Note 6. Income Taxes

The provision for income taxes for the years ended April 30, 2017, 2016,  and 2015 consists of the following (in thousands):







Deferred income taxes consist of the following at April 30, 2017 and 2016 (in thousands):





Deferred income taxes are included in the April 30, 2017 and 2016 consolidated balance sheets as follows (in thousands):





Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that the deductible temporary differences and carryforwards are expected to be available to reduce taxable income. Based on the reversal patterns of existing taxable temporary differences, the net deferred tax assets will be recovered. There was no valuation allowance deemed necessary.



Loss carryforwards for tax purposes as of April 30, 2017, have the following expiration dates (in thousands):





The Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”).  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.



For fiscal years 2017, 2016, and 2015, the expected income tax rate differs from the statutory rate as follows (in thousands):





In connection with the Company’s initial public offering in November 2014, a change of ownership in the Company occurred pursuant to the provisions of the Tax Reform Act of 1986. As a result, the Company’s usage of its net operating loss carryforwards will be limited each year; however, management believes the full benefit of those carryforwards will be realized prior to their respective expiration dates.

The Company accounts for unrecognized tax benefits also in accordance with ASC 740,  which prescribes a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution to any related appeals or litigation, based solely on the technical merits of the position. The Company has no accrual for interest or penalties related to uncertain tax positions at April 30, 2017 and 2016, and did not recognize interest or penalties in the consolidated statements of income (loss) during the years ended April 30, 2017, 2016,  and 2015.



The major jurisdictions in which the Company files income tax returns include the federal and state jurisdictions within the United States. The tax years after 2010 remain open to examination by federal and state taxing jurisdictions. However, the Company has net operating losses beginning in 2001 which would cause the statute of limitations to remain open for the year in which the net operating losses was incurred.



Management regularly assesses the likelihood that its net deferred tax assets will be recovered from future taxable income. To the extent management believes that it is more likely than not that a net deferred tax asset will not be realized, a valuation allowance is established. When a valuation allowance is established or increased, an income tax charge is included in the consolidated financial statements and net deferred tax assets are adjusted accordingly. Changes in tax law, statutory tax rates, and estimates of the Company’s future taxable income levels could result in actual realization of the net deferred tax assets being materially different from the amounts provided for in the consolidated financial statements. If the actual recovery amount of the deferred tax asset is less than anticipated, the Company would be required to write off the remaining deferred tax asset and increase the tax provision, resulting in a reduction of net income and stockholders’ equity.



The Company does not have any unrecognized tax benefits and has not incurred any interest and penalties for fiscal years 2017, 2016,  and 2015.