Income Taxes

12 Months Ended

Apr. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

14. Income Taxes

Income tax expense/(benefit) from operations consists of the following (in thousands):

	For the Years Ended April 30,
	2024				2023				2022
Current:
Federal	$		5		$		(126	)	$	2,356
State			(79	)			(123	)		302
Foreign			4			—				3
Total current			(70	)			(249	)		2,661
Deferred:
Deferred federal		—				—				5,958
Deferred state		—				—				725
Total deferred		—				—				6,683
Total income tax (benefit)/expense	$		(70	)	$		(249	)	$	9,344

The following table presents a reconciliation of the provision for income taxes from operations at statutory rates to the provision (benefit) in the consolidated financial statements (in thousands):

	For the Years Ended April 30,
	2024				2023				2022
Federal income taxes expected at the statutory rate (a)	$		(2,587	)	$		(2,577	)	$	(11,663	)
State income taxes, less federal income tax benefit			(132	)			(303	)		(633	)
Stock compensation			436				96			(276	)
Research and development tax credit			(203	)			(200	)		(291	)
Goodwill impairment		—				—				7,633
Change in deferred tax valuation allowance			2,257				2,600			14,200
Other			159				135			374
Total income tax (benefit)/expense	$		(70	)	$		(249	)	$	9,344

(a)We had a federal statutory rate of 21% in fiscal 2024, 2023, and 2022.

Deferred tax assets (liabilities) related to temporary differences are the following (in thousands):

	April 30, 2024				April 30, 2023
Non-current tax assets (liabilities):
Inventories	$		1,100		$		1,574
Accrued expenses, including compensation			1,589				1,446
Product liability			—				28
Workers' compensation			10				8
Warranty reserve			286				222
Stock-based compensation			1,066				1,172
State bonus depreciation			110				150
Property, plant, and equipment			(2,619	)			(2,577	)
Intangible assets			11,777				11,877
Right-of Use assets			(7,740	)			(5,640	)
Right-of Use lease liabilities			7,985				5,820
Capitalized R&D			2,136				1,340
Other			(83	)			(15	)
Loss and credit carryforwards			3,681				1,636
Less valuation allowance			(19,298	)			(17,041	)
Net deferred tax asset/(liability) — total	$	—			$	—

As of April 30, 2024, federal and state net operating loss, or NOL, carryforwards were $13.9 million and $7.1 million, respectively, and $403,000 of federal research & development tax credits. The tax-effected deferred tax assets recorded for federal and state NOL carryforwards were $2.9 million and $355,000, respectively. Under legislation enacted in 2017,

informally titled the Tax Cuts and Jobs Act, or Tax Act, federal NOLs incurred in taxable years ending after December 31, 2017, may be carried forward indefinitely. The federal research and development credits of $403,000, which, if unused, will expire between April 30, 2043 and 2044. State NOL carryforwards of $5.7 million, which, if unused, will expire in years April 30, 2033 through April 30, 2044. The remaining $1.4 million of the state NOL carryforwards may also be carried forward indefinitely.

As of April 30, 2024, we continued to maintain a full valuation allowance of $19.3 million against our net deferred income tax assets based on management's assessment that it was more likely than not that our deferred income tax assets will not be recovered. We will continue to evaluate the need for a valuation allowance on our deferred tax assets until there is sufficient positive evidence to support the reversal of all or some portion of these allowances. As of April 30, 2023, we maintained a full valuation allowance of $17.0 million against our net deferred income tax assets based on management's assessment that it was more likely than not that our deferred income tax assets will not be recovered.

The income tax provisions (benefit) represent effective tax rates of 0.6%, 2.0%, and (16.8%) for the fiscal years ended April 30, 2024, 2023, and 2022, respectively. Excluding the impact of the non-cash goodwill impairment charges and establishing the full valuation allowance against our deferred taxes, our effective tax rate for the fiscal year ended April 30, 2022 was 19.6%.

U.S. income taxes have not been provided on $375,000 of undistributed earnings of our foreign subsidiary since it is our intention to permanently reinvest such earnings offshore. If the earnings were distributed in the form of dividends, we would not be subject to U.S. tax as a result of the Tax Act but could be subject to foreign income and withholding taxes. Determination of the amount of this unrecognized deferred income tax liability is not practical.

As of April 30, 2024 and 2023, we did not have any gross tax-effected unrecognized tax benefits.

With limited exception, we are subject to U.S. federal, state, and local, or non-U.S. income tax audits by tax authorities for fiscal years subsequent to April 30, 2020. On March 7, 2023, the Internal Revenue Service (“IRS”) initiated an examination of our Federal income tax return filed for the tax period ended April 30, 2021. On January 10, 2024, we were notified from the IRS that they had concluded their examination. As a result of their examination procedures, our tax liability was unchanged for the tax period under examination, and there was no impact to our consolidated financial statements.