v3.26.1
INCOME TAXES
 12 Months Ended
Jan. 31, 2025
INCOME TAXES  
INCOME TAXES

Note 8 – INCOME TAXES

 

The Company did not record a current income tax provision on its operating losses for the years ended January 31, 2025 and 2024 due to net operating losses and a full valuation allowance against deferred tax assets. In accordance with ASC 740-10-45-25, the Company has elected to classify interest and penalties on income tax obligations as income tax expense. During the year ended January 31, 2025, the Company recognized $95,008 interest and penalties on historical income tax obligations relating to fiscal year 2022. Excluding such interest and penalties, the Company recorded no current or deferred income tax provision for the year ended January 31, 2025, due to operating losses and a full valuation allowance against deferred tax assets.

 

Due to uncertainties surrounding the Company’s ability to generate future taxable income to realize deferred income tax assets arising as a result of net operating losses carried forward, the Company has not recorded any deferred income tax assets as of January 31, 2025. The Company has incurred a net operating loss (NOL) of $5,588,962.  Federal net operating loss carryforwards generated in tax years beginning after December 31, 2017 carry forward indefinitely; any net operating losses generated in earlier tax years expire 20 years after the year in which they were generated. The Company’s net operating loss carry forwards may be subject to annual limitations, which could eliminate, reduce or defer the utilization of the losses because of an ownership change as defined in Section 382 of the Internal Revenue Code.  The Company files U.S. federal and California state income tax returns, which remain subject to examination for the periods provided under the applicable statutes of limitations.

 

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

 

 

 

Years Ended January 31,

 

 

 

2025

 

 

2024

 

Statutory federal income tax rate

 

 

21.00%

 

 

21.00%

State income taxes, net of federal tax benefit

 

 

-

 

 

 

-

 

Valuation allowance

 

 

(21.00)%

 

 

(21.00)%

Other, net

 

 

-

 

 

 

-

 

Effective tax rate

 

 

0.00%

 

 

0.00%

 

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

 

 

 

Years Ended January 31,

 

 

 

2025

 

 

2024

 

Deferred tax assets:

 

 

 

 

 

 

Allowance for credit loss

 

$7,063

 

 

$7,063

 

Impairment expense

 

 

2,194

 

 

 

2,194

 

Stock based compensation

 

 

57,636

 

 

 

34,555

 

Operating lease liability

 

 

-

 

 

 

19,600

 

Net operating loss carryforward

 

 

1,173,682

 

 

 

1,041,256

 

Total deferred tax assets

 

 

1,240,575

 

 

 

1,104,668

 

Valuation allowance

 

 

(1,238,484)

 

 

(1,078,716)

Net deferred tax assets

 

 

2,091

 

 

 

25,952

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Amortization and depreciation

 

 

(2,091)

 

 

(7,125)

Operating lease right-of-use assets

 

 

-

 

 

 

(18,827)

Total deferred tax liabilities

 

 

(2,091)

 

 

(25,952)

 

 

 

 

 

 

 

 

 

Net deferred tax assets (liabilities)

 

$-

 

 

$-