8. Income Taxes

12 Months Ended

Oct. 31, 2019

Notes

8. Income Taxes

8. Income Taxes

The Company’s provision for income taxes in each fiscal year consists of current federal, state, and local minimum taxes.

The income tax expense for fiscal years ended October 31, 2019 and 2018 consisted of the following:

		2019		2018
Current:
Federal	$	-	$	-
State	$	(10,000)	$	5,000
Income tax provision-current	$	(10,000)	$	5,000
Deferred:
Federal	$	-	$	-
State	$	-	$	-
Total income tax (benefit)/expense, net	$	(10,000)	$	5,000

The difference between income taxes expected at the U.S federal statutory income tax rate and the reported income tax expense are summarized as follows:                                                                 

	2019		2018
	Amount	Percent	Amount	Percent
U.S. statutory tax	$  (808,000)	21.0%	$ (1,273,000)	23.2%
Stock compensation	102,000	-2.6%	128,000	-2.3%
Meals and entertainment	9,000	-0.2%	9,000	-0.2%
State tax, net of federal benefit	(164,000)	4.2%	(209,000)	3.8%
Tax law changes (U.S. Tax Reform)	-	0.0%	1,127,000	-20.5%
Other	44,000	-1.1%	(44,000)	0.8%
Change in Valuation Allowance	807,000	-21.0%	267,000	-4.9%
Income tax (benefit)/expense, net	$    (10,000)	0.3%	$          5,000	-0.1%

The tax effect of temporary differences that give rise to deferred tax assets and liabilities as of October 31, 2019 and 2018 is as follows:

	2019	2018
Deferred tax assets and liabilities:
Net operating loss carry-forward	$    3,758,000	$      3,037,000
Deferred Revenue	92,000	84,000
Allowance for doubtful accounts receivable	43,000	41,000
Stock compensation-nonqualified	205,000	171,000
Accruals	81,000	104,000
Deferred rent	29,000	37,000
Deferred interest	97,000	-
Depreciation	(427,000)	(402,000)
Sub-total	$    3,878,000	$      3,072,000
Valuation allowance	(3,878,000)	(3,072,000)
Deferred tax assets and liabilities	$                   -	$                     -

At October 31, 2019, the Company had available a federal net operating loss carryforward of $15,565,000, of which $2,785,000 are indefinite lived and $12,780,000 will expire in various tax years from fiscal year 2022 through fiscal year 2038.

At October 31, 2019 and 2018, the Company did not have any uncertain tax positions. As permitted by ASC 740-10, the Company’s accounting policy is to prospectively classify accrued interest and penalties related to any unrecognized tax benefits in its income tax provision. The Company’s tax return years that are subject to examination by taxing authorities are fiscal years 2016 through 2019.