Annual report pursuant to Section 13 and 15(d)

Income Taxes

v2.4.0.8
Income Taxes
12 Months Ended
Apr. 30, 2014
Income Taxes [Abstract]  
Income Taxes

Note 13. Income Taxes


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


                                 

 

 

For the

 

 

For the

 

 

For the

 

 

 

Year Ended

 

 

Year Ended

 

 

Four Months Ended

 

 

 

April 30,

2014

 

 

December 31,

2012

 

 

April 30,

2013

 

 

April 30,

2012

 

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,

 

 

April 30,

 

 

 

2014

 

 

2013

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss

 

$

6,021,134

 

 

$

4,256,530

 

Allowance for doubtful accounts

 

 

55,679

 

 

 

23,948

 

Intangible assets

 

 

294,284

 

 

 

238,259

 

Deferred rent

 

 

7,948

 

 

 

11,809

 

Stock-based compensation

 

 

411,374

 

 

 

185,916

 

Contributions carryforward

 

 

93

 

 

 

93

 

Total deferred tax assets

 

 

6,790,512

 

 

 

4,716,555

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Property and equipment

 

 

(126,297

)

 

 

(31,714

)

Total deferred tax liabilities

 

 

(126,297

)

 

 

(31,714

)

 

 

 

 

 

 

 

 

 

Deferred tax assets, net

 

 

6,664,215

 

 

 

4,684,841

 

 

 

 

 

 

 

 

 

 

Valuation allowance:

 

 

 

 

 

 

 

 

Beginning of year

 

 

(4,684,841

)

 

 

(4,166,510

)

(Increase) during period

 

 

(1,979,374

)

 

 

(518,331

)

Ending balance

 

 

(6,664,215

)

 

 

(4,684,841

)

 

 

 

 

 

 

 

 

 

Net deferred tax asset

 

$

-

 

 

$

-

 


Presentation in the financial statements:


                 

 

 

April 30,

2014

 

 

April 30,

2013

 

 

 

 

 

 

 

  

Deferred taxes, current portion

 

$

-

 

 

$

-

 

Deferred taxes, net of current portion

 

 

-

 

 

 

-

 

Net deferred tax assets

 

$

-

 

 

$

-

 


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, 2014 and 2013 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, 2014 was an increase of $1,979,374.


At April 30, 2014, the Company had $16,248,831 of net operating loss carryforwards which will expire from 2029 to 2034. 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, 2014, tax years 2010 through 2013 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:


                 

 

 

2014

 

 

2013

 

Statutory U.S. federal income tax rate

 

 

34.0

%

 

 

34.0

%

State income taxes, net of federal tax benefit

 

 

3.1

 

 

 

3.1

 

Other

 

 

(0.1

)

 

 

(0.1

)

Change in valuation allowance

 

 

(37.0

)

 

 

(37.0

)

Effective income tax rate

 

 

0.0

%

 

 

0.0

%