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Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.5.0.2
Income Taxes
 12 Months Ended
Apr. 30, 2016
Income Tax Disclosure [Abstract]  
Income Taxes

Note 12. Income Taxes

 

The components of income tax expense (benefit) are as follows:

 

    For the Years Ended  
    April 30,  
    2016     2015  
Current:            
Federal   $ —     $ —  
State     —       —  
      —       —  
Deferred:                
Federal     —       —  
State     —       —  
      —       —  
Total Income tax expense (benefit)   $ —     $ —  

 

Significant components of the Company's deferred income tax assets and liabilities are as follows:

 

    April 30,  
    2016     2015  
Deferred tax assets:            
Net operating loss   $ 8,271,894     $ 7,487,076  
Allowance for doubtful accounts     26,793       21,416  
Intangible assets     249,099       304,062  
Deferred rent     11,678       2,872  
Stock-based compensation     694,900       580,672  
Contributions carryforward     93       93  
Total deferred tax assets     9,254,457       8,396,191  
                 
Deferred tax liabilities:                
Property and equipment     (185,683 )     (155,991 )
Total deferred tax liabilities     (185,683 )     (155,991 )
                 
Deferred tax assets, net     9,068,774       8,240,200  
                 
Valuation allowance:                
Beginning of year     (8,240,200 )     (6,664,215 )
(Increase) during period     (828,574 )     (1,575,985 )
Ending balance     (9,068,774 )     (8,240,200 )
                 
Net deferred tax asset   $ —     $ —  

 

A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. The Company recorded a valuation allowance at April 30, 2016 and 2015 due to the uncertainty of realization. Management believes that based upon its projection of future taxable operating income for the foreseeable future, it is more likely than not that the Company will not be able to realize the tax benefit associated with deferred tax assets. The net change in the valuation allowance during the year ended April 30, 2016 was an increase of $828,574.

 

At April 30, 2016, the Company had $22,322,804 of net operating loss carryforwards which will expire from 2031 to 2036. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of April 30, 2016, tax years 2012 through 2015 remain open for IRS audit. The Company has received no notice of audit from the Internal Revenue Service for any of the open tax years.

 

A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax rate is as follows:

 

    April 30,  
    2016     2015  
Statutory U.S. federal income tax rate     34.0 %     34.0 %
State income taxes, net of federal tax benefit     3.0       3.0  
Other     (0.1 )     (0.1 )
Change in valuation allowance     (36.9 )     (36.9 )
Effective income tax rate     0.0 %     0.0 %