Provision for Income Taxes

12 Months Ended

Apr. 30, 2021

Income Tax Disclosure [Abstract]

Provision for Income Taxes

Provision for Income Taxes

The components of the provision for income taxes are as follows (in thousands):

	Year Ended April 30, 2021
	Federal		State		Foreign		Total
Current	$	—	$	13	$	62	$	75
Total	$	—	$	13	$	62	$	75

	Year Ended April 30, 2020
	Federal		State		Foreign		Total
Current	$	—	$	3	$	127	$	130
Total	$	—	$	3	$	127	$	130

A reconciliation between the Company’s effective tax rate and the United States statutory tax rate for the years ended April 30, 2021 and 2020 is as follows:

	Year Ended April 30,
	2021		2020
Federal income tax at statutory rate	21.0	%	21.0	%
US vs. foreign tax rate difference	0.5		(0.4)
State income tax, net of federal benefit	80.8		16.9
Permanent differences	(61.5)		(14.0)
Increase in uncertain tax position	0.7		(1.4)
Goodwill impairment	—		(3.5)
Change in valuation allowance	(24.3)		(25.2)
Income tax expense	17.2	%	(6.6)	%

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.  Significant components of the Company’s deferred tax assets and liabilities as of April 30, 2021 and 2020 consist of the following (in thousands):

	As of April 30,
	2021		2020
Accrued liabilities	$	232	$	77
Right of use, net asset/liability	271		226
Depreciation and amortization	(206)		(175)
Stock-based compensation expense	3,640		4,109
Net operating loss carry-forward	11,404		11,223
Total deferred tax assets	15,341		15,460
Less: Valuation allowance	(15,341)		(15,460)
Net deferred tax asset	$	—	$	—

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The Act contains several new or changed income tax provisions, including but not limited to the following: increased limitation threshold for determining deductible interest expense; class life changes to qualified improvements (in general, from 39 years to 15 years); and the ability to carry back net operating losses incurred from tax years 2018 through 2020 up to the five preceding tax years. The Company has evaluated the new tax provisions of the CARES Act and determined the impact to be either immaterial or not applicable.

Management has evaluated the available evidence about future tax planning strategies, taxable income, and other possible sources of realization of deferred tax assets and has established a full valuation allowance against its net deferred tax assets as of April 30, 2021 and 2020.  For the years ended April 30, 2021 and 2020, the Company recorded a valuation allowance of $15.3 million. 

As of April 30, 2021 and 2020, the Company’s estimated U.S. net operating loss carry-forwards were approximately $46.9 million and $45.0 million, respectively. Net operating losses generated prior to May 1, 2018 have a 20-year carryforward and will begin expiring in 2025 for federal and 2031 for state purposes. Losses generated in the fiscal years ended April 30, 2021 and 2020 can be carried forward indefinitely.  A valuation allowance has been recorded against all of these loss carryforwards.

Under the provisions of the Internal Revenue Code, certain substantial changes in the Company’s ownership may result in a limitation on the amount of net operating losses that may be utilized in future years. During the fiscal year ended April 30, 2013, approximately $12.0 million of the Company’s net operating losses became subject to limitation under Internal Revenue Code Section 382 in connection with an ownership change on January 28, 2013. As a result of the ownership change, the Company’s annual limitation is approximately $432,000.

 The Company files income tax returns in various jurisdictions with varying statutes of limitations.  As of April 30, 2021, the earliest tax year still subject to examination for state purposes is fiscal 2018.  The Company’s tax years for periods ending April 30, 2002 and forward are subject to examination by the United States and certain states due to the carry-forward of unutilized net operating losses.

The following table indicates the changes to the Company’s uncertain tax positions for the period and years ended April 30, 2021 and 2020 in thousands:

	Year Ended April 30,
	2021		2020
Balance, beginning of the year	$	178	$	151
Addition based on tax positions related to prior years	—		—
Payment made on tax positions related to prior years	—		—
Addition based on tax positions related to current year	3		27
Balance, end of year	$	181	$	178

As of April 30, 2021 and 2020, the above amounts of $181,000 and $178,000 were included in other long-term liabilities.