XML 37 R22.htm IDEA: XBRL DOCUMENT v3.21.2
Income Taxes
 12 Months Ended
Apr. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

(15) Income Taxes

 

Loss before income taxes for the years ended April 30, 2021 and 2020 consisted of the following components:

 

    April 30, 2021     April 30, 2020  
    (in thousands)  
             
Domestic   $ (14,392 )   $ (10,985 )
Foreign     (368 )     (262 )
Total loss before income taxes   $ (14,760 )   $ (11,247 )

  

The income tax benefit for the years ended April 30, 2021 and 2020 consisted of state income tax benefits of zero and $0.9 million in each year from the sale of New Jersey net operating losses and research and development credits. Note that the 2021 benefit was received in FY2022.

 

Tax Rate Reconciliation

 

The effective income tax rate differed from the percentages computed by applying the U.S. federal income tax rate for the periods ended April 30, 2021 and 2020 to loss before income taxes as a result of the following:

 

    April 30, 2021     April 30, 2020  
             
Computed expected tax (benefit)     (21.0 )%     (21.0 )%
Increase(reduction) in income taxes resulting from:                
State income taxes, net of federal (benefit)     6.8 %     2.9 %
Federal research and development tax credits     (0.7 )%     (0.5 )%
Foreign rate differential     (1.3 )%     5.2 %
Other non-deductible expenses     (0.6 )%     0.0 %
Proceeds of sale of New Jersey tax (benefits)     0.0 %     (8.0 )%
Other     2.3 %     5.2 %
Increase in valuation allowance     14.5 %     8.3 %
Income tax (benefit)     0.0 %     (7.9 )%

 

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, 2021     April 30, 2020  
    (in thousands)  
             
Deferred tax assets:                
Federal net operating loss carryforwards   $ 36,340     $ 33,740  
Foreign net operating loss carryforwards     4,064       3,307  
State operating loss carryforwards     581       1,598  
Federal and New Jersey research and development tax credits     3,303       3,076  
Stock compensation     346       311  
Accrued expenses     158       131  
Other     545       595  
Net deferred tax assets before valuation allowance     45,337       42,758  
Valuation allowance     (45,091 )     (42,431 )
Deferred tax assets     246       327  
                 
Deferred tax liability:                
Lease liability     246       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, 2021 and 2020, based upon the level of historical taxable losses, valuation allowances of $45.1 million and $42.4 million, respectively, were recorded to fully offset deferred tax assets. The valuation allowance increased $2.7 million during the year ended April 30, 2021 and decreased $0.7 million during the year ended 2020 respectively.

 

As of April 30, 2021, the Company had net operating loss carry forwards for federal income tax purposes of approximately $173.0 million, which begin to expire in fiscal 2022; $36.6 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 $3.2 million as of April 30, 2021, which begins to expire in 2022. 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 as a result of multiple ownership changes, as described in Section 382 of the Internal Revenue Code, its ability to utilize these NOL’s and research and development tax credit have been significantly limited.

 

In addition, as of April 30, 2021, the Company had state net operating loss carry forwards of approximately $21.3 million which begin to expire in 2039, which also may be limited to utilization limitations. Further, as of April 30, 2021, the Company had foreign net operating loss carry forwards of approximately $18.9 million. The ability to utilize these carry forwards may also be limited due to ownership changes.

 

New Jersey Net Operating Loss Transfer Program

 

During the years ended April 30, 2021 and 2020, the Company sold New Jersey State net operating losses and research and development credits (“NJ NOL”) in the amount of $12.0 million and $10.0 million, respectively, resulting in the recognition of income tax benefits of $1.0 million and $0.9 million, The proceeds of $0.9 million for fiscal year 2020 were recorded in the Company’s Statement of Operations. The sale of the fiscal year 2021 NJ NOL was not completed until May, 2021. The Company received proceeds of $1.0 million for fiscal year 2021 in May, 2021 and recorded the amount to the Company’s Statement of Operations in fiscal year 2022. New Jersey-based technology or biotechnology companies with fewer than 225 US employees may be eligible to sell net operating losses and research and development tax credits to unaffiliated corporations, up to a maximum lifetime benefit of $20 million per business.

 

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 17 to the Consolidated Financial Statements). At April 30, 2021 and 2020, 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. The Company is currently going through a state income tax audit for fiscal years 2015 to 2020. 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.