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Commitments and Contingencies | 6 Months Ended
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Oct. 31, 2023
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | (14) Commitments and Contingencies Spain Income Tax Audit The Company underwent an income tax audit in Spain for the period from 2011 to 2014, when its Spanish branch was closed. On July 30, 2018, the Spanish tax inspector concluded that although there was no tax owed in light of losses reported, the Company’s Spanish branch owed penalties for failure to properly account for the income associated with the funding grant. During the year ended April 30, 2022, the Company received notice from the Spanish Central Economic and Administrative Tribunal (“Spanish Tax Administration”) that it agreed with the inspector and ruled that the Company owes the full amount of the penalty in the amount of €279,870 or approximately $331,000. On January 25, 2021, the Company paid the Spanish Tax Administration €279,870. Notwithstanding that payment, on April 30, 2022, the Company filed its appeal of the decision of the Central Court to the Spanish National Court. The Company is awaiting the results of the appeal. Shareholder Proxy Contest On June 16, 2023, a stockholder of the Company, Paragon Technologies, Inc., a Delaware corporation (“Paragon”), informed the Company that Paragon was planning a proxy contest against the Company and intended to nominate candidates for election to the Company’s Board of Directors (the “Board”) at the Company’s 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”). Paragon would later disclose that it is seeking to replace a majority of the six-member Board and, thereby, seek control of the Company. In connection with Paragon’s threatened proxy contest, the Company is currently defending against two litigation matters brought by Paragon in the Delaware Court of Chancery. On July 27, 2023, Paragon filed a complaint against the Company in the Delaware Court of Chancery to enforce the demand that Paragon had made on July 17, 2023, to inspect the Company’s confidential books and records pursuant to Section 220 of the Delaware General Corporation Law. On October 20, 2023, a Magistrate of the Delaware Court of Chancery issued a telephonic report regarding this matter and indicated that Paragon had asserted a proper purpose for its inspection demand. On October 25, 2023, the Company filed a Notice of Exceptions with the Delaware Court of Chancery to take exceptions to the Magistrate’s report. In its Notice of Exceptions, the Company detailed the areas of the Magistrate’s report that the Company took exception to, including, but not limited to: (i) the report’s conclusion that Paragon had stated a proper purpose for its books and records demand; (ii) the report’s conclusion that the primary purpose motivating Paragon’s demand was Paragon’s stated purpose; (iii) the report’s conclusion that Paragon’s stated purpose for its demand was not pretextual and that Paragon did not have improper ulterior motives; and (iv) the report’s conclusion as to the scope of inspection to be permitted pursuant to Paragon’s demand. On November 14, 2023, the Company filed its opening brief with respect to this matter. As of the date hereof, Paragon has not filed its answering brief, and the Delaware Court of Chancery has not scheduled any further action with respect to this matter. On October 9, 2023, Paragon initiated litigation in the Delaware Court of Chancery against the Company and the Board alleging claims for breach of fiduciary duty and seeking declaratory and injunctive relief, including an injunction to (i) prevent the Company from rejecting the purported nominating notice that Paragon submitted to the Company on August 25, 2023 to notify the Company of its intention to nominate a majority slate of nominees at the 2023 Annual Meeting (the “Purported Nominating Notice”), and (ii) require the Company to approve Paragon’s request for an exemption from the Company’s Section 382 Tax Benefits Preservation Plan so that Paragon could purchase up to 19.9% of the Company’s common stock without triggering the dilution that would otherwise apply to the holder of 4.99% or more of the Company’s common stock. On November 30, 2023, the Delaware Court of Chancery denied Paragon’s request for injunctive relief to (i) block the Board from continuing to reject Paragon’s Purported Nominating Notice, and (ii) require the Board to grant Paragon the exemption it had requested from the Company’s Section 382 Tax Benefits Preservation Plan. Further, the Delaware Court of Chancery indicated that factual issues remain that would need to be resolved at a trial. On November 30, 2023, the Delaware Court of Chancery also granted, in part, a motion for sanctions against Paragon relating to the purported spoliation of text messages. As of the date hereof, the Delaware Court of Chancery has not scheduled any further action with respect to this matter, other than directing counsel for the Company and the Board to submit an affidavit detailing the reasonable fees and expenses incurred in filing their motion for sanctions and providing Paragon with an opportunity to respond. General Legal Matters From time to time, the Company is involved in legal and administrative proceedings and claims of various types. The Company records a liability in its consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. The Company reviews these estimates each accounting period as additional information is known and adjusts the loss provision when appropriate. If a matter is both probable to result in a liability and the amounts of loss can be reasonably estimated, the Company estimates and discloses the possible loss or range of loss to the extent necessary to make the consolidated financial statements not misleading. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in its consolidated financial statements.

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