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AIRWA INC.

AIRWA INC.YYAIEarnings & Financial Report

Nasdaq · Information Technology · Services-Computer Programming, Data Processing, Etc.

Flying W Airways (FWA) was a briefly high-profile publicly-traded company of the late 1960s/early 1970s, which originated in 1961 when its founders opened Flying W Airport in New Jersey as a fly-in resort. FWA became a bet on Alaskan oil and at its peak in 1969 attracted investment by the Matlack family, had two Hollywood actors on its board and bought Red Dodge Aviation (RDA) of Alaska, for which it acquired Lockheed L-100 Hercules aircraft, to take advantage of forthcoming Alaska pipeline c...

What changed in AIRWA INC.'s 10-K — 2022 vs 2023

Top changes in AIRWA INC.'s 2023 10-K

317 paragraphs added · 394 removed · 225 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

71 edited+22 added−63 removed45 unchanged
Exclusive Padel distribution Agreement On March 7, 2023, Slinger Bag entered into an exclusive distribution agreement for Padel Tennis with a company located in Valencia, Spain called with Desarrollo y Promocion de Padel S.L. This agreement is contracted to deliver approximately $20million in revenue over a 5 year period.
On March 7, 2023, Slinger Bag entered into an exclusive distribution agreement for Padel Tennis with a company located in Valencia, Spain called with Desarrollo y Promocion de Padel S.L. This agreement is contracted to deliver approximately $20million in revenue over a 5-year period.
Sale of PlaySight On November 27, 2022, the Company entered into a share purchase agreement (the “Agreement”) with PlaySight, Chen Shachar and Evgeni Khazanov (together, the “Buyer”) pursuant to which the Buyer purchased 100% of the issued and outstanding shares of PlaySight from the Company in exchange for (1) releasing the Company from all of PlaySight’s obligations towards its vendors, employees, tax authorities and any other (past, current and future) creditors of PlaySight; (2) waiver by the Buyer of 100% of the personal consideration owed to them under their employment agreements in the total amount of U.S. $600,000 (which would have been increased in December 2022 to U.S. $800,000); and (3) cash consideration of U.S. $2 million to be paid to the Company as follows: (i) a promissory note in the amount of U.S. $2 million issued and delivered to the Company (the “Promissory Note”).
On November 27, 2022, the Company entered into a share purchase agreement (the “Agreement”) with PlaySight, Chen Shachar and Evgeni Khazanov (together, the “Buyer”) pursuant to which the Buyer purchased 100% of the issued and outstanding shares of PlaySight from the Company in exchange for (1) releasing the Company from all of PlaySight’s obligations towards its vendors, employees, tax authorities and any other (past, current and future) creditors of PlaySight; (2) waiver by the Buyer of 100% of the personal consideration owed to them under their employment agreements in the total amount of U.S. $600,000 (which would have been increased in December 2022 to U.S. $800,000); and (3) cash consideration of U.S. $2 million to be paid to the Company as follows: (i) a promissory note in the amount of U.S. $2 million issued and delivered to the Company (the “Promissory Note”).
The Company continued to classify Foundation Sports in continuing operations, until December 5, 2022 when they sold 75% of Foundation Sports back to the original owners at which time it deconsolidated this subsidiary and recorded a loss on the sale. The Company also determined to dispose of the PlaySight entity during the year ended April 30, 2023.
The Company continued to classify Foundation Sports in continuing operations, until December 5, 2022 when it sold 75% of Foundation Sports back to the original owners at which time it deconsolidated this subsidiary and recorded a loss on the sale. The Company also determined to dispose of the PlaySight entity during the year ended April 30, 2023.
These efforts are collaborative and based on a detailed product brief and in-depth market and consumer research for each product category. The development timetable of the Slinger Bag Launcher for the new market segments from concept to market launch is 18 months and includes at least 2 rounds or in-market field testing.
These efforts are collaborative and based on a detailed product brief and in-depth market and consumer research for each product category. The development timetable of the Slinger Bag Launcher for the new market segments from concept to market launch is approximately 18 months and includes at least 2 rounds or in-market field testing.
The Company completed the sale in November 2022 and recorded a loss on the sale at that time. In April 2022, the Company changed its domicile from Nevada to Delaware. On April 7, 2022, the Company effected a name change to Connexa Sports Technologies Inc. We also changed our ticker symbol, “CNXA”.
The Company completed the sale in November 2022 and recorded a loss on the sale at that time. 1 In April 2022, the Company changed its domicile from Nevada to Delaware. On April 7, 2022, the Company effected a name change to Connexa Sports Technologies Inc. We also changed our ticker symbol, “CNXA”.
Stride-Innovation quality control teams regularly visit our vendor facilities and monitor production, employee conditions and welfare, and undertake quality control testing. We do not utilize or condone the use of child labor of any kind in the production of our products.
Stride-Innovation quality control teams regularly visit each of our vendor facilities and monitor production, employee conditions and welfare, and undertake quality control testing. We do not utilize or condone the use of child labor of any kind in the production of our products.
On October 10, 2022, the Company received a letter from the Listing Qualifications Department of the Nasdaq indicating that the Company’s common stock is subject to potential delisting from Nasdaq because, for a period of 30 consecutive business days, the bid price of the Company’s common stock has closed below the minimum $1.00 per share requirement for continued listing under Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”).
Delinquency Notices On October 10, 2022, the Company received a letter from the Listing Qualifications Department of the Nasdaq indicating that the Company’s common stock is subject to potential delisting from Nasdaq because, for a period of 30 consecutive business days, the bid price of the Company’s common stock has closed below the minimum $1.00 per share requirement for continued listing under Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”).
