Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES

v3.25.4
INCOME TAXES
 12 Months Ended
Oct. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES

7. INCOME TAXES

 

Income tax provision (benefit) consists of the following (in thousands):

 

SCHEDULE OF INCOME TAX PROVISION (BENEFIT)

             
    Year Ended October 31,  
    2025     2024  
Federal:                
Current   $ -     $ -  
Deferred     (1,237 )     (2,284 )
State:                
Current     -       -  
Deferred     (574 )     (754 )
Adjustment to valuation allowance related to net deferred tax assets     1,811       3,038  
Total   $ -     $ -  

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax asset, net, at October 31, 2025 and 2024, are as follows (in thousands):

 

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

             
    October 31,  
    2025     2024  
Long-term deferred tax assets:                
Federal and state NOL and tax credit carryforwards   $ 30,582     $ 29,198  
Deferred compensation     8,763       8,394  
Intangibles     104       161  
Subtotal     39,449       37,753  
Less: valuation allowance     (39,449 )     (37,753 )
Deferred tax asset, net   $ -     $ -  

 

As of October 31, 2025, we had Federal tax net operating loss and tax credit carryforwards of approximately $106,253,000 and $2,413,000, respectively. At the federal level, businesses can carry forward their net operating losses indefinitely, but the deductions are limited to 80% of taxable income. Prior to the Tax Cuts and Jobs Act (TCJA) of 2017, businesses could carry losses forward for 20 years (without a deductibility limit). If the tax benefits relating to deductions of option holders’ income are ultimately realized, those benefits will be credited directly to additional paid-in capital. Certain changes in stock ownership can result in a limitation on the amount of net operating loss and tax credit carryovers that can be utilized each year. As of October 31, 2025, management has not determined the extent of any such limitations, if any.

 

We had California tax net operating loss carryforwards of approximately $68,597,000 as of October 31, 2025, available within statutory limits (expiring at various dates between 2026 and 2045), to offset future corporate taxable income and taxes payable, if any, under certain computations of such taxes.

 

We have provided a 100% valuation allowance against our deferred tax asset due to our current and historical pre-tax losses and the uncertainty regarding their realizability. The primary differences from the Federal statutory rate of 21% and the effective rate of 0% is attributable to a change in the valuation allowance. The following is a reconciliation of income taxes at the Federal statutory tax rate to income tax expense (benefit) (in thousands):

SCHEDULE OF RECONCILIATION OF INCOME TAXES

    Year Ended October 31,  
    2025     2024  
Income tax benefit at U.S. Federal statutory income tax rate   $ (2,316,000 )     (21.00 )%   $ (2,667,000 )     (21.00 )%
State income taxes     (770,000 )     (6.98 )%     (887,000 )     (6.99 )%
Permanent differences     31,000       0.28 %     21,000       0.17 %
Expiring net operating losses, credits and other     1,244,000       11.28 %     495,000       3.90 %
Change in valuation allowance     1,811,000       16.42 %     3,038,000       23.92 %
Income tax provision   $ -       0.00 %   $ -       0.00 %

 

During the two fiscal years ended October 31, 2025, we incurred no Federal and no State income taxes. We have no unrecognized tax benefits as of October 31, 2025 and 2024 and we account for interest and penalties related to income tax matters, if any, in general and administrative expenses. Tax years to which our net operating losses relate remain open to examination by Federal and California authorities to the extent which the net operating losses have yet to be utilized.