| Reconciliation of Federal Statutory Income Tax |
Reconciliation of the federal statutory blended income tax rate of
28.6% for the year ended May 31, 2018 and the federal
statutory rate of 34% for the years ended May 31, 2017 and
May 31, 2016, to the effective income tax rate is as follows
for all periods presented:
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2018 |
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2017 |
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2016 |
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Income tax provision at statutory rate:
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28.6 |
% |
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34.0 |
% |
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34.0 |
% |
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State income taxes net
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— |
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— |
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— |
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Rate Change
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(34.8 |
) |
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— |
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— |
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Loss on debt conversion
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— |
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— |
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(0.8 |
) |
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Derivative gain/loss
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1.00 |
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2.80 |
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0.9 |
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Non-deductible debt
issuance costs
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(0.2 |
) |
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— |
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— |
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Non-deductible interest on
conversion
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(0.1 |
) |
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— |
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— |
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Inducement charge
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(2.0 |
) |
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(1.00 |
) |
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(1.0 |
) |
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Other
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(1.1 |
) |
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— |
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— |
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Miscellaneous
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(0.1 |
) |
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(0.10 |
) |
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(0.5 |
) |
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Current year credits generated
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4.4 |
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— |
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— |
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Credit carry forward generated (recorded currently)
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4.1 |
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— |
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— |
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Valuation allowance
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0.3 |
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(35.7 |
) |
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(32.9 |
) |
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0.0 |
% |
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0.0 |
% |
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0.0 |
% |
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| Net Deferred Tax Assets and Liabilities |
Net deferred tax assets and liabilities are comprised of the
following as of May 31, 2018 and 2017:
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2018 |
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2017 |
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Deferred tax asset (liability) non-current:
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Net Operating Loss
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$ |
29,230,279 |
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$ |
32,530,436 |
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Credits
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4,260,470 |
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— |
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ASC 718 Expense on NQO’s
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2,916,585 |
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4,284,246 |
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Charitable Contribution—Carry forward
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— |
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25,500 |
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Accrued Expenses
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117,880 |
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216,645 |
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Fixed Assets
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174 |
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1,300 |
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Amortization
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139,875 |
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186,772 |
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Capitalized Debt Issuance Costs
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— |
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157,992 |
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Debt Discount
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— |
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(31,072 |
) |
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Valuation allowance
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(36,665,263 |
) |
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(37,371,817 |
) |
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$ |
— |
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$ |
— |
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Noncurrent asset
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$ |
36,665,263 |
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$ |
37,371,817 |
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Valuation Allowance
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|
(36,665,263 |
) |
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(37,371,817 |
) |
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$ |
— |
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$ |
— |
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