We do not pay any rent or fee to use this location. 14 COVID-19 Supply Issues Slinger Bag is a business fully reliant on China based vendors for manufacture of its product. Throughout the course of 2022 the flow of production was occasionally affected as the China government implemented regional lockdowns.
We do not pay any rent or fee to use this location. 11 COVID-19 Supply Issues Slinger Bag is a business fully reliant on China based vendors for manufacture of its product. Throughout the course of 2022 the flow of production was occasionally affected as the China government implemented regional lockdowns.
The Slinger Bag brand ambassador team has also been integral to the overall brand marketing strategy in their support of our product by creating and sharing content, representing themselves as affiliated with the brand and through their personal appearances at events, tournaments, etc.
The Slinger Bag brand ambassador team has also been integral to the overall brand marketing strategy through their support of our product and by creating and sharing their user content, representing themselves as affiliated with the brand and through their personal appearances at events, tournaments, etc.
Sale of Foundation Tennis On December 5, 2022, the Company assigned 75% of its membership interest in Foundation Sports to Charles Ruddy, its founder and granted him the right for a period of three years to purchase the remaining 25% of its Foundation Sports membership interests for $500,000 in cash.
On December 5, 2022, the Company assigned 75% of its membership interest in Foundation Sports to Charles Ruddy, its founder and granted him the right for a period of three years to purchase the remaining 25% of its Foundation Sports membership interests for $500,000 in cash.
Outside of this core marketing strategy, Slinger Bag has taken advantage of numerous opportunities to partner with key brands in the tennis and pickleball spaces or to advertise at key tennis or pickleball related events.
Outside of our core marketing strategy, Slinger Bag has taken advantage of numerous opportunities to partner with key brands in the tennis and pickleball spaces and/or to advertise at key tennis or pickleball related events.
Connexa Brand Marketing With the go-to-market strategy for Slinger Bag focused on its core North American tennis and pickleball markets as a direct-to-consumer business e-commerce brand, all marketing activity and advertising media is centered around a consumer push to the Slinger Bag e-commerce platform at https://www.connexasports.com/ and then working to convert brand or product interest to purchases.
Connexa Brand Marketing With the go-to-market strategy for Slinger Bag focused on its core North American tennis and pickleball markets as a direct-to-consumer business e-commerce brand, all in-house marketing activity and advertising media is centered around a consumer push to the Slinger Bag e-commerce platform at https://www.slingerbag.com/ and then working to convert brand or product interest to purchases.
Gameface AI’s core capabilities are delivered through compatible camera or smart phone, which allows us to build scalable solutions for the sports market without relying on specific hardware or camera types. We envision Gameface as a product that will be at the heart of ‘powering’ the Connexa portfolio of brands.
Gameface’s core capabilities are delivered through a compatible single camera or smart phone, which allows us to build scalable solutions for the sports market without relying on specific hardware or camera types. We envision Gameface as a product and technology that will be at the heart of ‘powering’ the Connexa portfolio of brands.
There are, however, other companies that market traditional tennis ball machines, including the following brands: ● Spinshot ● Lobster Sports ● Spinfire ● MatchMate ● Sports Tutor ● Silent Partner ● Hydrogen Proton ● Playmate Gameface There are currently no competitors for our cricket and tennis analytics product that are similar to the cricket technique analysis app under development or the Slinger app in beta testing, based on functionality and affordability.
There are, however, other companies that market traditional tennis ball machines, including the following brands: ● Nisplay ● Spinshot ● Lobster Sports – Tennis, Pickleball and Padel ● Spinfire ● MatchMate ● Sports Tutor - Tennis, Pickleball and Padel ● Silent Partner ● Hydrogen Proton ● Playmate ● Erne Pickleball ● Simon X Pickleball ● Padelmaster - Padel 7 Gameface There are currently no competitors for our cricket and tennis AI analytics product that are similar to the cricket technique analysis app or the Slinger app (currently in beta testing), based on functionality and affordability.
Rolling Road, Suite 138, Windsor Mill, Maryland 21244. We entered into a lease for use of office space at this location effective September 1, 2019. This location is owned by Zeek Logistics, which is a company owned by Yonah Kalfa, who is a director, Chief Innovation Officer, and our largest shareholder.
We entered into a lease for use of office space at this location effective September 1, 2019. This location is owned by Zeek Logistics, which is a company owned by Yonah Kalfa, who is a director, Chief Innovation Officer, and our largest shareholder.
Slinger Bag has a formal supply of service agreement in place with our vendor management partner, Stride-Innovation, for a wide range of support and services. We have a written agreement in place with our main vendor partner, Xiamen Ruicheng Industrial Design Co., Ltd.
Vendors Slinger Bag works only with and through third-party suppliers. Slinger Bag has a formal supply of service agreement in place with our vendor management partner, Stride-Innovation, for a wide range of support and services. We have a written agreement in place with our main assembly vendor partner, Xiamen Ruicheng Industrial Design Co., Ltd.
These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Accordingly, there is substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Over the course of 2022 and through the date of this report we have not experienced any significant supply chain issues in the availability of our product. Gameface, PlaySight and Foundation are primarily software based companies.
Over the course of 2022 and through the date of this report we have not experienced any significant supply chain issues in the availability of our product. Gameface is primarily a software based company.
Employees As at the date of this report, we have 8 full-time employees spread across Israel, USA, Australia, India and the UK. Management believes its relations with employees is good. We also hire part-time employees and engage consultants to support our operations as needed. Facilities Our principal office is located at 2709 N.
