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INCOME TAXES
 12 Months Ended
Apr. 30, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 11: 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. The Company’s operations in Canada and the UK were immaterial for the years ended April 30, 2021 and 2020.

 

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

 

   April 30,   April 30, 
   2021   2020 
         
Deferred tax assets:          
Loss carryforwards  $788,400   $301,000 
Accrued payroll   333,700    - 
Related party accruals   194,400    79,000 
Start-up costs   109,600    61,000 
Other   17,900    - 
Valuation allowance   (1,444,000)   (441,000)
Net deferred tax assets  $-   $- 

 

The income tax provision differs from the amount of income tax determined by applying the applicable statutory income tax rate to pretax loss due to the following for the years ended April 30, 2021 and 2020:

 

   April 30,   April 30, 
   2021   2020 
         
Income tax benefit based on book loss at US statutory rate  $(3,832,300)  $(1,273,000)
Share-based compensation and shares for services   188,100    786,000 
Debt discount amortization   79,100    15,000 
Related party accruals   127,800    79,000 
Start-up costs   -    61,000 
Interest expense   2,630,000    41,000 
Meals and entertainment   -    1,000 
Loss on extinguishment of debt   636,400    - 
Accrued payroll   

215,400

    

-

 
Gain on change in fair value of derivatives   

(407,300)

    - 
Other   1,500    

-

 
Valuation allowance   361,300    290,000 
Total income tax provision  $-   $- 

 

The Company had net operating loss carryforwards of $3,032,000 and $1,424,000 as of April 30, 2021 and 2020, respectively, which can be used to offset future taxable income in the US for the years ended 2022 through 2041. 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:

 

   April 30,   April 30, 
   2021   2020 
         
Deferred tax assets:          
Loss carryforwards  $178,000   $384,000 
Accrued expenses   -    63,000 
Start-up costs   13,000    - 
Research and development costs   113,000    23,000 
Valuation allowance   (304,000)   (470,000)
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% due to the following for the years ended April 30, 2021 and 2020:

 

   April 30,   April 30, 
   2021   2020 
         
Income tax provision (benefit) based on book income (loss) at Israeli statutory rate  $80,000   $(728,000)
Debt discount amortization   -    430,000 
Related party accruals   -    44,000 
Travel expenses   -    38,000 
Research and development costs   113,000    23,000 
Other non-deductible items   -    9,000 
Start-up costs   13,000    - 
Valuation allowance   -   184,000 
Loss carryforward   (206,000)   - 
Total income tax provision  $-   $- 

 

The Company had net operating loss carryforwards of approximately $774,000 and $1,671,000 as of April 30, 2021 and 2020, respectively, 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, 2021 or 2020.