Income Taxes
 12 Months Ended
Dec. 31, 2014
Income Tax Disclosure [Abstract]  
Income Taxes

6. Income Taxes

 

The following table summarizes the tax provision (benefit) for U.S. federal, state, and foreign taxes on income for the periods noted below:

 

             
        April 20 -   February 1 -
        December 31,   April 19,
    2014   2013   2013
Current            
  Federal $ - $ - $ (667,878)
  State   49,578   51,181   92,852
           
   Foreign   99,331 33,159   34,129
             
Current tax expense   148,909   84,340   (540,897)
             
Deferred            
  Federal   (7,853,302)   (3,087,428)   -
  State   -   -   -
           
   Foreign   (6,671) -   -
           
           
             
Deferred tax expense   (7,859,973)   (3,087,428)   -
             
Total income tax expense $ (7,711,064) $ (3,003,088) $ (540,897)

 

Income taxes differed from the amounts computed by applying the U.S. federal income tax rate of 34% to income (loss) before income taxes as follows:

 

             
        April 20 -   February 1 -
        December 31,   April 19,
    2014   2013   2013
             
Computed expected tax expense (benefit) $ (27,273,428) $ (5,441,153) $ (1,052,114)
State tax expense, net of federal benefit   (2,014,371)   51,181   92,852
Non-taxable income charge   (1,002,749)   (666,472)   -
Nondeductible expenses, principally goodwill & impairment   7,478,000   344,730   431,605
Change in valuation allowance   15,002,153   2,675,467   -
             
Foreign income tax   99,331   33,159   34,129
             
Other   -   -   (47,369)
Total $ (7,711,064) $ (3,003,088) $ (540,897)

 

 

 The tax effects of temporary differences that give rise to significant portions of the deferred tax (assets) liabilities at December 31st are as follows:

 

         
    2014   2013
         
Deferred revenue $ 400,271 $ 161,166
Deferred rent   704,925   -
Deferred state sales tax   30,326   34,000
Bad debt reserve   78,055   46,104
Foreign currency loss   38,238   34,657
Other   (15,417)   -
Current deferred tax assets   1,236,398   275,927
         
Depreciation and Amortization   (371,033)   195,693
Equity Based Compensation   1,476,708   637,881
Intangible Assets   4,931,178   (7,476,737)
Net operating loss carryforwards   10,413,423   3,702,754
Other   1,024,904   0
Net non-current deferred tax assets (liabilities)   17,475,180   (2,940,409)
Total Deferred tax assets (liabilities) non-current   18,711,578   (2,664,482)
Valuation allowance   (18,704,907)   (3,702,754)
         
Net deferred tax assets (liabilities) $ 6,671 $ (6,367,236)

 

The Company evaluates the recoverability of the deferred income tax assets and the associated valuation allowances on a regular basis.  The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible.  The increase in the valuation allowance from 2013 to 2014 was $15,002,153 and is primarily due to intangible asset impairment and changes in net operating loss carryforwards.

 

At December 31, 2014, the Company had federal net operating loss carryforwards of approximately $27,316,307 which expire in 2032-2034. Of the $10,413,423 in non-current net operating losses above, approximately $1,131,511 relates to state net operating losses. The Company evaluates a variety of factors on a regular basis to determine the amount of deferred income tax assets to recognize in the financial statements.  These factors include the Company’s recent earnings history, projected future taxable income, the number of years the Company’s net operating loss and tax credits can be carried forward, the existence of taxable temporary differences, and available tax planning strategies.

 

The Company accounts for uncertain tax positions in accordance with FASB ASC Topic 740.  This guidance prescribes a comprehensive model as to how a company should recognize, present, and disclose in its financial statement uncertain tax positions that a company has taken or expects to take on its tax return.  Symon’s open tax years are for the years ended January 31, 2011, 2012, and 2013 and the short period ending April 19, 2013.  All RMG tax years within the statute of limitations are open.  As of December 31, 2014 and 2013, the Company had no accruals recorded for uncertain tax positions.  The Company has elected to recognize accrued interest and penalties related to income tax matters as a component of income tax expense if incurred.  For the year ended December 31, 2014, the period April 20 through December 31, 2013, and the period February 1 through April 19, 2013, there were no such costs related to income taxes.  It is determined not to be reasonably likely for the amounts of unrecognized tax benefits to significantly increase or decrease within the next 12 months.  The Company is currently subject to a three year statute of limitation by major tax jurisdictions.