Employees As at the date of this report, we have 9 full-time employees spread across Israel, USA, Australia and the UK. Management believes its relations with employees is good. We also hire part-time employees and engage consultants to support our operations as needed. Facilities Our principal office is located at 2709 N. Rolling Road, Suite 138, Windsor Mill, Maryland 21244.
As a result of the nature of their business, in the time that that we owned these companies we have not seen any material impact on their business of any Covid related issues.
As a result of the nature of its business, in the time that that we owned Gameface we have not seen any material impact on its business because of any Covid related issues.
Ad Venture Media leads all digital advertising activities for Slinger Bag on a performance-based fee structure. ● We have partnered with Team HQS, who manages an affiliate marketing program geared towards US-based teaching professionals, players, juniors and events, in the United States tennis and pickleball markets.
Ad Venture Media leads all of our paid digital and social media advertising activities for Slinger Bag on a performance-based fee structure. ● We have partnered with Team Activations through their Team HQS portal to manage an affiliate marketing program geared towards US-based teaching professionals, players, juniors and events, in the United States tennis and pickleball markets.
Government Regulation Both the Slinger Bag Launcher and the Slinger Oscillator meet all the United States government requirements for electrical, radio wave and battery standards, as well as having all necessary and required certifications to facilitate global marketing and sales of these products. 12 Research and Development Slinger Bag Slinger Bag is working with our vendor management partner, Stride Innovation, and our China based vendors to produce ball launchers for new market segments, such as Pickleball, Padel and Baseball/Softball.
In addition, within the United States, we comply with the required California 65 regulations in respect to the materials used in the construction of its trolley bag. 8 Government Regulation Both the Slinger Bag Launcher and the Slinger Oscillator meet all the United States government requirements for electrical, radio wave and battery standards, as well as having all necessary and required certifications to facilitate global marketing and sales of these products. 9 Research and Development Slinger Bag Slinger Bag is working with our vendor management partner, Stride Innovation, and our China based vendors to produce ball launchers for new market segments, such as Pickleball, Padel and Baseball/Softball.
Distributor marketing budgets are allocated to Google, Facebook, Instagram, YouTube and other relevant websites or platforms in their region, and supported, approved and /or overseen by AdVenture Media Group where applicable. Brand Endorsements We have reached agreements with several globally recognized tennis players and coaches to become brand ambassadors.
Distributor marketing budgets are allocated to Google, Facebook, Instagram, YouTube and other relevant websites or platforms in their region, and several are supported, approved and /or overseen by AdVenture Media Group where applicable. 6 Brand Endorsements In 2021 we reached agreements with several globally recognized tennis players and coaches to become brand ambassadors, but those agreements terminated in the first two calendar quarters of 2023.
Additionally, through our management team’s close association to the tennis industry, we have been able to provide many touring professionals with a Slinger Bag Launcher for their personal use. These arrangements were non-contractual product seeding opportunities. Players have occasionally posted on social media about their use of the Slinger Bag Launcher, including tennis player, Simona Halep.
Additionally, through our management team’s close association to the tennis industry, we have been able to provide many touring professionals with a Slinger Bag Launcher for their personal use. These arrangements were non-contractual product seeding opportunities.
We are engaged with 10 individual part suppliers, and all of these parts come together at our contracted assembly facility in Xiamen, China, where the Launchers are assembled and quality control checked before being processed for global distribution. 5 Our manufacturing capacity is estimated at approximately 5,000 units monthly.
Manufacturing and Distribution Production of the Slinger Bag Launcher is based in southern China. We are engaged with 10 individual part suppliers, and all of these parts come together at our contracted assembly facility in Xiamen, China, where the Launchers are assembled and quality control checked before being processed for global distribution.
Ukraine War The impact of the Ukraine ware has been limited on the Company with the direct impact being seen through those distributors bordering the war zone who have seen a significant decline in demand. PlaySight is at risk of significant impact in regards to the war.
Ukraine War The impact of the Ukraine ware has been limited on the Company with the direct impact being seen through those distributors bordering the war zone who have seen a significant decline in demand. Gameface – no direct impact seen on this business to date.
All distributor partners purchase Slinger Bag Launchers at a discounted distributor pricing structure, which is considerably lower than the retail price, and are responsible for placing their product orders up to 3 months in advance of their delivery requirement. The United States market will remain predominantly a direct-to-consumer market for Slinger Bag for Tennis and for Pickleball.
All distributors purchase Slinger Bag Launchers at a discounted distributor pricing structure, which is considerably lower than the US consumer price, and are responsible for placing their product orders up to 3 months in advance of their delivery requirement.
Since September 2021, the Gameface team has been dedicated to building its technology to deliver performance insights in tennis, which will form the core of our new Slinger app.
The Gameface team has been dedicated to building its technology to deliver performance insights in tennis, which will form the core of our new Slinger app, which is planned to be launched in late 2023.
Details of such partners announced and active today include: ● Dunlop: We have entered a strategic partnership with one of the most iconic tennis brands in the world, Dunlop, for the supply of co-branded Slinger-Dunlop tennis balls across the globe. 9 ● Peter Burwash International: An organization providing coaching and tennis services to high-level, high-quality hotels, resorts and tennis facilities across the globe. ● Mouratoglou Tennis Academy (MTA): A high profile tennis academy located in the south of France.
Details of such partners announced and active include: ● Dunlop: We have entered a strategic partnership with one of the most iconic tennis brands in the world, Dunlop, for the supply of co-branded Slinger-Dunlop tennis balls across the globe. ● Peter Burwash International: An organization providing coaching and tennis services to high-level, high-quality hotels, resorts and tennis facilities across the globe. ● Tennis Europe: In partnership with our European distributor, Dunlop, Slinger Bag is the official tennis ball launcher of the Tennis Europe organization.
