Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.24.2.u1
INCOME TAXES
 12 Months Ended
Apr. 30, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 10 - INCOME TAXES

 

At April 30, 2024, the Company had federal and state net operating loss carryforwards of approximately $57,383,000 and $27,000,000, respectively, available to offset against future taxable income; these operating loss carryforwards expire in 2023 through 2038. Internal Revenue Code Section 382 imposes an annual limitation for the utilization of tax attributes if there is an “ownership change”. Based upon the equity activity during the year ended April 30, 2022, the Company had an ownership change in August 2021. As a result of the change in-control that occurred in the Company’s shareholder base in August 2021, approximately $37,060,000 and $15,890,000 federal and state net operating loss carryforwards, respectively, became limited in their availability. The remaining net operating loss carryforwards are approximately $20,323,000 and $11,119,000 for federal and state purposes, respectively. The remaining net operating loss deferred tax assets are approximately $4,268,000 and $983,000 for federal and state purposes, respectively.

 

Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. Based on the assessment of all available evidence including, but not limited to, the Company’s limited operating history in its core business and lack of profitability, uncertainties of the commercial viability of its technology, the impact of government regulations and healthcare reform initiatives and other risks normally associated with biotechnology companies, the Company has concluded that is more likely than not that these operating loss carryforwards will not be realized. Accordingly, 100% of the deferred tax valuation allowance has been recorded against these assets.

 

Deferred income taxes reflect the net effect of temporary differences between the financial reporting carrying amounts of assets and liabilities and income tax carrying amounts of assets and liabilities. The components of the Company’s deferred tax assets and liabilities are as follows:

           
    April 30,  
    2024     2023  
Deferred tax assets:                
Net operating loss carryforwards   $ 14,437,888     $ 15,732,671  
Stock compensation     494,130       369,666  
Research and development     160,452       93,316  
Investment in SG Austria     469,139       –  
Intangible asset (diabetes license)     596,800       –  
Fair value of derivative liability     (174,862 )     –  
Fair value of convertible note receivable     (324,958 )     –  
Fair value of warrant asset     (542,491 )     –  
Other     77,622       33,688  
Total deferred tax assets     15,193,720       16,229,341  
Valuation allowance     (15,193,720 )     (16,229,341 )
Net deferred tax assets   $ –     $ –  

 

For all years presented, the Company did not recognize any deferred tax assets or liabilities. The net change in valuation allowance for the years ended April 30, 2024 and 2023 was a decrease of $1,035,621 and an increase of and $470,940, respectively.

 

The provision for income taxes differs from the provision computed by applying the Federal statutory rate to net loss before income taxes as follows: 

           
    Years Ended April 30,  
    2024     2023  
Federal benefit at statutory rate   $ 70,090     $ (906,359 )
State income taxes, net of Federal taxes     29,505       (369,017 )
Permanent differences     (996,649 )     (12,462 )
Provision related to change in valuation allowance     (1,035,621 )      470,940  
Expired stock options     76,864       405,057  
Net valuation allowance for state NOLs     1,797,207       420,300  
Return to provision     (883 )     –  
Other, net     59,487       (8,459 )
Provision for income taxes   $ –     $ –  

 

There have been no changes to the Company’s liability for unrecognized tax benefits during the year ended April 30, 2024.

 

The Company files its income tax returns in the U.S. Federal jurisdiction and various state jurisdictions. As of the year ended April 30, 2024, the tax returns for 2019 through 2023 remain open to examination by the Internal Revenue Service and state tax authorities.

 

The Company’s policy is to recognize any interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of the years ended April 30, 2024 and 2023, the Company had accrued no interest or penalties related to uncertain tax positions.