Post-effective amendment to a registration statement that is not immediately effective upon filing

Income Taxes

v3.23.3
Income Taxes
12 Months Ended
May 31, 2023
Income Taxes  
Income Taxes

Note 9. Income Taxes

Deferred taxes are recorded for all existing temporary differences in the Company’s assets and liabilities for income tax and financial reporting purposes. As noted below, there was no net deferred tax benefit or expense for the periods ended May 31, 2023 and 2022. Reconciliation of the federal statutory income tax rate of 21% to the effective income tax rate is as follows:

    

Fiscal years ended May 31,

    

2023

2022

Income tax provision at statutory rate:

 

21.0

%  

21.0

%  

Derivative loss

 

(2.3)

 

 

Non-deductible debt issuance costs

 

(2.6)

 

 

Non-deductible interest on convertible notes

 

(1.2)

 

(0.5)

 

Inducement interest expense

 

 

(0.7)

 

Other

 

0.8

 

1.1

 

Credit carry-forward released

 

 

(0.2)

 

Non-deductible loss on induced conversion

(1.4)

(3.7)

Non-deductible debt discount amortization

 

(0.6)

 

(0.3)

 

IRC section 162(m) limitation

 

 

(0.1)

 

Non-deductible expense on induced conversion of debt

 

 

(0.3)

 

Valuation allowance

 

(13.7)

 

(16.3)

 

Effective income tax rate

 

0.0

%  

0.0

%  

Net deferred tax assets and liabilities, non-current, are composed of the following:

    

As of May 31,

(in thousands)

    

2023

    

2022

Net operating loss

$

96,338

$

106,965

Credits

 

2,063

 

2,063

ASC 718 expense on non-qualified stock options

 

6,400

 

6,057

Charitable contribution carry forward

 

 

14

Accrued vacation and payroll

 

21

 

68

Right-of-use asset

(84)

(112)

Lease liability

89

117

Inventory charges

6,173

2,138

Inventory write-off

13,739

Issued warrants

2,317

Section 174 R&D costs

858

Accrued legal settlements

13

Accrued legal fees

3

Accrued expenses

 

36

 

89

Amortization

 

609

 

238

Fixed assets

 

4

 

1

Valuation allowance

 

(128,579)

 

(117,638)

Deferred tax asset, non-current

$

$

Non-current asset

 

128,579

 

117,638

Valuation allowance

 

(128,579)

 

(117,638)

Deferred tax asset (liability) non-current

$

$

The income tax benefit for the period presented is offset by a valuation allowance established against deferred tax assets arising from operating losses and other temporary differences, the realization of which is not considered more likely than not. In future periods, tax benefits and related tax deferred assets will be recognized when management considers realization of such amounts to be more likely than not. As of May 31, 2023 and 2022, the Company had available net operating loss carry forwards of approximately $458.8 million and $509.4 million, respectively, which began expiring in 2023. The Company’s income tax returns remain subject to examination by all tax jurisdictions for tax years ended May 31, 2020 through 2022.