Later in 2023, Gameface plans to revisit the cricket vertical and enhance its technology offering based on the advances made in tennis AI tools available through the combined company, which will broaden and deepen its reach across the cricket world.
After launching the tennis app, Gameface plans to revisit the cricket vertical and enhance its technology offering based on the advances made in its tennis AI, which will broaden and deepen its reach across the cricket world.
As a result, the Company sold PlaySight back to its original owners of in November 2022, and the Company sold most (75%) of Foundation Tennis back to their original owners, with an option to purchase any remaining interests. The Company believes these divestitures will bring about greater cash flow and result in a reduction in net loss from operations.
As a result, the Company sold PlaySight back to its original owners of in November 2022, and the Company sold most (75%) of Foundation Tennis back to their original owners, with an option to purchase any remaining interests.
Foundation – no direct impact seen on this business to date. Going Concern Our financial statements have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge its liabilities in the normal course of business for the foreseeable future.
Going Concern Our financial statements have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge its liabilities in the normal course of business for the foreseeable future. We have an accumulated deficit and more losses are anticipated in the ongoing development of the business.
(the “Escrow Agent”) for the benefit of the Company or, at the election of the Company, issued in the form of a stock certificate or recorded in some other market-standard format to be held by the Escrow Agent. 2 (iv) The number of the Deposited Shares shall be determined according to the post-money valuation of the last investment round of the Company, and in the absence of such investment round, the total number of the Deposited Shares shall be $2 million divided by the Company’s valuation to be determined at that time by a third party appraiser, to be nominated by both the Company and the Buyer (the “Appraiser”).
(iv) The number of the Deposited Shares shall be determined according to the post-money valuation of the last investment round of the Company, and in the absence of such investment round, the total number of the Deposited Shares shall be $2 million divided by the Company’s valuation to be determined at that time by a third party appraiser, to be nominated by both the Company and the Buyer (the “Appraiser”).
Each distributor executes local grassroots programs, including demonstration days, local teaching pro partnerships, specialist tennis network communications, providing Slinger product locally as necessary to local key market tennis, pickleball and padel influencers to further increase the intensity of the influencer effort. Typically, we support these activities with either discounted products or certain quantities of free products.
Each distributor executes local grassroots programs, including demonstration days, local teaching pro partnerships, specialist tennis network communications, providing Slinger Bag product locally as necessary to the local market key influencers across tennis, pickleball and padel to further increase the intensity of the influencer effort and broaden consumer awareness.
Our utility patents have been applied for in all key markets including the US, China, Israel, Canada, Japan, Hong Kong, Australia, and EU, and granted in US and China. Our design patents have been applied for and granted in US, China, EU, United Kingdom, Canada, Israel, and Japan.
Our design patents have been applied for and granted in US, China, EU, United Kingdom, Canada, Israel, and Japan.
We intend to overcome the circumstances that impact its ability to remain a going concern through a combination of the commencement of revenues, with interim cash flow deficiencies being addressed through additional equity and debt financing.
The Company believes these divestitures will bring about greater cash flow and result in a reduction in net loss from operations. 12 We intend to overcome the circumstances that impact its ability to remain a going concern through a combination of the commencement of revenues, with interim cash flow deficiencies being addressed through additional equity and debt financing.
However, the mix of product sales across our group may vary considerably from time to time as a result of changes in seasonal and geographic demand for tennis and other sports equipment and in connection with the timing of significant sporting events, such as any Grand Slam tennis tournament and, over time, other sports competitions and in relation to new product market launches. 11 Costs and Effects of Complying with Environmental Regulations Set forth below is a detailed chart of all our Product Certifications for key global markets covering battery, remote control (radio wave), and power charger.
However, the mix of product sales across our group may vary considerably from time to time as a result of changes in seasonal and geographic demand for tennis and other sports equipment and in connection with the timing of significant sporting events, such as any Grand Slam tennis tournament and, over time, other sports competitions and in relation to new product market launches.
We expect this to aid efficiency of the production process. We have engaged an independent and experienced vendor management company to manage all of our production activities, our quality control process and quality assurance activities, both across our individual vendor partners and at the assembly facility.
We have engaged an independent and experienced vendor management company to manage all of our production activities, our quality control process and quality assurance activities, both across our individual vendor partners and at the assembly facility. These processes have been developed together with the Company with a goal of producing consistently high-quality and high performing products.
During the fiscal year that ended on April 30, 2022, our ambassador team included: Tommy Hass, Robert Bryan, Darren Cahill, Eugenie Bouchard, Patrick Mouratoglou, Dustin Brown and the Jensen brothers.
During the fiscal year that ended on April 30, 2022, our ambassador team included: Tommy Hass, Robert Bryan, Darren Cahill, Eugenie Bouchard, Patrick Mouratoglou, Dustin Brown and the Jensen brothers. All ambassador arrangements terminated prior to the date hereof, which means that we no longer have any active tennis ambassadors.
Through until March 2023 Slinger Bag has been a single product company marketing its Tennis Launcher for tennis players of all ages and abilities. Currently, approximately 70% of Slinger Bag Tennis Launcher revenues are generated through our direct-to-consumer strategy in North America. We operate a third-party distributor structure in all markets outside of North America.
Currently, approximately 70% of Slinger Bag Tennis Launcher revenues are generated through our direct-to-consumer strategy in North America. We operate a third-party distributor structure in all markets outside of North America. Distributor partners have exclusive territories and / or product categories.
