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INCOME TAXES | 12 Months Ended
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Jan. 31, 2015
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):
Domestic and Foreign Pretax Income (Loss) |  | FY15 |  | FY14 |
Domestic |  | $ | (472,667) |  | $ | 1,962,763 |
Foreign |  |  | 534,011 |  |  | (4,933,655) |
Total |  | $ | 61,344 |  | $ | (2,970,892) |
Income Tax Expense (Benefit) |  |  | FY15 |  |  | FY14 |
Current: |  |  |  |  |  |  |
Federal |  | $ | (222,315) |  | $ | 512,202 |
State and other taxes |  |  | 129,893 |  |  | 39,810 |
Foreign |  |  | 1,246,378 |  |  | 1,303,875 |
Deferred: |  |  |  |  |  |  |
Domestic |  | $ | (12,437,201) |  | $ | (162,847) |
Valuation allowance-deferred tax asset |  |  | 2,945,885 |  |  | (4,544,431) |
Foreign |  |  | — |  |  | — |
Total |  | $ | (8,337,360) |  | $ | (2,851,391) |
Numbers may not add due to rounding The following is a reconciliation of the effective income tax rate to the Federal statutory rate:
|  | 2015 |  |  | 2014 |
Statutory rate |  |  | 34.00 | % |  |  | 34.00 | %
State income taxes, net of Federal tax benefit |  |  | (592.85) | % |  |  | (0.88) | %
Adjustment to Deferred |  |  | 84.97 | % |  |  | — |
Dividend from sale of Qingdao and from Canada relating to financing |  |  | 758.69 | % |  |  | (17.33) | %
Brazil losses with no tax benefit |  |  | — |  |  |  | (69.42) | %
Brazil Worthless Stock Deduction |  |  | (19,135.81) | % |  |  | — |
Original Issue Discount |  |  | 1,077.32 | % |  |  | — |
Argentina Flowthrough Loss |  |  | (170.62) | % |  |  | — |
Permanent differences |  |  | (38.02) | % |  |  | (12.44) | %
Foreign tax rate differential* |  |  | — |  |  |  | 2.67 | %
Valuation allowance-deferred tax asset |  |  | 4,802.37 | % |  |  | 159.38 | %
Other |  |  | (411.60) | % |  |  | — |
Effective rate |  |  | (13,591.55) | % |  |  | 95.98 | %
* The foreign rate differential is 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, 2015 and 2014 are summarized as follows:
|  | 2015 |  | 2014 |
Deferred tax assets: |  |  |  |  |  |  |
Inventories |  | $ | 1,153,094 |  | $ | 1,545,663 |
US tax loss carryforwards, including work opportunity credit* |  |  | 11,931,395 |  |  | 233,798 |
Accounts receivable and accrued rebates |  |  | 80,748 |  |  | 125,159 |
Accrued compensation and other |  |  | 137,860 |  |  | 183,434 |
India reserves - US deduction |  |  | 164,190 |  |  | 613,200 |
Equity based compensation |  |  | 573,966 |  |  | 215,872 |
Foreign tax credit carry-forward |  |  | 2,170,109 |  |  | 1,243,519 |
State and local carry-forwards |  |  | 980,872 |  |  | 145,528 |
Depreciation and other |  |  | 146,657 |  |  | 299,756 |
Amortization |  |  | (148,516) |  |  | — |
Accrued interest on subordinated debt |  |  | — |  |  | 101,349 |
Deferred tax asset |  |  | 17,190,375 |  |  | 4,707,278 |
Less valuation allowance |  |  | 2,945,884 |  |  | — |
Net deferred tax asset - USA |  | $ | 14,244,491 |  | $ | 4,707,278 |
Shown on the accompanying balance sheet as follows: |  |  |  |  |  |  |
Current |  | $ | 1,143,893 |  | $ | 4,707,278 |
Non-current |  | $ | 13,100,598 |  |  | — |
*The federal net operating loss (“NOL”) that is left after FY15 will expire after 1/31/2035 (20 years from the generated date of 1/31/2015). The credits will begin to expire after 1/31/2030 (20 years from the 1st carryover year generated date of 1/31/2010) and will fully expire after 1/31/2033. The state NOLs will begin to expire after 1/31/2025 and will continue to expire at various periods up until 1/31/2035 when they will be fully expired. The states have a larger spread because some only carryforward for 15 years and some allow 20 years. 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 the Company would not 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 was $2.9 million at January 31, 2015 ($0 at January 31, 2014). As a result of the going concern uncertainty in FY13, the Company recorded a valuation allowance for the full amount of $4.5 million in 2013 of the deferred tax assets. During FY14, the Company successfully refinanced its FY14 and long term debt and alleviated substantial doubt of a going concern. As such, the Company reversed the valuation allowance previously provided. As discussed below, the Company plans to take a worthless stock deduction related to its Brazilian operations in 2015. As this will be a foreign source deduction, the future use of the foreign tax credits both current