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Income taxes | 12 Months Ended
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Jan. 31, 2021
Income Tax Disclosure [Abstract] |
Income taxes | Income taxes For the year ended January 31, 2021, the Company recorded a tax provision of $49, compared to a tax benefit of $1,780, for the corresponding period in the prior year. Our provision and benefit for income taxes was 0% and 8% of loss before income taxes for the year ended January 31, 2021 and 2020, respectively. The Company's effective tax rate differs from the U.S. statutory tax rate of 21% primarily because the Company records a valuation allowance against the majority of its deferred tax assets, and due to foreign income tax expense recorded for the Company's Canada branch. Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax basis of assets and liabilities using statutory rates. Management of the Company has evaluated the positive and negative evidence pertaining to the realizability of its deferred tax assets, including the Company’s history of losses, and concluded that it is more likely than not that the Company will not recognize the benefits for the majority of its deferred tax assets. On the basis of this evaluation, the Company has recorded a valuation allowance against its deferred tax assets that are not more likely than not to be realized at both January 31, 2021 and January 31, 2020. The Company’s loss before income taxes was primarily generated in the United States for fiscal 2021, fiscal 2020 and fiscal 2019. The effective tax rate is 0% for fiscal 2019. The difference between the U.S. statutory rate of 21.0% and the effective tax rate is primarily due to the change in valuation allowance in fiscal 2019. The Company's income tax provision (benefit) consisted of the following for fiscal 2021 and fiscal 2020:
|  | Year ended January 31,
|  | 2021 |  | 2020
Current tax |  |  |  |
Federal |  | $ | — |  |  | $ | — |
State |  | 114 |  |  |
Foreign |  | — |  |  | (1,005) |
Deferred tax |  |  |  |
Federal |  | (116) |  |  | — |
State |  | (65) |  |  |
Foreign |  | 116 |  |  | (775) |
Total income tax expense (benefit) |  | $ | 49 |  |  | $ | (1,780) |
A reconciliation of income tax benefit computed at the statutory federal income tax rate to income taxes as reflected in the Company's consolidated financial statements is as follows:
|  | January 31, |  | January 31,
|  | 2021 |  | 2020
Federal income tax benefit at statutory rate |  | 21 | % |  | 21 | %
State and local tax, net of federal benefit |  | 10 | % |  | 3 | %
Permanent differences |  | — | % |  | (2) | %
Equity compensation |  | 44 | % |  | 7 | %
Foreign taxes |  | — | % |  | 8 | %
Other |  | (4) | % |  | (4) | %
Change in valuation allowance |  | (71) | % |  | (25) | %
Effective income tax rate |  | — | % |  | 8 | %
Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for the Company's consolidated financial statements and for income tax purposes. The significant components of the Company's deferred tax assets and liabilities as of January 31, 2021 and 2020 are as follows:
|  | January 31,
Deferred tax assets (liabilities) |  | 2021 |  | 2020
Net operating loss carryforwards |  | $ | 51,973 |  |  | $ | 33,641 |
Stock based compensation |  | 1,162 |  |  | 1,340 |
Accruals, reserves, and other expenses |  | 2,823 |  |  | 329 |
Reserve for bad debts |  | 443 |  |  | 251 |
Disallowed interest expense |  | 1,586 |  |  | 1,358 |
Depreciation and amortization |  | — |  |  | 106 |
Total deferred tax assets |  | 57,987 |  |  | 37,025 |
Less valuation allowance |  | (54,563) |  |  | (35,369) |
Net deferred tax assets |  | 3,424 |  |  | 1,656 |
Depreciation and amortization |  | (1,568) |  |  | — |
Intangible assets |  | (440) |  |  | — |
Deferred contract acquisition costs |  | (758) |  |  | (881) |
Total deferred tax liabilities |  | (2,766) |  |  | (881) |
Deferred taxes, net |  | $ | 658 |  |  | $ | 775 |
The Company has accumulated a Federal net operating loss carryforward of approximately $199,079, $124,512 and $100,000 as of January 31, 2021, 2020, and 2019, respectively. This carryforward may be available to offset future income tax liabilities and will expire beginning in 2025. As of January 31, 2021, the Company's foreign branch had net operating loss carryforwards of approximately $2,485, which may be available to offset future income in Canada and will expire beginning in 2030. Due to the uncertainty regarding the ability to realize the benefit of the U.S. deferred tax assets primarily relating to net operating loss carryforwards, valuation allowances have been established to reduce the U.S. deferred tax assets to an amount that is more likely than not to be realized. On the basis of this evaluation, as of January 31, 2021 and 2020, the Company recorded a valuation allowance of $54,563 and $35,369, respectively, to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable foreign income during the carryforward period are reduced. Under the Tax Reform Act of 1986, or the Act, the net operating loss carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss carryforwards could become subject to an annual limitation as the result of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50% as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized on a yearly basis to offset future taxable income. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed multiple financings since its inception which may have resulted in an ownership change as defined by Sections 382 of the Internal Revenue Code, or could result in a change in control in the future. The Company has not done an analysis to determine whether or not ownership changes, as defined by the Act, have occurred since inception. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state, and foreign jurisdictions, where applicable. The Company’s tax years are still open from 2017 to present and, to the extent utilized in future years' tax returns, net operating loss carryforwards at January 31, 2021 will remain subject to examination until the respective tax year is closed. The Company records unrecognized tax benefits as liabilities related to its operations in accordance with ASC 740 and adjusts these liabilities when its judgement changes a s a result of the evaluation of new information previously not available. The Company recognized interest and penalties related to uncertain tax positions in income tax expense. As of January 31, 2021, the Company had no accrued interest or penalties related to uncertain tax positions. The following is a roll forward of the Company's total gross unrecognized tax benefits:
|  | January 31,
|  | 2021 |  | 2020
Unrecognized income tax benefits, opening balance |  | $ | — |  |  | $ | 1,000 |
Increase for income tax positions of prior years |  | — |  |  | — |
Lapse of statute of limitations |  | — |  |  | (1,000) |
Unrecognized income tax benefits, ending balance |  | $ | — |  |  | $ | — |

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- 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
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