There are, however, other companies that offer analytics using AI across different sports and at different levels, including Track160 (football), Second Spectrum (basketball), Hawk Eye (tennis/football/cricket), Swingvision (tennis), Home Court (basketball), and Golf Boost Ai (golf). Foundation Tennis There are a wide number of local, regional and global competitors in the facility / court booking software space.
There are, however, other companies that offer analytics using AI across different sports and at different levels, including Track160 (football), Second Spectrum (basketball), Hawk Eye (tennis/football/cricket), Swing Vision (tennis), Home Court (basketball), and Golf Boost Ai (golf).
The Nasdaq notice indicated that, in accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company will be provided 180 calendar days, or until April 10, 2023, to regain compliance.
The Nasdaq notice indicated that, in accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company would be provided 180 calendar days, or until April 10, 2023, to regain compliance. If the Company were to fail to regain compliance with the Bid Price Rule before April 10, 2023, t he Company may be eligible for an additional 180-calendar day compliance period.
In similar vein, we are looking to deliver partnerships for the co-branded supply of Pickle Balls and Padel tennis Balls. Competition Slinger Bag Launcher There are currently no direct competitors with products that are similar to the Slinger Bag Launcher, based on its affordability and tennis bag functionality.
Competition Slinger Bag Launcher There are currently no direct competitors with products that are similar to the Slinger Bag Launcher, based on its affordability and tennis bag functionality.
We also see Gameface technology as a driver of real-time data and analytics for a wide range of sports, brands and other strategic partners. Gameface initially focused its technology on the cricket and soccer markets, where it has built an automated platform to extract various data points from live and archived match footage.
Gameface initially focused its technology on the cricket and soccer markets, where it has built an automated platform to extract various data points from live and archived match footage.
Based on the target tennis and pickleball demographic, our marketing focus for the brand centers is around three core marketing pillars: digital advertising; influencers and brand ambassadors.
Based on the target tennis and pickleball demographic, our marketing focus centers around three core marketing pillars: digital advertising; influencers and brand ambassadors. Our marketing efforts also focus on core targeted social media platforms such as Facebook, Google, Instagram and You Tube.
In 2023 and going forward, Gameface expects to dedicate resources to baseball analytics and identifying strategic partners for other team sports such as basketball and soccer. We also intend to license technology to validated global partners for direct-to-consumer applications.
In 2024 and going forward, Gameface expects to dedicate resources to baseball analytics and identifying strategic partners for other high-profile team sports such as basketball and soccer. We also intend to license technology to validated global partners in sports verticals that remain non-core to Connexa with the aim to become the recognized leader in sports AI globally.
Slinger Bag is the official ball launcher of the MTA. ● Tennis Europe: In partnership with Dunlop, Slinger Bag is the official tennis ball launcher of Tennis Europe. Tennis Europe provides a platform for aspiring junior tennis players to compete in age-group categorized events. ● Country Federations: Slinger Bag is an official partner of the UK Lawn Tennis Association (“LTA”).
Tennis Europe provides a platform for 60,000 aspiring junior tennis players to compete in age-group categorized events. ● Country Federations: Slinger Bag is an official partner of the UK Lawn Tennis Association (“LTA”). In similar vein, we are looking to deliver partnerships for the co-branded supply of Pickle Balls and Padel Tennis Balls.
As the largest tennis and pickleball market in the world with 17.4 million tennis players and over 5 million pickleball players, the United States is a key market both to establish the Slinger brand and to drive demonstrable growth. Direct-to-consumer sales are further supplemented by one or more third-party internet sites focused on either the tennis or the pickleball market.
The United States market will remain predominantly a direct-to-consumer market for Slinger Bag for all sport verticals. 4 As the largest tennis and pickleball market in the world with 17.4 million tennis players and over 5 million pickleball players, the United States is a key market both to establish the Slinger brand and to drive demonstrable growth.
South American distributors are typically serviced from our US warehouse locations and European distributors are able to place replacement orders through a small third-party distribution facility located in Rotterdam, Netherlands. Additionally, we ship our Slinger-Dunlop co-branded tennis balls from Dunlop (our supplier) to the United States or to Rotterdam for further distribution through our distribution network.
South American distributors are sometimes serviced from our US warehouse locations and European distributors continue to be able to place replacement orders through a small third-party distribution facility located in Rotterdam, Netherlands.
We have implemented an agreed quality audit process for all product parts being received and used by our product assembly vendor. All products go through a rigorous, statistically validated quality control testing approval process before being confirmed as available to be released for shipment to one of our distribution centers or to any of our distribution partners.
All products go through a rigorous, statistically validated quality control testing approval process before being confirmed as available to be released for shipment to one of our distribution centers or to any of our distribution partners. We offer a limited warranty with all purchases in accordance with local market statutory regulations.
Over the course of the next twelve months, we will be focused on the global tennis, padel tennis and pickleball as our primary target markets. The ITF cites the global tennis market as having 80 million active participants, with many million other consumers being acknowledged as avid fans of the sport.
The ITF cites the global tennis market as having 80 million active participants, with many million other consumers being acknowledged as avid fans of the sport.
This capacity will be shared across our three Slinger Bag Launcher products– tennis, pickleball, and padel. The pickleball product has been introduced to the market in March 2023 and this will be followed by Padel tennis in June 2023. In developing our Slinger Bag tennis, pickleball and padel launchers, we have designed the three products that share many common parts.
Our manufacturing capacity is estimated at approximately 5,000 units monthly. This capacity will be shared across our three Slinger Bag Launcher products– tennis, pickleball, and padel. The pickleball product was introduced to the market in March 2023 and was followed by Padel Tennis in June 2023.
Seasonal Business The Connexa group of companies expects to experience minor fluctuations in aggregate sales volume during the year. We expect revenues in the first and fourth fiscal quarters to typically exceed those in the second and third fiscal quarters.
