The Company had no income tax expense for the three months ended July 31, 2015 and 2014. During the three months ended July 31, 2015 and 2014, the Company had net operating loss (“NOLs”) which generated deferred tax assets for NOL carryforwards. The Company provided valuation allowances against the net deferred tax assets including the deferred tax assets for NOL carryforwards. Valuation allowances provided for the net deferred tax asset increased by approximately $300,000 and $420,000 for the three months ended July 31, 2015 and 2014.

There was no material difference between the effective tax rate and the projected blended statutory tax rate for the quarters ended July 31, 2015 and 2014.

In assessing the realization of deferred tax assets, management considered whether it is more likely than not that some portion or all of the deferred asset will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based on the available objective evidence, including the history of operating losses and the uncertainty of generating future taxable income, management believes it is more likely than not that the net deferred tax assets at July 31, 2015 will not be fully realizable. Accordingly, management has maintained a valuation allowance against the net deferred tax asset at July 31, 2015.

There have been no changes to the Company’s liability for unrecognized tax benefits during the period ended July 31, 2015.

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 periods ended July 31, 2015 and 2014, the Company had accrued no interest or penalties related to uncertain tax positions.

See Note 13 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended April 30, 2015 for additional information regarding income taxes.