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Revision of Previously Issued Consolidated Financial Statement | 12 Months Ended
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Dec. 31, 2022
Disclosure of Revision of Previously Issued Financial Statement [Abstract] |
Revision of Previously Issued Consolidated Financial Statement | Note 16. Revision of Previously Issued Consolidated Financial Statement Due to errors discovered in the Company’s 2020 tax return, the Company revised certain previously issued disclosures related to the components of its deferred tax assets and liabilities and valuation allowance as of December 31, 2021 and 2020. Additionally, the Company has revised the reconciliation of its income tax rate computed using the federal statutory rate for the year ended December 31, 2021. The errors related primarily to the misapplication of the carryback of net operating losses under the CARES Act provision and mathematical errors related to the Company’s inventory reserve. Since the Company provided a full valuation allowance on its net deferred tax assets, there was no impact to the Consolidated Balance Sheet as of December 31, 2021 and the Consolidated Statements of Operations, Cash Flows and Stockholders’ Equity for the year ended December 31, 2021. As a result of the errors, the Company will be amending its 2020 and 2021 income tax returns. The Company had previously disclosed that its net operating loss carry forward as of December 31, 2021 was $29,100,000. The proper amount that should have been disclosed was $21,971,000. Along with this finding, the Company further reviewed its disclosure of the rate reconciliation and deferred tax calculation along with the valuation allowance of its net deferred tax assets. Other items that were corrected in the disclosure included disallowed interest, stock based compensation and operating lease liability along with the associated operating lease ROU assets. The below table summarizes the revisions to the reconciliation of our income tax rate computed using the federal statutory rate to our actual income tax rate for the year ended December 31, 2021:
|  | Year Ended December 31, |  |  |  |  |  | Year Ended December 31, |
|  | 2021 As Reported |  |  | Adjustment |  |  | 2021 As Revised |
U.S. statutory income tax rate |  |  | 21.0 | % |  |  | 0.0 | % |  |  | 21.0 | %
State taxes, net of federal benefit |  |  | 5.1 | % |  |  | (1.0 | )% |  |  | 4.1 | %
Permanent difference, overaccruals, and non-deductible items |  |  | (40.4 | )% |  |  | 46.7 | % |  |  | 6.3 | %
Change in state rate |  |  | 0.0 | % |  |  | 8.3 | % |  |  | 8.3 | %
Deferred tax valuation allowance |  |  | 14.3 | % |  |  | (53.0 | )% |  |  | (38.7 | )%
Other |  |  | 0.0 | % |  |  | (1.0 | )% |  |  | (1.0 | )%
Total |  |  | 0.0 | % |  |  | 0.0 | % |  |  | 0.0 | %
The table below summarizes the revisions to the attributes of the Deferred Tax Assets as of December 31, 2021:
|  | December 31, |  |  |  |  |  | December 31, |
|  | 2021 As Reported |  |  | Adjustment |  |  | 2021 As Revised |
Deferred tax assets: |  |  |  |  |  |  |  |  |
Net operating loss |  | $ | 6,737,000 |  |  | $ | (1,778,000 | ) |  | $ | 4,959,000 |
Allowance for doubtful accounts |  |  | 155,000 |  |  |  | (6,000 | ) |  |  | 149,000 |
Inventory - IRC 263A adjustment |  |  | 394,000 |  |  |  | (17,000 | ) |  |  | 377,000 |
Stock based compensation - options and restricted stock |  |  | 393,000 |  |  |  | (210,000 | ) |  |  | 183,000 |