Gameface Gameface is currently working to prepare AI-related patent applications, which are expected to include the United States, EU, China, Japan, India and Australia. Seasonal Business We expect to experience minor fluctuations in aggregate sales volume during the year. We expect revenues in the first and fourth fiscal quarters to typically exceed those in the second and third fiscal quarters.
These processes have been developed together with the Company with a goal of producing consistently high-quality and high performing products. We have a global distribution network, and all shipments made to distributor markets outside of the United States and Canada are shipped free-on-board (“FOB”) Xiamen, China, thereby immediately becoming the responsibility of the distributor.
We have created a global distribution network, and all shipments of our products made to distributor markets outside of the United States and Canada are shipped free-on-board (“FOB”) from Xiamen, China, at which point they enter into the ownership of the distributors and become their responsibility.
Our marketing budget is primarily funded by, or determined in accordance with, the distributor partner linked to the distributors purchase objectives.
Slinger Bag supports all of its brand distributors with full access to all of the company’s marketing partners, brand assets, as well as with direct contact to our internal marketing team. Our marketing budget is primarily funded by, or determined in accordance with, the distributor partner and is linked to the distributors annual purchase objectives.
Slinger Bag has engaged Stride-Innovation, a company with in-depth experience working with ball sport companies such as ours and knowledge, resources and experience in working with Chinese vendors of sports equipment. In partnership, together, we have created and documented quality guidelines, testing procedures and warranty processes.
As a relatively new brand in the market, our business enterprise success will in part dependent on the quality and consistency of our products. Slinger Bag has engaged Stride-Innovation, a company with in-depth experience working with ball sport companies such as ours, has the knowledge, resources and 20 years of experience in working with Chinese vendors of sports equipment.
In addition to our paid marketing activities, Slinger Bag relies on the expertise of our small internal team to build out a network of ‘followers’ across various social media platforms – mainly Instagram, Facebook and LinkedIn. Today, Slinger Bag has consumers who are fans of our brand and fully engaged in generating social media content through their own means.
Using demographic data for tennis and pickleball and following a period of advertising testing, our digital advertising spend is focused mainly towards Facebook and Google platforms. 5 In addition to our paid marketing activities, Slinger Bag relies on the expertise of our small internal team to build out a network of ‘followers’ across various social media platforms – mainly Instagram, Facebook, You Tube and LinkedIn.
Any future features that will be developed within PlaySight’s ordinary course of business, and not exclusively for the purpose of the cooperation agreement, shall not be covered by Company. The reason for the entry into the Agreement and the transactions contemplated thereby is to eliminate the need for the Company to provide further financing for PlaySight’s operations.
The reason for the entry into the Agreement and the transactions contemplated thereby was to eliminate the need for the Company to provide further financing for PlaySight’s operations.
All influencer activity is continually rolled back up to our social media platforms as a means of generating content, brand awareness and product interest. ● Ad Venture Media Group, a New York based PPC (pay-per-click) agency whose work is grounded in scientific analysis of consumer data and consumer trends.
To support the Slinger Bag marketing program, we have engaged the following agencies: ● Ad Venture Media Group, a New York based PPC (pay-per-click) agency whose work is grounded in scientific analysis of consumer data and consumer trends.
In regard to development of our pending performance and analytics app, we have identified a combination of internal project leadership and the development team of Gameface to create Tennis specific analysis code for the app. We also contracted a focused design agency to build the road map for the user experience based on the technology being developed.
In regard to development of our pending performance and analytics app, the development team of Gameface is working to create a Tennis specific analysis code for the app.
In the event the Company is not eligible for the second grace period, Nasdaq will provide written notice that the Company’s common stock is subject to delisting. On November 17, 2022, Gabriel Goldman and Rohit Krishnan resigned from the board of directors of the Company. Gabriel and Rohit were members of the audit and compensation committees.
The Company also consummated a public offering of shares of its common stock and the listing of its common stock on the Nasdaq Capital Market. On November 17, 2022, Gabriel Goldman and Rohit Krishnan resigned from the board of directors of the Company. Gabriel and Rohit were members of the audit and compensation committees.
Gameface AI is a software-as-a-service company and, as such, has no direct procurement or supply chain requirements. Strategy Slinger Bag Launchers for tennis, pickleball and padel In introducing the Slinger Bag Launcher, we saw an opportunity to disrupt the traditional tennis market.
Strategy Slinger Bag Launchers for tennis, pickleball and padel In introducing the Slinger Bag Launcher, we saw an opportunity to disrupt the traditional tennis market. Through until March 2023 Slinger Bag has been a single product company marketing its Tennis Launcher for tennis players of all ages and abilities.
PBI provides tennis programs and other tennis services to over 28 of the global luxury resorts. Slinger Launchers will be available to use at each resort and the PBI team will be actively promoting the Slinger brand as part of our affiliate marketing activity. Functional Tennis, an Ireland based social media tennis blog site with in excess of 250,000 followers.
Slinger Bag Launchers are available to use at each resort and the PBI team will be actively promoting the Slinger brand as part of our affiliate marketing activity. The Dink – a leading Pickleball platform with 250,000 active pickleball players on their database.
In similar fashion we are in the process of identifying relevant ambassadors to support our Pickleball and Padel category activities. We also engaged with the following organizations to promote our Slinger brand and products. Peter Burwash International (“PBI”), a United States-based, highly respected, global tennis services company set up by Peter Burwash some 35 years ago.
Peter Burwash International (“PBI”), a United States-based, highly respected, global tennis services company set up by Peter Burwash some 35 years ago. PBI provides tennis programs and other tennis services to over 28 of the global luxury resorts.
