XML 40 R22.htm IDEA: XBRL DOCUMENT v3.23.1
INCOME TAXES
 12 Months Ended
Apr. 30, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES

Note 16: 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, Israel, and the UK were immaterial for the years ended April 30, 2022 and 2021.

 

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

 

   2022   2021 
   April 30, 
   2022   2021 
         
Deferred tax assets:          
Loss carryforwards  $2,166,000   $788,400 
Stock options   8,259,000    — 
Accrued payroll   —    333,700 
Related party accruals   799,000    194,400 
Inventory reserve   100,000    — 
Interest deferral   191,000    — 
Start-up costs   84,000    109,600 
Other   57,000    17,900 
Valuation allowance   (11,656,000)   (1,444,000)
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 2022 and 2021:

 

   2022   2021 
   April 30, 
   2022   2021 
         
Income tax benefit based on book loss at US statutory rate  $(10,259,000)  $(3,832,300)
Share-based compensation and shares for services   —    188,100 
Debt discount amortization   1,841,000    79,100 
Related party accruals   150,000    127,800 
Start-up costs   6,815,000    — 
Interest expense   5,000    2,630,000 
Depreciation   21,000    — 
Inventory reserve   55,000    — 
Interest deferral   13,000    — 
Acquisition costs   1,268,000    — 
Accrued legal   76,000    — 
Loss on extinguishment of debt   —    636,400 
Accrued payroll   —    215,400 
Gain on change in fair value of derivatives   (1,298,000)   (407,300)
Other   (29,000)   1,500 
Valuation allowance   1,342,000    361,300 
Total income tax provision  $—   $— 

 

 

CONNEXA SPORTS TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

The Company had net operating loss carryforwards of $12,366,000 and $3,032,000 as of April 30, 2022 and 2021, respectively, which may be available to be used to offset future taxable income in the US for the years ended 2023 through 2042. The utilization of the Company’s net operating losses may be subject to a U.S. federal limitation due to the “change in ownership provisions” under Section 382 of the Internal Revenue Code and other similar limitations in various state jurisdictions. Such limitations may result in a reduction of the amount of net operating loss carryforwards in future years and possibly the expiration of certain net operating loss carryforwards before their utilization. The Company has not completed a full study to assess whether an “ownership change” as defined in Section 382 has occurred or whether there have been multiple ownership changes since inception. Future changes in the Company’s stock ownership, which may be outside of the Company’s control, may trigger an “ownership change”. In addition, future equity offerings or acquisitions that have equity as a component of the purchase price could result in an “ownership change”. Tax years that remain subject to examination are 2018 and forward.

 

Net deferred tax assets from operations in Israel, using an effective tax rate of 23%, consisted of the following:

 

   2022   2021 
   April 30, 
   2022   2021 
Deferred tax assets:          
Loss carryforwards  $234,000   $178,000 
Start-up costs   —    13,000 
Research and development costs   (113,000)   113,000 
Valuation allowance   (121,000)   (304,000)
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, 2022 and 2021:

   2022   2021 
   April 30, 
   2022   2021 
         
Income tax provision (benefit) based on book income (loss) at Israeli statutory rate  $(56,000)  $80,000 
Research and development costs   —    113,000 
Start-up costs   —    13,000 
Valuation allowance   56,000    — 
Loss carryforward   —    (206,000)
Total income tax provision  $—   $— 

 

The Company had net operating loss carryforwards of approximately 1,020,000 and $774,000 as of April 30, 2022 and 2021, respectively, which may be available to 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 comprehensive loss for the years ended April 30, 2022 and 2021.