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INCOME TAXES | 12 Months Ended
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Jan. 31, 2013
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | 8. INCOME TAXES The provision for income taxes is based on the following pretax income (loss):
|  | FY 13 |  | FY 12 |
Domestic and Foreign Pretax Income (Loss) |  | Total |  | Continuing Operations |  | Discontinued Operations |  | Total |  | Continuing Operations |  | Discontinued Operations |
Domestic |  | $ | (11,394,955) |  | $ | (11,394,955) |  | $ | — |  | $ | (1,810,731) |  | $ | (1,810,731) |  | $ | — |
Foreign |  |  | (10,136,243) |  | $ | (9,336,243) |  | $ | (800,000) |  | $ | 334,627 |  | $ | 2,649,586 |  | $ | (2,314,959) |
Total |  | $ | (21,531,198) |  | $ | (20,731,198) |  | $ | (800,000) |  | $ | (1,476,104) |  | $ | 838,855 |  | $ | (2,314,959) |
Income Tax Expense (Benefit) |  | Total |  | Continuing Operations |  | Discontinued Operations |  | Total |  | Continuing Operations |  | Discontinued Operations |
Current: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | — |  | $ | — |  | $ | — |  | $ | (304,615) |  | $ | (304,615) |  | $ | — |
State and other taxes |  |  | (130,213) |  | $ | (130,213) |  |  | — |  |  | — |  |  | — |  |  | — |
Foreign |  |  | 688,836 |  | $ | 688,836 |  |  | — |  | $ | 198,221 |  | $ | 198,221 |  |  | — |
Deferred: |  |  |  |  |  |  |  |  |  |  | $ | (992,885) |  | $ | (147,925) |  | $ | (844,960) |
Domestic |  | $ | (1,269,245) |  | $ | (990,952) |  | $ | (278,293) |  |  |  |  |  |  |  |  |  |
Valuation Allowance-Deferred Tax Asset |  |  | 4,544,431 |  |  | 4,544,431 |  |  | — |  |  |  |  |  |  |  |  |  |
Foreign |  |  | 923,663 |  |  | 923,663 |  |  | — |  |  |  |  |  |  |  |  |  |
Total |  | $ | 4,757,451 |  | $ | 5,035,764 |  | $ | (278,293) |  | $ | (1,099,279) |  | $ | (254,319) |  | $ | (844,960) |
The following is a reconciliation of the effective income tax rate to the Federal statutory rate:
|  | 2013 |  | 2012 |
Statutory rate |  |  | 34.0 | % |  | 34.0 | %
State income taxes, net of Federal tax benefit |  |  | 2.5 | % |  | 2.5 | %
Goodwill and other intangibles impairment charge |  |  | (46.23) | % |  | — |
Arbitration settlement charge |  |  | (12.43) | % |  | — |
Permanent differences |  |  | (12.90) | % |  | (2.8) | %
Foreign tax rate differential* |  |  | 32.38 | % |  | 37.8 | %
Various tax credits |  |  | — |  |  | 3.0 | %
Valuation Allowance-deferred tax asset |  |  | (21.11) | % |  | — |
Other |  |  | 1.66 | % |  | — |
Effective rate |  |  | (22.13) | % |  | 74.5 | %
* The foreign rate differential is very high due to losses in India, Chile and Argentina treated as pass through entities for US tax purposes, the VAT tax charge in Brazil and the elimination of intercompany profit in inventory, all of which serve to reduce the consolidated pretax income. The tax effects of temporary differences which give rise to deferred tax assets at January 31, 2013 and 2012, are summarized as follows:
|  | 2013 |  | 2012 |
Deferred tax assets: |  |  |  |  |  |  |
Inventories |  | $ | 812,054 |  | $ | 959,971 |
US tax loss carry-forwards, including work opportunity credit |  |  | 1,520,142 |  |  | 569,376 |
Accounts receivable and accrued rebates |  |  | 94,877 |  |  | 81,922 |
Accrued compensation and other |  |  | 184,214 |  |  | 176,322 |
India inventory reserves - US deduction |  |  | 963,524 |  |  | 514,712 |
Equity based compensation |  |  | 218,942 |  |  | 447,220 |
Foreign tax credit carry-forward |  |  | 407,092 |  |  | 156,741 |
State and local carry-forwards |  |  | 96,810 |  |  | 126,161 |
Depreciation and other |  |  | 246,776 |  |  | 246,247 |
Brazil carryforward resulting from goodwill write-offs |  |  | — |  |  | 709,000 |
Deferred tax asset |  |  | 4,544,431 |  |  | 3,987,672 |
Less Valuation Allowance |  |  | (4,544,431) |  |  | — |
Net deferred tax asset |  | $ | 0 |  | $ | 3,987,672 |
