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Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.20.2
Income Taxes
 12 Months Ended
Apr. 30, 2020
Income Tax Disclosure [Abstract] Ìý
Income Taxes Income Taxes
The components of income tax expense are as follows:
For the Years Ended April 30,
2020 2019
Current:
Federal $ —Ìý Ìý $ —Ìý Ìý
State 51,820Ìý Ìý —Ìý Ìý
51,820Ìý Ìý —Ìý Ìý
Deferred:
Federal —Ìý Ìý —Ìý Ìý
State —Ìý Ìý —Ìý Ìý
—Ìý Ìý —Ìý Ìý
Total Income tax expense $ 51,820Ìý Ìý $ —Ìý Ìý
Significant components of the Company's deferred income tax assets and liabilities are as follows:
April 30,
2020 2019
Deferred tax assets:
Net operating loss carryforward $ 11,044,236Ìý Ìý $ 9,033,235Ìý Ìý
Allowance for doubtful accounts 629,272Ìý Ìý 181,774Ìý Ìý
Deferred rent 606,594Ìý Ìý 180,154Ìý Ìý
Stock-based compensation 439,454Ìý Ìý 954,586Ìý Ìý
Contributions carryforward 11,275Ìý Ìý 60Ìý Ìý
Intangibles 86,897Ìý Ìý —Ìý Ìý
Total deferred tax assets 12,817,728Ìý Ìý 10,349,809Ìý Ìý
Deferred tax liabilities:
Property and equipment (417,780) Ìý (234,336) Ìý
Intangibles —Ìý Ìý (64,439) Ìý
Total deferred tax liabilities (417,780) Ìý (298,775) Ìý
Deferred tax assets, net $ 12,399,948Ìý Ìý $ 10,051,034Ìý Ìý
Valuation allowance:
Beginning of year (10,051,034) Ìý (7,837,755) Ìý
Increase during period (2,348,914) Ìý (2,213,279) Ìý
Ending balance (12,399,948) Ìý (10,051,034) Ìý
Net deferred tax asset $ —Ìý Ìý $ —Ìý Ìý
As of AprilÌý30, 2020, as part of its periodic evaluation of the necessity to maintain a valuation allowance against its deferred tax assets, and after consideration of all factors, including, among others, projections of future taxable income, current year net operating loss carryforward utilization and the extent of the Company's cumulative losses in recent years, the Company determined that, on a more likely than not basis, it would not be able to use remaining deferred tax assets. Accordingly, the Company has determined to maintain a full valuation allowance against its net deferred tax assets. As of AprilÌý30, 2020 and 2019, the valuation allowance was approximately $12,400,000 and $10,100,000, respectively. In the future, the utilization of the Company's net operating loss carryforwards may be subject to certain change of control limitations. If the Company determines it will be able to use some or all of its deferred tax assets in a future reporting period, the adjustment to reduce or eliminate the valuation allowance would reduce its tax expense and increase after-tax income.
At AprilÌý30, 2020, the Company had approximately $41,900,000 of net operating loss carryforwards, $28,200,000 of which will expire from 2031 to 2038, the remainder will carryforward indefinitely. 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 AprilÌý30, 2020, tax years 2017 through 2019 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:
The Company's effective income tax expense differs from the statutory federal income tax rate of 21% as follows:
April 30,
2020 2019
Statutory Rate applied to net loss before income taxes 21.0Ìý % 21.0Ìý %
Increase (decrease) in income taxes resulting from:
ÌýÌýÌýÌýÌýState income taxes, net of federal tax benefit 5.3Ìý % 3.6Ìý %
ÌýÌýÌýÌýÌýFederal and State Minimum Taxes (0.9) % —Ìý %
ÌýÌýÌýÌýÌýPermanent Differences (0.3) % —Ìý %
ÌýÌýÌýÌýÌýChange in Tax Rates - States 17.3Ìý % —Ìý %
ÌýÌýÌýÌýÌýChange in Valuation Allowance (41.9) % (23.8) %
ÌýÌýÌýÌýÌýOther (1.4) % (0.8) %
Effective Income Tax Rate (0.9) % 0.0Ìý %