Note 16. Income Taxes

For the eight-month period ended December 31, 2025, the Company recorded $1.0 million of income tax benefit in the U.K., all of which relates to the current year provision. For the twelve months ended April 30, 2025, the Company recorded $3.4 million of income tax expense in the U.K. For the twelve months ended April 30, 2024, the Company did not record any income tax benefit or expense in any jurisdiction.

Management of the Company has determined it is not more likely than not that the Company will recognize the benefits of net deferred tax assets, the majority of which are NOLs, and has provided a valuation allowance for the full amount of deferred tax assets as of December 31, 2025 and April 30, 2025 and 2024. During the eight-month period ended December 31, 2025 and twelve months ended April 30, 2025 and 2024 the valuation allowance increased by $46.1 million, $6.5 million, and $13.3 million, respectively. Realization of deferred tax assets is dependent upon the generation of future taxable income.

The ability to utilize the Company’s domestic net operating losses is limited due to changes in ownership as defined by Section 382 of the Internal Revenue Code (the “Code”). Under the provisions of Sections 382 and 383 of the Code, a change of control, as defined in the Code, imposes an annual limitation on the amount of the Company’s pre-change net operating loss and tax credit carryforwards, and other tax attributes that can be used to reduce future tax liabilities. The Company determined that ownership changes occurred as a result of public offerings in December 2005, a transaction in November 2016, and public offerings in February 2019 and December 2022. The Company most recently underwent a change of ownership on December 28, 2022. The Company evaluated the 382 position for the period of December 29, 2022 through December 31, 2025 and concluded that the Company did not have any ownership changes during the period of December 29, 2022 to December 31, 2025.

The Company has $111.0 million of NOLs subject to 382 limitation. As a result of these ownership changes, it is estimated that the effect of Section 382 will generally limit the amount of the net operating loss carryforwards that are available to offset future taxable income to approximately $1.5 million, annually. Due to this annual limitation, the Company expects $76.7 million of federal NOL to go unutilized.

As of December 31, 2025, the Company has available NOL carryforwards for U.S. federal income taxes of $6.1 million generated prior to the Tax Cuts and Jobs Act, that expire in 2036. The Company has an additional $90.9 million in NOL carryforwards generated after the Tax Cuts and Jobs Act that can be carried forward indefinitely. Of the $6.1 million of NOL expiring in 2036, $3.7 million remains subject to the Section 382 limitation for the change of ownership that occurred on November 21, 2016, and is subject to an annual 382 limitation of $0.3 million, and $2.4 million of NOLs are only subject to a $1.5 million annual limitation. Of the remaining $90.9 million of indefinite NOL, $23.0 million is subject to an annual 382 limitation of $1.5 million. The Company also has NOL carryforwards for state income taxes of $166.3 million that begin to expire in 2036, NOL carryforwards for U.K. income taxes of $216.7 million that do not expire, and $3.8 million of NOLs carryforwards in Japan that begin to expire in 2034.

The Company has $1.5 million of R&D credit carryforward subject to 383 limitation. As a result of these ownership changes, it is estimated that the effect of Section 383 will be the limitation of all of these R&D credit carryforwards, with $1.5 million of credit to expire unutilized.

The Company recognizes the financial statement effects of a tax position when it becomes more likely than not, based upon the technical merits, that the position will be sustained upon examination. The Company files U.S. Federal tax returns, as well as certain state returns. The Company also files returns in the United Kingdom. The Company is subject to U.S. Federal, state, and U.K. income tax examinations by authorities for tax years ending after 2021. There are currently no federal, state, or U.K. audits in process. Tax year 2021 and subsequent years contain matters that could be subject to differing interpretations of the applicable tax laws and regulations as it relates to the amount and or timing of income, deductions, and tax credits. Although the outcome of tax audits is always uncertain,

management has analyzed the Company’s tax positions taken for all open tax years and has concluded that no provision for unrecognized tax benefits from uncertain tax positions is required in the Company’s consolidated financial statements for the eight-month period ended December 31, 2025 and twelve months ended April 30, 2025 and 2024.

The One Big Beautiful Bill Act (“OBBBA”) was signed into law on July 4, 2025, and makes changes to the deductibility of certain business expenditures including interest expense, research and development expenditures, and property and equipment, and makes changes to elements of U.S. cross-border taxation. The Company implemented the changes enacted under the OBBBA, which impacted the Company's deferred tax assets as of July 4, 2025, the date of enactment, via the reversal of approximately $1.7 million of deferred tax assets resulting from capitalized research expenses incurred through December 31, 2024. The reversal is reflected in the Company's consolidated financial statements for the eight-month period ended December 31, 2025.

Under the U.K. government’s research and development tax incentive scheme, the Company incurred qualifying research and development expenses and filed claims for research and development tax credits in accordance with the relevant tax legislation. The research and development tax credits are paid to the Company in cash and reported as other income. In March 2026, the Company received an enquiry from HMRC opening a check on its R&D credit for the April 30, 2024 tax year.