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Income Taxes | 12 Months Ended
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Jan. 31, 2021
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE 5 - INCOME TAXES On March 27, 2020, the Federal government of the United States enacted the Coronavirus Aid Relief and Economic Security Act (“CARES Act”) which includes a number of significant changes to the existing U.S. tax laws including postponing the filing date of specific federal income tax returns and payments from April 15, 2020 to July 15, 2020, temporarily increasing the 30% limitation on the interest deduction to 50%, introduction of a capital investment deduction for Qualified Improvement Property (“QIP”), and change in the use of net operating losses. The Company’s federal net operating losses that have been incurred in tax years beginning on or before December 31, 2017 will have a 20-year carryforward limitation, a two-year carryback period and can offset 100% of future taxable income. Net operating losses incurred in tax years beginning after December 31, 2017 and before January 1, 2021 will have an indefinite life, a five-year carryback period and can offset 100% of future taxable income prior to 2021 and 80% of future taxable income after 2020. Net operating losses incurred in tax years beginning on or after January 1, 2021 will have an indefinite life, generally no carryback period and can offset 80% of future taxable income. State taxes for the fiscal years ended January 31, 2021 and February 2, 2020, were approximately $86,000 and $43,000 respectively. The components of deferred income taxes follow:
|  | 2021 |  |  | 2020 |
Deferred Income Tax Assets |  |  |  |  |  |
Federal net operating loss carryforward |  | $ | 7,762,784 |  |  | $ | 12,455,237 |
State net operating loss carryforward |  |  | 1,817,622 |  |  |  | 2,485,074 |
Intangible assets |  |  | 286,297 |  |  |  | 244,053 |
Accrued liabilities |  |  | 4,422,738 |  |  |  | 1,833,549 |
Equity-based compensation |  |  | 1,082,820 |  |  |  | 503,201 |
Property and equipment |  |  | 640,581 |  |  |  | 1,748,593 |
Merchandise inventories |  |  | 330,333 |  |  |  | 254,034 |
Charitable Contributions |  |  | 9,615 |  |  |  | - |
Total Deferred Income Tax Assets |  |  | 16,352,790 |  |  |  | 19,523,741 |
Valuation Allowance |  |  | (16,352,790 | ) |  |  | (19,523,741 | )
Net Deferred Income Tax Asset |  | $ | - |  |  | $ | - |
The income tax provision differs from the amount obtained by applying the statutory Federal income tax rate to pre-tax income as follows:
|  | 2021 |  |  | 2020 |
Provision (benefit) at Federal Statutory rates |  | $ | 3,110,696 |  |  | $ | (3,183,958 | )
Permanent adjustments |  |  | (410,550 | ) |  |  | (847,531 | )
State tax, net of Federal provision (benefit) |  |  | 495,442 |  |  |  | (582,572 | )
Federal True-ups |  |  | 61,052 |  |  |  | (393,702 | )
Uncertain tax positions- NOLS |  |  | - |  |  |  | (10,753,384 | )
Change in valuation allowance |  |  | (3,170,951 | ) |  |  | 15,804,459 |
Income tax provision |  | $ | 85,689 |  |  | $ | 43,312 |
The Company is subject to federal, state and local corporate income taxes. The components of the provision for income taxes reflected on the consolidated statements of operations are set forth below:
|  | 2021 |  |  | 2020 |
Current taxes: |  |  |  |  |  |
U.S. federal |  | $ | - |  |  | $ | - |
State and local |  |  | 85,689 |  |  |  | 43,312 |
Total current tax expense |  | $ | 85,689 |  |  | $ | 43,312 |
Deferred taxes: |  |  |  |  |  |  |  |
U.S. federal |  | $ | - |  |  | $ | - |
State and local |  |  | - |  |  |  | - |
Total deferred tax expense (benefit) |  | $ | - |  |  | $ | - |
Total tax provision |  | $ | 85,689 |  |  | $ | 43,312 |
Differences in terms of percentages are as follows:
|  | 2021 |  |  | 2020 |
Provision (benefit) at Federal Statutory rates |  |  | 21.0 | % |  |  | -21.0 | %
Permanent adjustments |  |  | -2.8 | % |  |  | -5.6 | %
State tax, net of Federal provision (benefit) |  |  | 3.4 | % |  |  | -3.8 | %
Federal True-ups |  |  | 0.4 | % |  |  | -2.6 | %
Uncertain tax positions- NOLS |  |  | 0.0 | % |  |  | -70.9 | %
Change in valuation allowance |  |  | -21.4 | % |  |  | 104.2 | %
Income tax provision |  |  | 0.60 | % |  |  | 0.30 | %
At January 31, 2021 and February 2, 2020, the Company has net operating loss carryforwards available for federal income tax purposes of approximately $36,966,000 and $59,311,000, respectively, which are scheduled to expire in varying amounts from fiscal 2027 to fiscal 2037. In addition, the Company has approximately $30,399,000 and $42,618,000 of state net operating loss carryforwards as of January 31, 2021 and February 2, 2020, respectively. In fiscal 2020 a reserve had been released that was previously recorded against the net operating losses in accordance with ASC 740-10 due to a Private Letter Ruling (“PLR”) that was issued by the IRS. The PLR approved the late filing of Form 8832, “Entity Classification Election”. Due to the filing of this form, the Company believes that the Federal and State NOLs will be available for future utilization. As defined in Section 382 of the Internal Revenue Code, certain ownership changes limit the annual utilization of federal net operating losses. As a result of issuance, sales and other transactions involving the Company’s stock, the Company experienced an ownership change during fiscal years ended January 31, 2011, February 3, 2019, and January 31, 2021 which have caused such federal net operating losses to be subject to limitation under Section 382. The annual base limitation from 2011, 2019, and 2021 are approximately $302,000, $5,888,000, and $7,665,000 respectively. The Company is entitled to additional limitation based on the net unrealized built-in gain computation, which results in additional limitation of approximately $40,000,000 over the next 5 years. There is no impact on the overall provision since the Company has a full valuation allowance against its deferred tax assets. During fiscal year ending January 31, 2021 and February 2, 2020, the Company increased/(decreased) the valuation allowance by approximately ($3,171,000) and $15,804,000 respectively. The changes in the amount of unrecognized tax benefits in the fiscal years ending January 31, 2021 and February 2, 2020 were as follows:
|  | 2021 |  |  | 2020 |
Beginning balance |  | $ | - |  |  | $ | 10,753,384 |
Additions for tax positions acquired |  |  | - |  |  |  | - |
Additions for tax positions related to current year |  |  | - |  |  |  | - |
Tax positions of prior years: |  |  |  |  |  |  |  |
Payments |  |  | - |  |  |  | - |
Settlements |  |  | - |  |  |  | - |
Release |  |  | - |  |  |  | (10,753,384 | )
Ending balance |  | $ | - |  |  | $ | - |
The Company adopted FAS Accounting Standard 2013-11. The pronouncement requires the Company to offset its uncertain tax positions against certain deferred tax assets in the same jurisdiction.

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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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