Entity information:
Note 7 Income Taxes
   
 

Deferred tax assets and liabilities are recognized for temporary differences between the carrying amount of the balance sheet items and their corresponding tax values as well as for the benefit of losses available to be carried forward to future years for tax purposes that are likely to be realized.
   
 

Significant components of the Company’s deferred tax assets and liabilities, after applying enacted corporate income tax rates, are as follows:

      Years Ended  
      April 30,  
      2017     2016  
  Tax loss carry forwards $ 19,378,000   $ 18,796,000  
  Capital losses carried forward   227,000     247,000  
  Equipment   164,000     242,000  
  Other   39,000     64,000  
  Bad debt   29,000     186,000  
  Nondeductible research and development expenses   2,837,000     3,084,000  
  Investment tax credits   413,000     490,000  
  Cumulative unrealized foreign exchange gain   405,000     410,000  
  Acquired technology and other intangibles   313,000     (1,115,000 )
  Valuation allowance established by management   (23,805,000 )   (22,404,000 )
  Net deferred tax assets $   –   $   –  

The provision for income taxes differ from the amount calculated using the U.S. federal and state statutory income tax rates as follows:

      Years Ended  
      April 30,  
      2017     2016  
  Tax (recovery) based on U.S. rates $ (836,000 ) $ (915,000 )
  Foreign tax rate differential   (38,000 )   (34,000 )
  Non-deductible expenses   –     –  
  Change in fair value of derivative instrument   –     –  
  Non-deductible stock option compensation   289,000     295,000  
  Effect of reduction (increase) in foreign statutory rates   –     104,000  
  Foreign exchange gain (losses) on revaluation of deferred tax balances   (818,000 )   384,000  
  Under provision relating to prior year   2,000     (2,026,000 )
  Expiry of non-operating losses   –     –  
  Increase in valuation allowance   1,401,000     2,192,000  
  Income tax expense for year $   –   $   –  

The Company establishes its valuation allowance based on projected future operations. Management has determined that the allowance should be 100% of the deferred tax assets. When circumstances cause a change in management’s judgment about the recoverability of deferred tax assets, the impact of the change on the valuation allowance will be reflected in current income.

  As at April 30, 2017, the Company had net operating loss carry-forwards available to reduce taxable income in
  future years as follows:

  Country         Amount     Expiration Dates  
                     
  United States – US$       $ 47,730,000     2026 – 2037  
  Canada – CDN$       $ 17,762,732 (1)   2026 – 2035  

(1) These losses are subject to tax legislation that limits the use of the losses against future income of the Company’s Canadian subsidiaries.

The Company is subject to taxation in the U.S. and Canada. It is subject to tax examinations by tax authorities for all taxation years commencing in or after 2002. The Company does not expect any material increase or decrease in its income tax expense in the next twelve months related to examinations or changes in uncertain tax positions.

Changes in the Company’s uncertain tax positions for the year ended April 30, 2017 and April 30, 2016 were as follows:

      Years Ended  
      April 30,  
      2017     2016  
  Balance at beginning of year $ 10,563   $ 25,631  
  Increases related to prior year tax positions (interest and penalties)   –     –  
  Increases related to current year tax positions (interest and penalties)   –     –  
  Settlements   –     –  
  Lapses in statute of limitations   (800 )   (15,068 )
  Balance at end of year $ 9,763   $ 10,563