INCOME TAXES

12 Months Ended

Apr. 30, 2016

INCOME TAXES [Text Block]

NOTE 8. INCOME TAXES

We account for income taxes under ASC 740, “ Expenses - Income Taxes ”. ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry forwards. ASC 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets.

The income tax provision (benefit) for the years ended April 30, 2016, 2015 and 2014 consists of the following:

		For the Years Ended April 30,
		2016			2015			2014
Expected income tax expense (benefit)         at the statutory rate of 34%	$	(37,000	)	$	(4,454,000	)	$	(57,000	)
Tax effect of expenses (benefit)         that are not deductible for income tax purposes         (net of other amounts deductible for tax purposes)		-			-			-
Change in valuation allowance		37,000			4,454,000			57,000
Provision for income taxes	$	-		$	-		$	-

The Company has a net operating loss (“NOL”) carryforward for U.S. income tax purposes aggregating approximately $13,714,000 at April 30, 2016 expiring through the year 2035, subject to the Internal Revenue Code Section 382, which places a limitation on the amount of taxable income that can be offset by net operating losses after a change in ownership. The Company has no Hong Kong NOL for its inactive subsidiaries in Hong Kong as of April 30, 2016.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Included in the deferred tax asset is the aforementioned NOL and the tax benefit associated with the issuance of stock-based compensation. The realization of the deferred tax assets is dependent on future taxable income, in addition to the exercise of stock options; we are not able to predict if such future taxable income will be more likely than not sufficient to utilize the benefit. As such, we do not believe the benefit is more likely than not to be realized and we recognize a full valuation allowance for those deferred tax assets. Our deferred tax assets as of April 30, 2016 and 2015 are as follows:

		As of April 30,
		2016			2015
Deferred income tax asset:
Net operating loss carryforwards	$	4,663,000		$	4,626,000
Valuation allowance		(4,663,000	)		(4,626,000	)
Deferred income taxes	$	-		$	-

The increases in the valuation allowance at April 30, 2016 and 2015 from their immediate prior year-end was $37,000 and $4,454,000, respectively.

The Company has filed its U.S. tax returns through April 30, 2015.

Our subsidiaries in Hong Kong have no business activities since inception and are governed by the Income Tax Law of the Hong Kong Special Administrative Region (“HK SAR”) and local income tax laws (the HK SAR Income Tax Law”). Pursuant to the HK SAR Income Tax Law, our Hong Kong subsidiaries are subject to tax at a maximum statutory rate of 17% (inclusive of state and local income taxes) if in operations.

The provisions of ASC 740 require companies to recognize in their financial statements the impact of a tax position if that position is more likely than not to be sustained upon audit, based upon the technical merits of the position. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure.

Management does not believe that the Company has any material uncertain tax positions requiring recognition or measurement in accordance with the provisions of ASC 740. Accordingly, the adoption of these provisions of ASC 740 did not have a material effect on the Company’s financial statements. The Company’s policy is to record interest and penalties on uncertain tax positions, if any, as income tax expense.

All tax years for the Company remain subject to future examinations by the applicable taxing authorities.