INCOME TAXES

12 Months Ended

Jan. 31, 2023

INCOME TAXES

INCOME TAXES

Note 11 – INCOME TAXES

The Company has established a full valuation allowance against its deferred tax assets as of January 31, 2023 and 2022. The valuation allowance is based on management’s assessment that it is more likely than not that the deferred tax assets will not be realized due to the Company’s limited operating history and history of net losses.

The Company had approximately $4.5 million of federal net operating loss (“NOL”) carryforwards as of January 31, 2023, which may be available to offset future taxable income. Federal NOLs arising in tax years beginning after 2017 can be carried forward indefinitely but are limited to offsetting 80% of taxable income in any given year, pursuant to  current U.S. tax law. State NOLs are subject to separate rules and expiration periods.

The following is a reconciliation of the federal statutory tax rate to the effective tax rate:

	Year ended January 31,
	2023			2022
Statutory federal income tax rate		21.00	%		21.00	%
State income taxes, net of federal tax benefit		(0.00	)		-
Valuation allowance		(20.84	)		-
Other, net		-0.04			(1.73	)
Effective tax rate		0.12	%		19.27	%

The components of the income tax provision/(benefit) are as follows:

	Year ended January 31,
	2023			2022
Current:
Federal	$	-		$	210,923
State		800			-
Total current		800			210,923
Deferred:
Federal		(6,181	)		6,181
State		-			-
Total deferred		(6,181	)		6,181
Total income tax provision	$	(5,381	)	$	217,104

The tax effects of cumulative temporary differences that gave rise to the deferred tax assets and liabilities were as follows:

	January 31,
	2023			2022
Deferred tax assets:
Allowance for credit loss	$	7,063		$	-
Operating lease liability		55,226			97,350
Net operating loss carryforward		865,309			-
Other, net		168			-
Total deferred tax assets		927,766			97,350
Valuation allowance		(868,172	)		-
Net deferred tax assets		59,594			97,350
Deferred tax liabilities:
Amortization and depreciation		(5,901	)		(6,940	)
Operating lease right-of-use assets		(53,693	)		(96,591	)
Total deferred tax liabilities		(59,594	)		(103,531	)
net deferred tax assets (liabilities)	$	-		$	(6,181	)