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Income Taxes
 12 Months Ended
Apr. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 10: INCOME TAXES

 

The Company does business in the US through its subsidiaries Slinger Bag Inc. and Slinger Bag Americas. It also does business in Israel through SBL, whose operations are reflected in the Company’s consolidated financial statements from May 1, 2019 on, the beginning of the earliest period in which the entities were under common control.

 

Net deferred tax assets from operations in the US, using an effective tax rate of 21%, consisted of the following.

 

    April 30,     April 30,  
    2020     2019  
             
Deferred tax assets (liabilities):                
Loss carryforwards   $ 301,000     $ 9,500  
Depreciation     -       (400 )
Related party accruals     79,000       -  
Start-up costs     61,000       -  
Valuation allowance     (441,000 )     (9,100 )
Net deferred tax assets   $ -     $ -  

 

The income tax provision differs from the amount of income tax determined by applying the applicable US statutory income tax rate of 21% to pretax loss due to the following for the year ended April 30, 2020 and 2019.

 

    April 30,     April 30,  
    2020     2019  
             
Income tax benefit based on book loss at US statutory rate   $ (1,273,000 )   $ (5,900 )
Stock-based compensation     786,000       -  
Debt discount amortization     15,000       -  
Related party accruals     79,000       -  
Start up costs     61,000       -  
Interest expense     41,000       -  
Meals and entertainment     1,000       -  
Depreciation     -       400  
Valuation allowance     290,000       5,500  
Total income tax provision   $ -     $ -  

 

The Company had net operating loss carryforwards of approximately $1,424,000 as of April 30, 2020 which can be used to offset future taxable income in the US from the year 2021 through 2040. Tax years that remain subject to examination are 2017 and forward.

 

Net deferred tax assets from operations in Israel , using an effective tax rate of 23%, consisted of the following. The net deferred tax assets as of April 30, 2019 represent the amounts from SBL contributed to the Company on May 1, 2019.

 

    April 30,     April 30,  
    2020     2019  
             
Deferred tax assets (liabilities):                
Loss carryforwards   $ 384,000     $ 201,000  
Accrued expenses     63,000       16,000  
Research and development costs     23,000       -  
Valuation allowance     (470,000 )     (216,000 )
Net deferred tax assets   $ -     $ -  

 

The income tax provision differs from the amount of income tax determined by applying the applicable Israeli statutory income tax rate of 23% to pretax loss due to the following for the year ended April 30, 2020. As the net assets of SBL were contributed on May 1, 2019, there is no income tax provision related to the year ended April 30, 2019.

 

    April 30,  
    2020  
       
Income tax benefit based on book loss at Israeli statutory rate   $ (728,000 )
Debt discount amortization     430,000  
Related party accruals     44,000  
Travel     38,000  
Research and development     23,000  
Other non-deductible items     9,000  
Valuation allowance     184,000  
Total income tax provision   $ -  

 

The Company had net operating loss carryforwards of approximately $1,671,000 as of April 30, 2020 which can be used to offset future taxable income in Israel. All of the Company’s tax years since inception are open for examination.

 

The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. There were no interest or penalties recognized in the accompanying consolidated statements of operations for the year ended April 30, 2020 or 2019.