| Summary of temporary differences |
At November 30, 2016 and November 30, 2015, respectively, the Company had temporary differences arising from the following:
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November 30, 2016 |
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Classified As |
Type |
|
Amount |
|
Deferred Tax |
|
Short-Term
Asset |
|
Long-Term
Asset |
Depreciation |
|
$ |
(349,763 |
) |
|
$ |
(127,489 |
) |
|
$ |
— |
|
|
$ |
(127,489 |
) |
Reserve for bad debts |
|
15,801 |
|
|
5,759 |
|
|
5,759 |
|
|
— |
|
Reserve for returns |
|
941,228 |
|
|
343,078 |
|
|
343,078 |
|
|
— |
|
Accrued returns |
|
194,873 |
|
|
71,031 |
|
|
71,031 |
|
|
— |
|
Reserve for obsolete inventory |
|
500,156 |
|
|
182,307 |
|
|
182,307 |
|
|
— |
|
Vacation accrual |
|
29,528 |
|
|
10,763 |
|
|
10,763 |
|
|
— |
|
Alternative minimum tax carry forward |
|
— |
|
|
20,000 |
|
|
— |
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|
20,000 |
|
Deferred compensation |
|
304,945 |
|
|
111,153 |
|
|
— |
|
|
111,153 |
|
Bonus obligations unpaid |
|
304,355 |
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|
110,937 |
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|
110,937 |
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— |
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Restructuring costs |
|
925,000 |
|
|
337,163 |
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|
337,163 |
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|
— |
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Charitable contributions |
|
584,558 |
|
|
213,071 |
|
|
96,249 |
|
|
116,822 |
|
Section 263A costs |
|
79,539 |
|
|
28,992 |
|
|
28,992 |
|
|
— |
|
Loss carry forward |
|
25,398,347 |
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|
9,257,698 |
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|
962,485 |
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|
8,295,213 |
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Net deferred tax asset |
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|
$ |
10,564,463 |
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|
$ |
2,148,764 |
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$ |
8,415,699 |
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November 30, 2015 |
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Classified As |
Type |
|
Amount |
|
Deferred Tax |
|
Short-Term
Asset |
|
Long-Term
(Liability) |
Depreciation |
|
$ |
(250,811 |
) |
|
$ |
(92,558 |
) |
|
$ |
— |
|
|
$ |
(92,558 |
) |
Reserve for bad debts |
|
4,911 |
|
|
1,812 |
|
|
1,812 |
|
|
— |
|
Reserve for returns |
|
907,777 |
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|
335,003 |
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|
335,003 |
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|
— |
|
Accrued returns |
|
407,992 |
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|
150,564 |
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|
150,564 |
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— |
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Reserve for obsolete inventory |
|
821,259 |
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|
303,075 |
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|
303,075 |
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— |
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Vacation accrual |
|
35,955 |
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|
13,269 |
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|
13,269 |
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— |
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Bonus obligations unpaid |
|
24,000 |
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|
8,857 |
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|
8,857 |
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— |
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Restructuring costs |
|
1,264,218 |
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|
466,544 |
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|
466,544 |
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— |
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Charitable contributions |
|
734,643 |
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|
271,109 |
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|
86,402 |
|
|
184,707 |
|
Section 263A costs |
|
67,129 |
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|
24,773 |
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|
24,773 |
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— |
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Loss carry forward |
|
27,022,986 |
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|
9,972,473 |
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|
864,023 |
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|
9,108,450 |
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Net deferred tax asset |
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|
$ |
11,454,921 |
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$ |
2,254,322 |
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$ |
9,200,599 |
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| Schedule of income tax expense |
Income tax(benefit) expense is made up of the following components:
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November 30, |
Continuing Operations |
|
2016 |
|
2015 |
|
2014 |
Current tax - Federal |
|
$ |
20,000 |
|
|
$ |
— |
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|
$ |
— |
|
Current tax - State & Local |
|
28,949 |
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|
(2,795 |
) |
|
33,664 |
|
Deferred tax expense (benefit) |
|
899,584 |
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(1,589,514 |
) |
|
(1,740,876 |
) |
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|
$ |
948,533 |
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|
$ |
(1,592,309 |
) |
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$ |
(1,707,212 |
) |
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November 30, |
Discontinued Operations |
|
2016 |
|
2015 |
|
2014 |
Current tax - Federal |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Current tax - State & Local |
|
— |
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|
— |
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|
— |
|
Deferred tax (benefit) expense |
|
(9,126 |
) |
|
6,073 |
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(3,651,431 |
) |
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|
$ |
(9,126 |
) |
|
$ |
6,073 |
|
|
$ |
(3,651,431 |
) |
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| Provision for income taxes computed at the statutory rate |
A reconciliation of the (benefit from) provision for income taxes computed at the statutory rate to the effective rate for the three years ended November 30, 2016, 2015 and 2014 is as follows:
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2016 |
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2015 |
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2014 |
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Amount |
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Percent of Pretax Income |
|
Amount |
|
Percent of Pretax Income |
|
Amount |
|
Percent of Pretax Income |
Continuing Operations |
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Provision for (benefit from) income taxes at federal statutory rate |
|
$ |
728,014 |
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|
34.00 |
% |
|
$ |
(1,648,640 |
) |
|
34.00 |
% |
|
$ |
(1,533,618 |
) |
|
34.00 |
% |
Changes in provision for (benefit from) income taxes resulting from: |
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State income taxes, net of federal income tax benefit |
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52,460 |
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|
2.45 |
% |
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(140,619 |
) |
|
2.90 |
% |
|
(130,809 |
) |
|
2.90 |
% |
Change in tax rate related to future deferred tax benefits |
|
140,483 |
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|
6.56 |
% |
|
— |
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— |
% |
|
— |
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|
— |
% |
Non-deductible expenses and other adjustments |
|
27,576 |
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|
1.29 |
% |
|
196,950 |
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(4.06 |
)% |
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(42,785 |
) |
|
0.95 |
% |
Provision for (benefit from) income taxes at effective rate |
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$ |
948,533 |
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44.30 |
% |
|
$ |
(1,592,309 |
) |
|
32.84 |
% |
|
$ |
(1,707,212 |
) |
|
37.85 |
% |
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Discontinued Operations |
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(Benefit from) provision for income taxes at federal statutory rate |
|
$ |
(7,004 |
) |
|
34.00 |
% |
|
$ |
6,288 |
|
|
34.00 |
% |
|
$ |
(3,280,140 |
) |
|
34.00 |
% |
Changes in (benefit from) provision for income taxes resulting from: |
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State income taxes, net of federal income tax benefit |
|
(505 |
) |
|
2.45 |
% |
|
536 |
|
|
2.90 |
% |
|
$ |
(279,777 |
) |
|
2.90 |
% |
Non-deductible expenses and other adjustments |
|
(1,617 |
) |
|
7.85 |
% |
|
(751 |
) |
|
(4.06 |
)% |
|
(91,514 |
) |
|
0.95 |
% |
(Benefit from) provision for income taxes at effective rate |
|
$ |
(9,126 |
) |
|
44.30 |
% |
|
$ |
6,073 |
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|
32.84 |
% |
|
$ |
(3,651,431 |
) |
|
37.85 |
% |
|