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Income Tax Provision
 12 Months Ended
Jan. 31, 2023
Income Tax Disclosure [Abstract]  
Income Tax Provision

Note 12 - Income Tax Provision

 

The income tax provision consists of the following:

 

Income tax provision / (benefit) consists of the following:

 

   January 31, 2023   January 31, 2022 
Federal          
Current  $112,892   $- 
Deferred   (183,565)   32,224 
State and Local          
Current   165,266      
Deferred   (85,489)   264,248 
Income tax provision  $9,104   $296,472 

 

The Company had U.S. federal net operating loss carryovers (NOLs) of approximately $2.7 million and $5.4 million at January 31, 2023 and 2022, respectively, available to offset taxable income through 2034. The Company also has State NOLs of approximately $8.8 million and $10.0 million at January 31, 2023 and 2022, respectively, available to offset future taxable income through 2035.

 

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future generation for taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. There was no valuation allowance as of January 31, 2023 and 2022.

 

The Company evaluated the provisions of ASC 740 related to the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. ASC 740 prescribes a comprehensive model for how a company should recognize, present, and disclose uncertain positions that the Company has taken or expects to take in its tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability is recognized (or amount of net operating loss carry forward or amount of tax refundable is reduced) for unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740.

 

If applicable, interest costs related to the unrecognized tax benefits are required to be calculated and would be classified as “Other expenses – Interest” in the consolidated statements of operations. Penalties would be recognized as a component of “General and administrative.”

 

No interest or penalties on unpaid tax were recorded during the years ended January 31, 2023 and 2022, respectively. As of January 31, 2023 and 2022, no liability for unrecognized tax benefits was required to be reported. The Company does not expect any significant changes in its unrecognized tax benefits in the next year.

 

 

The Company’s deferred tax assets and liabilities consisted of the effects of temporary differences attributable to the following:

 

Deferred Tax Assets 

Year Ended

January 31, 2023

  

Year Ended

January 31, 2022

 
Net operating loss carryovers  $607,351   $1,152,434 
Share-based compensation   32,362    6,854 
Acquisition costs   108,028    88,109 
Capitalized start-up and organization costs   23,740    27,843 
Right of use liability   819,916    798,015 
Inventory   27,057    21,945 
Interest limitation   -    16,224 
Bad debt   49,030    - 
Other   -    18,354 
Total deferred tax assets   1,667,484    2,129,778 
           
Deferred Tax Liabilities          
Fixed assets   65,578    812,528 
Intangibles   77,479    - 
Right of use asset   806,868    868,749 
Total deferred tax liabilities   949,925    1,681,277 
Net deferred tax asset  $717,559   $448,501 

 

The expected tax provision (benefit) based on the statutory rate is reconciled with actual tax provision (benefit) as follows:

 

  

Year Ended

January 31, 2023

  

Year Ended

January 31, 2022

 
US Federal statutory rate   21.00%   21.00%
State income tax, net of federal benefit   3.4    1.08 
Adjustments to deferred tax assets   (24)   627.47 
Non-deductible expenses   -    16.00 
Income tax provision (benefit)   0.4%   665.55%