Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.21.2
Income Taxes
 12 Months Ended
Apr. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income tax expense are as follows:
For the Years Ended April 30,
2021 2020
Current:
Federal $ —  $ — 
State 32,644  51,820 
32,644  51,820 
Deferred:
Federal —  — 
State —  — 
—  — 
Total Income tax expense $ 32,644  $ 51,820 
Significant components of the Company's deferred income tax assets and liabilities are as follows:
April 30,
2021 2020
Deferred tax assets:
Net operating loss carryforward $ 15,737,351  $ 11,044,236 
Allowance for doubtful accounts 1,009,273  629,272 
Deferred rent 252,479  606,594 
Stock-based compensation —  439,454 
Contributions carryforward 11,013  11,275 
Intangibles —  86,897 
Interest expense limitation carryforward 86,485  — 
Total deferred tax assets 17,096,601  12,817,728 
Deferred tax liabilities:
Property and equipment (356,473) (417,780)
Intangibles (186,063) — 
Stock-based compensation (1,778,017) — 
Total deferred tax liabilities (2,320,553) (417,780)
Deferred tax assets, net $ 14,776,048  $ 12,399,948 
Valuation allowance:
Beginning of year (12,399,948) (10,051,034)
Increase during period (2,376,100) (2,348,914)
Ending balance (14,776,048) (12,399,948)
Net deferred tax asset $ —  $ — 

As of April 30, 2021, 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 April 30, 2021 and 2020, the valuation allowance was approximately $14,800,000 and $12,400,000, 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 April 30, 2021, the Company had approximately $61,100,000 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 April 30, 2021, tax years 2018 through 2020 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,
2021 2020
Statutory Rate applied to net loss before income taxes 21.0  % 21.0  %
Increase (decrease) in income taxes resulting from:
     State income taxes, net of federal tax benefit 4.4  % 5.3  %
     Federal and State Minimum Taxes (0.2) % (0.9) %
     Permanent Differences (0.2) % (0.3) %
     Change in Tax Rates - States (2.8) % 17.3  %
     Change in Valuation Allowance (22.8) % (41.9) %
     Other 0.3  % (1.4) %
Effective Income Tax Rate (0.3) % (0.9) %