Valuation Allowance We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In the event we were to determine that it would be able to realize deferred income tax assets in the future in excess of net recorded amount, we would make an adjustment to the valuation allowance which would reduce the provision for income taxes. The valuation allowance $4,544,431 at January 31, 2013 ($0 in 2012) Tax Audit Income Tax Audit/Change in Accounting Estimate The Company is subject to US federal income tax, as well as income tax in multiple US state and local jurisdictions and a number of foreign jurisdictions. The Company’s federal income tax returns for the fiscal years ended January 31, 2003, 2004, 2005 and 2007, have been audited by the Internal Revenue Service (“IRS”). The Company has received a final “No Change Letter” from the IRS for FY07 dated August 20, 2009. The Company has received notice from the IRS on March 21, 2011, that it will shortly commence an audit for the FY09 tax return. There have been no further communications from the IRS since. Our three major foreign tax jurisdictions are China, Canada and Brazil. China tax authorities performed a fraud audit, but the scope was limited to the fraud activities found in late FY09 as discussed more fully in Note 15 to the Company’s Form 10-K for the year ended January 31, 2010. This audit covered tax years from 2003 through 2008. We reached a settlement with the Chinese Government in January 2009. China tax authorities have performed limited reviews on all China subsidiaries as of tax years 2008, 2009, 2010, and 2011 and 2012 with no significant issues noted. We believe our tax positions are reasonably stated as of January 31, 2013. On May 9, 2013, one of our China operations was notified by local tax authority that they could conduct an audit on transfer pricing. After preliminary communication with the tax authority, we believe the additional tax liability will be no more than RMB100,000 or USD16,000. At the same time, China tax authority also questioned about the retained earning amount for not being repatriated to corporate and the delayed payment in trade payable from corporate the sisters companies, especially from US parent to China. Additionally, China tax authority also questioned if there is any tax avoidance motive in the investment of USD500,000 to our Argentina subsidiary. We do not believe there will be any material tax consequences from the latter two inquiries. Lakeland Protective Wear, Inc., our Canadian subsidiary, follows Canada tax regulatory framework recording its tax expense and tax deferred assets or liabilities. As of this statement filing date, we believe the Company’s tax situation is reasonably stated, and we do not anticipate future tax liability for fiscal year ended January 31, 2013, or prior years. The Company’s Brazilian subsidiary is currently under a tax audit, which raised some issues regarding the tax impact related to the merger held in 2008 and the resulting goodwill resulting from the structure which was set up by the Company's Brazilian counsel's suggestion. The Company has not received any formal communication from the authorities. There is no formal claim received, and there may not be such a claim in any case. However, this structure is relatively common in acquisitions of Brazilian operations made by non-Brazilian companies. In general, acquisitions with this structure have survived challenge by the taxing authorities in Brazil. The cumulative amount of tax benefits recognized on the Company’s books through January 31, 2013, resulting from the tax deduction of the goodwill amortization is approximately USD$0, net of the deferred tax valuation reserve. This results from the goodwill on the Brazilian books which, for Brazilian tax purposes, is eligible for tax write-off over a five year period dating from November 2008.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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