Efforts aimed at reaching the tennis player directly and ensuring that the Slinger brand message is consistent around the globe. Slinger Bag supports all of its brand distributors with full access to all of the company’s marketing partners, as well as direct contact to our internal marketing team.
Each distributor is also conducting its own Slinger brand marketing program. All efforts in this regard are aimed at reaching the avid tennis player directly and are focused on ensuring that the Slinger Bag brand message is consistent around the globe.
This market is served by third-party logistics facilities in West Columbia, South Carolina and Reno, Nevada, which are operated by one of our logistics partners. All end consumer service support is currently managed by a small service team based in Canada.
Direct-to-consumer e-commerce sales are further supplemented by one or more third-party internet sites focused on either the tennis or the pickleball market. The Unites States market is served by third-party logistics facilities in West Columbia, South Carolina and Reno, Nevada, which are operated by two of our logistics partners.
The largest is Playtomic (Spain). Other competitors include Playbypoint, Court Reserve, Skedda, Planyo and others. 10 Intellectual Property We have applied for international design and utility patent protection for our main three products: Slinger Launcher, Slinger Oscillator and Slinger Telescopic Ball Tube.
Intellectual Property We have applied for international design and utility patent protection for our main three products: Slinger Launcher, Slinger Oscillator and Slinger Telescopic Ball Tube. Our utility patents have been applied for in all key markets including the US, China, Israel, Canada, Japan, Hong Kong, Australia, and EU, and granted in US and China.
Gameface Gameface is involved in additional research and development of building methods to extract data reliably and more accurately from videos. A large part of our research also includes identifying and associating extracted data points of athlete performance.
We have also contracted with a design agency to build the road map for the user experience based on the technology being developed. 10 Gameface Gameface is involved in additional research and development of building methods to extract data reliably and more accurately from videos.
All distributor partners are managed and supported by our distributor manager located in Israel. 6 Gameface Gameface provides access to analytics data by building an automated AI platform to analyze and extract data from sport videos across tennis, baseball, cricket and other sport verticals.
All end consumer service support is currently managed by a small service team based in Canada. All distributor partners are managed and supported by our distributor manager located in Israel. Gameface Gameface will provide the consumer with access to analytics data through a sport specific automated AI platform that analyzes and extracts data from uploaded consumer or team videos.
The ambassador arrangements with Tommy Haas and the Bryan Brothers and have terminated prior to the date hereof and the balance will terminate by May 25, 2023, after which we will no longer have any active tennis ambassadors. Similar prominent ambassadors are being identified for pickleball and padel and are expected to be in place over the coming months.
Similar prominent ambassadors are being identified for both pickleball in the United States of America and by our exclusive padel distributor for the global padel market and are expected to be in place and active over the coming months.
As a result, the Company will be required to meet the continued listing requirement for board of directors and committees. 4 On March 21, 2023, the Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“ Nasdaq ”) indicating that the Company’s failure to file its Quarterly Report on Form 10-Q for the period ended January 31, 2023 (“Additional Delinquency”) serves as an additional basis for delisting the Company’s securities from Nasdaq.
If granted, the Company will initiate a reverse split as soon as reasonably practical thereafter in an attempt to regain compliance with the Minimum Bid Price Requirement. 2 On July 26, 2023, the Company received a letter from the Listing Qualifications Department of Nasdaq indicating that the Company’s stockholders’ equity as reported in its Quarterly Report on Form 10-Q for the quarterly period ended January 31, 2023 did not satisfy the continued listing requirement under Nasdaq Listing Rule 5550(b)(1), which requires that a listed company’s stockholders’ equity be at least $2.5 million (the “Minimum Stockholders’ Equity Requirement”).
Removed
The Company also consummated a public offering of shares of its common stock and the listing of its common stock on the Nasdaq Capital Market. 1 The Company operates in the sports equipment and technology business.
Added
(the “Escrow Agent”) for the benefit of the Company or, at the election of the Company, issued in the form of a stock certificate or recorded in some other market-standard format to be held by the Escrow Agent.
Removed
Following the acquisitions of Foundation Sports, Gameface and PlaySight Interactive, the Connexa holding company was established and the original equipment-only Slinger Bag company business is being transformed into a sports technology company focused on providing equipment and software based services to sports teams, facilities, academies, events, federations, clubs and players and participants of all ages and abilities.
Added
The Company intends to enter into a database access and marketing agreement with Foundation Sports pursuant to which Foundation Sports will (i) provide the Company with sporting or racquet facility information and contact data of its customers (subject to applicable law) and (ii) publish any promotional content, call to action, survey or similar promotional communications provided by the Company to Foundation Sport’s customers for its Customers to promote said material to their extended network of consumers in exchange for 7% of any gross revenue to be generated from such activities.
Removed
Recent Events Reverse Stock Split On June 14, 2022, we effected a 1-for-10 reverse stock split, where upon our common stock began to trade on a reverse split adjusted basis. Issued and outstanding stock options and warrants were split on the same basis and exercise prices were adjusted accordingly.
Added
The Company failed to regain compliance with the Bid Price Rule by April 10, 2023 and requested and received an additional period of 180 days until October 9, 2023 to regain compliance with the Minimum Bid Price Requirement. The Company is in the process of obtaining shareholder consent to effect a reverse split of its shares of common stock.
Removed
All common stock per share numbers and prices included herein have been adjusted to reflect this reverse stock split, unless stated otherwise, and other than unaudited and audited financial statements and other historical share disclosures which indicate they are not adjusted for the reverse stock split.
