deferred tax assets have been recognized as of December 31, 2020. At December 31, 2020, Microphase, an entity not consolidated for income tax purposes, had NOLs of approximately $1,949,316 after applying the §382 limitation. NOLs generated in a taxable year beginning in 2018, 2019, or 2020, may be carried back five years and forward indefinitely. In accordance with Section 382 of the Internal Revenue Code, the future utilization of the Company’s net operating loss to offset future taxable income have been limited as a result of ownership changes that have occurred previously. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available and due to the last five years significant losses there is substantial doubt related to the Company’s ability to utilize its deferred tax assets, the Company recorded a full valuation allowance of the deferred tax asset. For the year ended December 31, 2020, the valuation allowance has decreased by $7,270,336. The 2016 through 2019 tax years remains open to examination by the Internal Revenue Service (“IRS”), the California Franchise Tax Board (“FTB”) and the Connecticut Department of Revenue (“CDR”). The IRS, FTB and CDR have the authority to examine those tax years until the applicable statute of limitations expires and the years with net operating loss carryovers when such carryovers are used. As of December 31, 2020, the Company’s foreign subsidiaries had accumulated losses for income tax purposes in the amount of approximately $2,977,113. All of the Company’s international accumulated losses were generated in the United Kingdom and Israel which have statutory tax rates of 19% and 7.5% respectively. These net operating losses may be carried forward and offset against taxable income in the future for an indefinite period. The net income tax benefit consists of the following:
|  | 2020 |  |  | 2019 |
Current |  |  |  |  |  |
US Federal |  | $ | — |  |  | $ | — |
US State |  |  | — |  |  |  | — |
Foreign |  |  | 24,842 |  |  |  | — |
Total current provision |  |  | 24,842 |  |  |  | — |
Deferred |  |  |  |  |  |  |  |
US Federal |  |  | — |  |  |  | — |
US State |  |  | — |  |  |  | — |
Foreign |  |  | (48,636 | ) |  |  | (108,293 | )
Total deferred benefit |  |  | (23,794 | ) |  |  | (108,293 | )
Total provision for income taxes |  | $ | (23,794 | ) |  | $ | (108,293 | )
The Company’s effective tax rates were 0.1% and 0.4% for the years ended December 31, 2020 and 2019, respectively. During the year ended December 31, 2020, the effective tax rate differed from the U.S. federal statutory rate primarily due to the change in the valuation allowance and the effect of changes in tax rates in future periods. The reconciliation of income tax attributable to operations computed at U.S. Federal statutory income tax rates of 21% to income tax expense is as follows:
|  | 2020 |  |  | 2019 |
Expected federal income tax benefit |  |  | 21.0 | % |  |  | 21.0 | %
Beneficial conversion feature |  |  | (0.1 | %) |  |  | (0.6 | %)
Deconsolidation of I.AM |  |  | 1.5 | % |  |  |  |
Loss on extinguishment of debt |  |  | (9.8 | %) |  |  |  |
State taxes net of federal benefit |  |  | 8.1 | % |  |  | 3.5 | %
Foreign rate differential |  |  | (0.3 | %) |  |  | (0.2 | %)
Section 382 limitation |  |  | (34.7 | %) |  |  | — |
Return to provision adjustment |  |  | (7.8 | %) |  |  |  |
Effect of change in valuation allowance |  |  | 21.1 | % |  |  | (21.9 | %)
Other |  |  | 1.1 | % |  |  | (1.4 | %)
Income tax benefit |  |  | 0.1 | % |  |  | 0.4 | %
The Company accounts for uncertain tax positions in accordance with ASC No. 740-10-25. ASC No. 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC No. 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. To the extent that the final tax outcome of these matters is different than the amount recorded, such differences impact income tax expense in the period in which such determination is made. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense. ASC No. 740-10-25 also requires management to evaluate tax positions taken by the Company and recognize a liability if the Company has taken uncertain tax positions that more likely than not would not be sustained upon examination by applicable taxing authorities. Management of the Company has evaluated tax positions taken by the Company and has concluded that as of December 31, 2020 and 2019, there are no uncertain tax positions taken, or expected to be taken, that would require recognition of a liability that would require disclosure in the financial statements.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration