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Income Taxes
 12 Months Ended
Apr. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes

(14) Income Taxes-

 

Loss before income taxes for the years ended April 30, 2020 and 2019 consisted of the following components:

 

    April 30, 2020     April 30, 2019  
    (in thousands)  
             
Domestic   $ (10,985 )   $ (12,860 )
Foreign     (262 )     (236 )
Total loss before income taxes   $ (11,247 )   $ (13,096 )

 

The income tax benefit for the years ended April 30, 2020 and 2019 consist of state income tax benefits of $0.9 million in each year from the sale of New Jersey net operating losses and research and development credits.

 

Tax Rate Reconciliation

 

The effective income tax rate differed from the percentages computed by applying the US federal income tax rate for the periods ended April 30, 2020 and 2019 to loss before income taxes as a result of the following:

 

    April 30, 2020     April 30, 2019  
       
Computed expected tax (benefit)     (21.0 )%     (21.0 )%
Increase(reduction) in income taxes resulting from:                
State income taxes, net of federal (benefit)     2.9 %     0.8 %
Federal research and development tax credits     (0.5 )%     (1.5 )%
Foreign rate differential     5.2 %     0.2 %
Other non-deductible expenses     0.0 %     0.1 %
Proceeds of sale of New Jersey tax (benefits)     (8.0 )%     (6.5 )%
Other     5.2 %     0.6 %
Increase in valuation allowance     8.3 %     20.8 %
Income tax (benefit)     (7.9 )%     (6.5 )%

 

Significant Components of Deferred Taxes

 

The tax effects of temporary differences and carry forwards that give rise to the Company’s deferred tax assets and deferred tax liabilities are presented below.

 

    April 30, 2020     April 30, 2019  
    (in thousands)  
             
Deferred tax assets:                
Federal net operating loss carryforwards   $ 33,740     $ 32,025  
Foreign net operating loss carryforwards     3,307       3,641  
State operating loss carryforwards     1,598       1,653  
Federal and New Jersey research and development tax credits     3,076       3,315  
Stock compensation     311       486  
Accrued expenses     131       145  
Other     595       443  
Net deferred tax assets before valuation allowance     42,758       41,708  
Valuation allowance     (42,431 )     (41,708 )
Deferred tax assets     327       -  
                 
Deferred tax liability:                
Lease liability     327       -  
Net deferred tax assets   $ -     $ -  

 

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences and carry forwards become deductible or are utilized. As of April 30, 2020 and 2019, based upon the level of historical taxable losses, valuation allowances of $42.4 million and $41.7 million, respectively, were recorded to fully offset deferred tax assets. The valuation allowance increased $0.7 million during the year ended April 30, 2020 and decreased $2.5 million during the year ended 2019 respectively.

 

As of April 30, 2020, the Company had net operating loss carry forwards for federal income tax purposes of approximately $160.7 million, which begin to expire in fiscal 2021; $22.6 million of the federal carryforward has no expiration, but the deductibility of such federal net operating losses may be limited to 80% of our taxable income in future years. The Company also had federal research and development tax credit carry forwards of approximately $3.0 million as of April 30, 2020, which begins to expire in 2021. The Tax Reform Act of 1986 contains provisions that limit the utilization of net operating loss and tax credit carry forwards if there has been an ownership change, as defined. The Company has determined that such an ownership change, as described in Section 382 of the Internal Revenue Code, occurred in conjunction with the Company’s U.S. initial public offering in April 2007. The Company’s annual Section 382 limitation is approximately $3.3 million. The Section 382 limitation is cumulative from year to year, and thus, to the extent net operating loss or other credit carry forwards are not utilized up to the amount of the available annual limitation, the limitation is carried forward and added to the following year’s available limitation. Such limitation only applies to net operating losses incurred in periods prior to the ownership change. The Company has not performed additional analysis on ownership changes that may have occurred subsequently to further limit the ability to utilize net tax attributes. As of April 30, 2020, the Company had state net operating loss carry forwards of approximately $22.5 million which begin to expire in 2039, which also may be limited to utilization limitations. As of April 30, 2020, the Company had foreign net operating loss carry forwards of approximately $16.3 million. The ability to utilize these carry forwards may also be limited in the event of a significant change to ownership.

 

New Jersey Net Operating Loss

 

During the years ended April 30, 2020 and 2019, the Company sold New Jersey State net operating losses and research and development credits in the amount of $10.0 million and $9.1 million, respectively, resulting in the recognition of income tax benefits of $0.9 million and $0.9 million, respectively, recorded in the Company’s Statement of Operations.

 

Uncertain Tax Positions

 

The Company applies the guidance issued by the FASB for the accounting and reporting of uncertain tax positions. The guidance requires the Company to recognize in its consolidated financial statements the impact of a tax position if that position is more likely than not to be sustained upon examination, based on the technical merits of the position. The Company is currently undergoing an income tax audit in Spain for the period from 2011 to 2014, when the Company’s Spanish branch was closed (see Note 15 to the Consolidated Financial Statements). At April 30, 2020 and 2019, the Company had no other unrecognized tax positions. The Company does not expect any material increase or decrease in its income tax expense in the next twelve months, related to examinations or uncertain tax positions. U.S. federal and state income tax returns were audited through fiscal 2014 and fiscal 2010 respectively. Net operating loss and credit carry forwards since inception remain open to examination by taxing authorities and will continue to remain open for a period of time after utilization.

 

The Company does not have any interest or penalties accrued related to uncertain tax positions as it does not have any unrecognized tax benefits.