Provision for Income Taxes

12 Months Ended

Apr. 30, 2023

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, 2023
	Federal		State		Foreign		Total
Current	$	—	$	15	$	53	$	68
Total	$	—	$	15	$	53	$	68

	Year Ended April 30, 2022
	Federal		State		Foreign		Total
Current	$	—	$	10	$	25	$	35
Total	$	—	$	10	$	25	$	35

A reconciliation between the Company’s effective tax rate and the United States statutory tax rate for the years ended April 30, 2023 and 2022 is as follows:

	Year Ended April 30,
	2023		2022
Federal income tax at statutory rate	21.0	%	21.0	%
US vs. foreign tax rate difference	(0.2)		1.3
State income tax, net of federal benefit	2.2		3.3
Permanent differences	(0.5)		(47.3)
Increase in uncertain tax position	—		—
Change in valuation allowance	(23.8)		27.7
Income tax expense	(1.3)	%	6.0	%

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, 2023 and 2022 consist of the following (in thousands):

	As of April 30,
	2023		2022
Accrued liabilities	$	273	$	162
Right of use, net asset/liability	403		316
Depreciation and amortization	(297)		(396)
Stock-based compensation expense	4,024		3,874
Capitalized research and development costs	2,597		—
Net operating loss carry-forward	9,756		11,546
Total deferred tax assets	16,756		15,502
Less: Valuation allowance	(16,756)		(15,502)
Net deferred tax asset	$	—	$	—

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, 2023 and 2022.  For the years ended April 30, 2023 and 2022, the Company recorded a valuation allowance

of $16.8 million and $15.5 million, respectively. The net changes in the valuation allowance of $1.3 million and $0.2 million during the fiscal years ended April 30, 2023 and 2022, respectively, were mainly due to increases in the deferred tax asset related to capitalized research expenses and other timing differences. Management continues to assess the realizability of the deferred tax assets at each interim and annual balance sheet date based upon actual and forecasted operating results.

As of April 30, 2023 and 2022, the Company’s estimated U.S. net operating loss carry-forwards were approximately $41.3 million and $48.0 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 since the year ended April 30, 2019 may 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 on its use of net operating loss carry-forwards is approximately $432,000.

 The Company files income tax returns in various jurisdictions with varying statutes of limitations.  As of April 30, 2023, the earliest tax year still subject to examination for state purposes is fiscal 2019.  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, 2023 and 2022 in thousands:

	Year Ended April 30,
	2023		2022
Balance, beginning of the year	$	181	$	181
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	—		—
Balance, end of year	$	181	$	181

As of April 30, 2023 and 2022, the above amounts of $181,000 for each fiscal year were included in other long-term liabilities.