Quarterly report pursuant to Section 13 or 15(d)

Note 14 ??? Income Taxes

Note 14 – Income Taxes
9 Months Ended
Jan. 31, 2023
Income Tax Disclosure [Abstract]  
Note 14 – Income Taxes

Note 14 – Income Taxes


Our operating subsidiary, Red Cat Propware, Inc., is incorporated and based in Puerto Rico which is a commonwealth of the United States. We are not subject to taxation by the United States as Puerto Rico has its own taxing authority. Since inception, we have incurred net losses in each year of operations. Our current provision for the reporting periods presented in these financial statements consisted of a tax benefit against which we applied a full valuation allowance, resulting in no current provision for income taxes. In addition, there was no deferred provision for any of these reporting periods.


At January 31, 2023 and April 30, 2022, we had accumulated deficits of approximately $43,000,000 and $27,500,000, respectively. Deferred tax assets related to the future benefit of these net operating losses for tax purposes totaled approximately $7,955,000 and $5,087,500, respectively, calculated using the base Puerto Rico corporate tax rate of 18.5%. Currently, we focus on projected future taxable income in evaluating whether it is more likely than not that these deferred assets will be realized. Based on the fact that we have not generated an operating profit since inception, we have applied a full valuation allowance against our deferred tax assets at January 31, 2023 and April 30, 2022.