and carryovers from prior years, is uncertain. As such the Company has established a valuation allowance of $2.9 million to reflect this uncertainty. Worthless stock deduction in USA for Brazil operations For US tax purposes, the Company has claimed a worthless stock deduction for its Brazilian operations which will yield a tax benefit of $9.5 million net of a valuation allowance of $2.9 million. This will generate an operating loss carryforward available to offset future USA taxable income 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 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. The Company has not had any recent US corporate income tax returns examined by the Internal Revenue Service. Returns for the year since 2011 are still open based on statutes of limitation only. Chinese tax authorities have performed limited reviews on all Chinese subsidiaries as of tax years 2008, 2009, 2010, 2011, 2012, and 2013 with no significant issues noted. We believe our tax positions are reasonably stated as of January 31, 2015. On August 20, 2014, Weifang Lakeland Safety Products Co., Ltd., one of our Chinese operations, was notified by the local tax authority that it would conduct an audit on income tax and transfer pricing and the tax inspector took all accounting documents of 2011, 2012, and 2013, back to the tax bureau. In October, the tax inspector returned all accounting documents to us. There was no material exposure from these audits. Our operations in the UK are profitable and continue to be subject to UK taxation. Management is not aware of any exposure in the UK. 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 Lakeland Protective Wear, Inc.’s tax situation is reasonably stated in accordance with accounting principles generally accepted in the United States of America, and we do not anticipate future tax liability. 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 goodwill resulting from the structure which was set up by the Company's Brazilian counsel's suggestion. The structure used 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, 2015, resulting from the tax deduction of the goodwill amortization is approximately US $0.9 million (R$ 2,774,843) consisting of tax of approximately US $0.1 million (R$ 280,416) and the remainder in interest and penalties. In February 2015, a court decision was reached in favor of the Company and as such no provision has been recorded. In connection with the exit plan from Brazil described in Note 17, we will claim a worthless stock deduction which the Company anticipates will generate of tax benefit of approximately US $9.5 million, net of a US $2.9 million valuation allowance. While the Company and its tax advisors believe that this deduction is valid, there can be no assurance that the IRS will not challenge it and, if challenged, there is no assurance that the Company will prevail. Except in Canada, it is our practice and intention to reinvest the earnings of our non-US subsidiaries in their operations. As of January 31, 2015, the Company had not made a provision for US or additional foreign withholding taxes on approximately $21.6 million of the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration ($18.0 million at January 31, 2014). Generally, such amounts become subject to US taxation upon remittance of dividends and under certain other circumstances. If theses earnings were repatriated to the US, the deferred tax liability associated with these temporary differences would be approximately $3.2 million and $3.2 million at January 31, 2015 and 2014, respectively. In China, a dividend of $1.3 million was declared and paid to the Company in July 2014 from the Company’s China subsidiary, Weifang Lakeland Safety Products Co., Ltd. (“Weifang”) and in August 2014, a dividend of $450,000 was declared from the Company’s China subsidiary, Weifang Meiyang Protective Products Co., Ltd. (“Meiyang”) and paid to the Company in October 2014. The Company’s Board of Directors has instituted a plan to pay annual dividends of $1.0 million to the Company from Weifang’s future profits and 33% of Meiyang’s future profits starting in the next fiscal year. All other retained earnings are expected to be reinvested indefinitely.

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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=26873400&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 + Details
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