| Schedule of Components of Income Tax Expense (Benefit) |
Income tax provision (benefit) reported in the consolidated statements of operations is comprised of the following (rounded to hundreds):
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December 31, |
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2019 |
|
2018 |
| Current provision (benefit): |
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| Federal |
$ |
— |
|
|
$ |
— |
|
| State, net of state tax credits |
47,200 |
|
|
39,300 |
|
| Total current provision (benefit) |
47,200 |
|
|
39,300 |
|
| Deferred provision (benefit): |
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|
| Federal |
800 |
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|
(90,000) |
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| State |
1,000 |
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|
13,000 |
|
| Total deferred provision (benefit) |
1,800 |
|
|
(77,000) |
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| Total income tax provision (benefit) |
$ |
49,000 |
|
|
$ |
(37,700) |
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| Schedule of Deferred Tax Assets and Liabilities |
The following are the components of the Company’s deferred tax assets (liabilities) for federal and state income taxes (rounded to hundreds):
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December 31, |
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2019 |
|
2018 |
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|
(as adjusted) |
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| Deferred income tax assets: |
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|
|
| Accrued expenses |
$ |
515,800 |
|
|
$ |
361,100 |
|
| Deferred revenue |
4,435,400 |
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|
3,092,500 |
|
| Deferred rent |
— |
|
|
237,900 |
|
| Lease abandonment |
— |
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|
96,500 |
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| Lease liability |
3,782,800 |
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|
— |
|
| Goodwill - component 2 |
55,300 |
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|
52,500 |
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| Restricted stock compensation |
3,900 |
|
|
— |
|
| Nonqualified stock options |
198,900 |
|
|
184,400 |
|
| Net operating loss carryforwards |
3,585,700 |
|
|
6,175,600 |
|
| Tax credits |
33,800 |
|
|
14,000 |
|
| Charitable contribution carryover |
— |
|
|
15,500 |
|
| Asset basis difference related to property and equipment |
214,000 |
|
|
458,600 |
|
| Intangibles |
595,800 |
|
|
435,900 |
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| Total deferred income tax assets |
13,421,400 |
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|
11,124,500 |
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| Deferred income tax liabilities: |
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|
|
|
| Lease right-of-use asset |
(3,267,900) |
|
|
— |
|
| Deferred franchise costs |
(406,500) |
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|
(574,100) |
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| Goodwill - component 1 |
(245,500) |
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|
(194,700) |
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| Restricted stock compensation |
— |
|
|
(30,800) |
|
| Total deferred income tax liabilities |
(3,919,900) |
|
|
(799,600) |
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| Valuation allowance |
(9,591,400) |
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|
(10,401,600) |
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| Net deferred tax liability |
$ |
(89,900) |
|
|
$ |
(76,700) |
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| Schedule of Effective Income Tax Rate Reconciliation |
The following is a reconciliation of the statutory federal income tax rate applied to pre-tax accounting net income, compared to the income tax provision (benefit) in the consolidated statement of operations (rounded to hundreds):
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For the Years Ended December 31, |
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2019 |
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2018 (as adjusted) |
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Amount |
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Percent |
|
Amount |
|
Percent |
| Expected federal tax expense (benefit) |
$ |
731,600 |
|
|
21.0 |
% |
|
$ |
22,900 |
|
|
21.0 |
% |
| State tax provision, net of federal benefit |
315,800 |
|
|
9.1 |
% |
|
(63,600) |
|
|
(58.4) |
% |
| Change in valuation allowance |
(810,200) |
|
|
(23.3) |
% |
|
51,600 |
|
|
47.4 |
% |
| Other permanent differences |
41,700 |
|
|
1.2 |
% |
|
13,200 |
|
|
12.1 |
% |
| Stock compensation |
(232,600) |
|
|
(6.7) |
% |
|
(40,800) |
|
|
(37.4) |
% |
| Bargain purchase gain |
(5,100) |
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|
(0.1) |
% |
|
(16,100) |
|
|
(14.8) |
% |
| Return to provision adjustments |
7,800 |
|
|
0.2 |
% |
|
(4,900) |
|
|
(4.5) |
% |
| Provision (benefit) |
$ |
49,000 |
|
|
1.4 |
% |
|
$ |
(37,700) |
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|
(34.6) |
% |
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