8. INCOME TAXES

12 Months Ended

Apr. 30, 2016

Income Tax Disclosure [Abstract]

INCOME TAXES

We are primarily subject to U.S. federal and California state jurisdictions. To our knowledge, all tax years remain open to examination by U.S. federal and state authorities.

In addition, in accordance with authoritative guidance, we are required to recognize the impact of an uncertain tax position in the consolidated financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. An uncertain tax position will not be recognized if it has less than a 50% likelihood of being sustained upon examination by the tax authorities. We had no unrecognized tax benefits from uncertain tax positions as of April 30, 2016 and 2015. It is also our policy, in accordance with authoritative guidance, to recognize interest and penalties related to income tax matters in interest and other expense in our consolidated statements of operations and comprehensive loss. We did not recognize interest or penalties related to income taxes for fiscal years ended April 30, 2016, 2015, and 2014, and we did not accrue for interest or penalties as of April 30, 2016 and 2015.

At April 30, 2016, we had total deferred tax assets of $168,395,000. Due to uncertainties surrounding our ability to generate future taxable income to realize these tax assets, a full valuation has been established to offset our total deferred tax assets. Additionally, the future utilization of our net operating loss carry forwards to offset future taxable income may be subject to an annual limitation, pursuant to Internal Revenue Code Section 382, as a result of ownership changes that may have occurred previously or that could occur in the future. A Section 382 analysis was completed as of the fiscal year ended April 30, 2015 and it was determined that no change in ownership had occurred. Ownership changes occurring subsequent to April 30, 2015 may impact the utilization of net operating loss carry forwards and other tax attributes.

At April 30, 2016, we had federal net operating loss carry forwards of approximately $384,857,000. The net operating loss carry forwards expire in fiscal years 2019 through 2036. We also have state net operating loss carry forwards of approximately $276,535,000 at April 30, 2016, which begin to expire in fiscal year 2017. In addition, we have approximately $5,956,000 of net operating loss attributable to excess tax deductions on share-based compensation that when utilized, if any, the tax benefit will be booked to additional paid-in-capital.

The provision for income taxes consists of the following for the three years ended April 30:

	2016			2015			2014
Federal income taxes at statutory rate	$	(18,921,000	)	$	(17,122,000	)	$	(12,023,000	)
State income taxes		(4,824,000	)		(4,450,000	)		(3,124,000	)
Expiration and adjustments of deferred tax assets		1,580,000			1,790,000			2,751,000
Change in valuation allowance		21,871,000			19,532,000			12,153,000
Other, net		294,000			250,000			243,000
Income tax (expense) benefit	$	–		$	–		$	–

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Significant components of our deferred tax assets at April 30, 2016 and 2015 are as follows:

	2016			2015
Share-based compensation	$	8,806,000		$	7,119,000
Deferred revenue		4,296,000			2,840,000
Other		2,547,000			2,765,000
Net operating losses		152,746,000			133,800,000
Total deferred tax assets		168,395,000			146,524,000
Less valuation allowance		(168,395,000	)		(146,524,000	)
Net deferred tax assets	$	–		$	–