Capitalized engineering costs |  |  | 449,000 |  |  |  | (19,000 | ) |  |  | 430,000 |
Amortization - NTW Transaction |  |  | 442,000 |  |  |  | 3,000 |  |  |  | 445,000 |
Inventory reserve |  |  | 824,000 |  |  |  | (34,000 | ) |  |  | 790,000 |
Deferred gain on sale of real estate |  |  | 47,000 |  |  |  | (2,000 | ) |  |  | 45,000 |
Accrued expenses |  |  | 204,000 |  |  |  | (186,000 | ) |  |  | 18,000 |
Disallowed interest |  |  | 1,286,000 |  |  |  | 290,000 |  |  |  | 1,576,000 |
Operating lease liability |  |  | 235,000 |  |  |  | 749,000 |  |  |  | 984,000 |
Capital loss carryforward |  |  | 88,000 |  |  |  | (88,000 | ) |  |  | - |
Total non-current deferred tax asset before valuation allowance |  |  | 11,254,000 |  |  |  | (1,298,000 | ) |  |  | 9,956,000 |
Valuation allowance |  |  | (9,628,000 | ) |  |  | 2,125,000 |  |  |  | (7,503,000 | )
Total non-current deferred tax asset after valuation allowance |  |  | 1,626,000 |  |  |  | 827,000 |  |  |  | 2,453,000 |
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Property and equipment |  |  | (1,626,000 | ) |  |  | (71,000 | ) |  |  | (1,697,000 | )
Operating lease ROU assets |  |  | - |  |  |  | (756,000 | ) |  |  | (756,000 | )
Total deferred tax liabilities |  |  | (1,626,000 | ) |  |  | (827,000 | ) |  |  | (2,453,000 | )
Net deferred tax asset |  | $ | - |  |  | $ | - |  |  | $ | - |
The table below summarizes the revisions to the attributes of the Deferred Tax Assets as of December 31, 2020:
|  | December 31, |  |  |  |  |  | December 31, |
|  | 2020 As Reported |  |  | Adjustment |  |  | 2020 As Revised |
Deferred tax assets: |  |  |  |  |  |  |  |  |
Net operating loss |  | $ | 6,594,000 |  |  | $ | (1,422,000 | ) |  | $ | 5,172,000 |
Allowance for doubtful accounts |  |  | 252,000 |  |  |  | (3,000 | ) |  |  | 249,000 |
Inventory - IRC 263A adjustment |  |  | 341,000 |  |  |  | (3,000 | ) |  |  | 338,000 |
Stock based compensation - options and restricted stock |  |  | 277,000 |  |  |  | (73,000 | ) |  |  | 204,000 |
Capitalized engineering costs |  |  | 336,000 |  |  |  | 228,000 |  |  |  | 564,000 |
Deferred Rent |  |  | 4,000 |  |  |  | - |  |  |  | 4,000 |
Amortization - NTW Transaction |  |  | 495,000 |  |  |  | (73,000 | ) |  |  | 422,000 |
Inventory reserve |  |  | 1,250,000 |  |  |  | (579,000 | ) |  |  | 671,000 |
Deferred gain on sale of real estate |  |  | 132,000 |  |  |  | (1,000 | ) |  |  | 131,000 |
Accrued expenses |  |  | 158,000 |  |  |  | (158,000 | ) |  |  | - |
Disallowed interest |  |  | 1,813,000 |  |  |  | (18,000 | ) |  |  | 1,795,000 |
Operating lease liability |  |  | 292,000 |  |  |  | 905,000 |  |  |  | 1,197,000 |
Total non-current deferred tax asset before valuation allowance |  |  | 11,944,000 |  |  |  | (1,197,000 | ) |  |  | 10,747,000 |
Valuation allowance |  |  | (9,394,000 | ) |  |  | 1,262,000 |  |  |  | (8,132,000 | )
Total non-current deferred tax asset after valuation allowance |  |  | 2,550,000 |  |  |  | 65,000 |  |  |  | 2,615,000 |
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Property and equipment |  |  | (2,150,000 | ) |  |  | 443,000 |  |  |  | (1,707,000 | )
Operating lease ROU assets |  |  | - |  |  |  | (908,000 | ) |  |  | (908,000 | )
Other |  |  | (400,000 | ) |  |  | 400,000 |  |  |  | - |
Total deferred tax liabilities |  |  | (2,550,000 | ) |  |  | (65,000 | ) |  |  | (2,615,000 | )
Net deferred tax asset |  | $ | - |  |  | $ | - |  |  | $ | - |

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