Added
The Company timely submitted a compliance plan to the Panel and on August 23, 2023 received notice from Nasdaq that it has until January 22, 2024 to demonstrate compliance with the Minimum Stockholders’ Equity Requirement.
Removed
The Company and the Buyer have also agreed to use their best efforts to enter into a non-exclusive binding agreement within three (3) months from the date of the Agreement that permits the Company to receive individual and match analytics for racquet sports (including, but not limited to, tennis, padel and pickle ball) without any upfront cost to the Company and based on revenues to be received from the Company’s customers and users of the analytics.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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We may face difficulties integrating the technology and offerings from each brand in order create a cohesive business. For example, users of the Slinger Bag may view us a sporting goods company and choose not to engage with our technology offerings from the Gameface AI brand, and users of our Gameface AI app services may not purchase our ball launchers.
We may face difficulties integrating the technology and offerings from each brand in order create a cohesive business. For example, users of the Slinger Bag may view us a sporting goods company and choose not to engage with our technology offerings from the Gameface brand, and users of our Gameface AI app services may not purchase our ball launchers.
Actions taken by athletes or other endorsers, associated with our products that harm the reputations of those athletes or endorsers, could also seriously harm our brand image with consumers and, as a result, could have an adverse effect on our sales and financial condition.
Actions taken by athletes or other endorsers, associated with our products that harm the reputations of those athletes or endorsers, could also seriously harm our brand image with consumers and, as a result, could have an adverse effect on our sales and financial condition.
Among the factors that could affect our stock price are: ● Actual or anticipated variations in our quarterly and annual operating results or those of companies perceived to be similar to us; ● Weather conditions, particularly during holiday shopping periods; ● Changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors, or differences between our actual results and those expected by investors and securities analysts; ● Fluctuations in the market valuations of companies perceived by investors to be comparable to us; ● The public’s response to our or our competitors’ filings with the SEC or announcements regarding new products or services, enhancements, significant contracts, acquisitions, strategic investments, litigation, restructurings or other significant matters; 34 ● Speculation about our business in the press or the investment community; ● Future sales of our shares; ● Actions by our competitors; ● Additions or departures of members of our senior management or other key personnel; and ● The passage of legislation or other regulatory developments affecting us or our industry.
Among the factors that could affect our stock price are: ● Actual or anticipated variations in our quarterly and annual operating results or those of companies perceived to be similar to us; ● Weather conditions, particularly during holiday shopping periods; ● Changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors, or differences between our actual results and those expected by investors and securities analysts; ● Fluctuations in the market valuations of companies perceived by investors to be comparable to us; ● The public’s response to our or our competitors’ filings with the SEC or announcements regarding new products or services, enhancements, significant contracts, acquisitions, strategic investments, litigation, restructurings or other significant matters; ● Speculation about our business in the press or the investment community; ● Future sales of our shares; ● Actions by our competitors; ● Additions or departures of members of our senior management or other key personnel; and ● The passage of legislation or other regulatory developments affecting us or our industry.
If new sources of financing are required, but are unattractive, insufficient or unavailable, then we will be required to modify our growth and operating plans based on available funding, if any, which would inhibit our growth and could harm our business. Our extended supply chain requires long lead times and relies heavily on manufacturers in Asia.
If new sources of financing are required, but are unattractive, insufficient or unavailable, then we will be required to modify our growth and operating plans based on available funding, if any, which would inhibit our growth and could harm our business. 17 Our extended supply chain requires long lead times and relies heavily on manufacturers in Asia.
Risks include, but are not limited to, credit card fraud or data mismanagement. Our products are subject to risks associated with overseas sourcing, manufacturing and financing. The principal materials used in our products (e.g., injection molded plastics, polyester, electrical motors, remote controls, trolley bags) are available in countries where our manufacturing takes place.
Risks include, but are not limited to, credit card fraud or data mismanagement. 22 Our products are subject to risks associated with overseas sourcing, manufacturing and financing. The principal materials used in our products (e.g., injection molded plastics, polyester, electrical motors, remote controls, trolley bags) are available in countries where our manufacturing takes place.
We have listed the shares of our common stock on the Nasdaq, under the symbol “CNXA.” As such we are e subject to, among other things, our fulfilling all of the listing requirements of the Nasdaq. In addition, Nasdaq has rules for continued listing, including, without limitation, minimum market capitalization and other requirements. As described above under “Item 1.
We have listed the shares of our common stock on the Nasdaq, under the symbol “CNXA.” As such we are subject to, among other things, our fulfilling all of the listing requirements of the Nasdaq. In addition, Nasdaq has rules for continued listing, including, without limitation, minimum market capitalization and other requirements. As described above under “Item 1.
In the opinion of management, these factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern as of the date of the end of the period covered by this report and for one year from the issuance of the consolidated financial statements. 24 We have limited financial resources.
In the opinion of management, these factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern as of the date of the end of the period covered by this report and for one year from the issuance of the consolidated financial statements. We have limited financial resources.
Continued disruptions in our supply chain and adverse consequences from aggressive trade policies could have a material adverse impact on our profitability and financial performance. We face risks associated with operating in international markets. We operate in a global marketplace and international sales growth is a key element of our growth strategy.
Continued disruptions in our supply chain and adverse consequences from aggressive trade policies could have a material adverse impact on our profitability and financial performance. 15 We face risks associated with operating in international markets. We operate in a global marketplace and international sales growth is a key element of our growth strategy.
If our market does not experience significant growth, or if demand for our products does not increase in line with our projections, then our business, results of operations and financial condition will be adversely affected. We rely on technical innovation and high-quality products to compete in the market for our products.
If our market does not experience significant growth, or if demand for our products does not increase in line with our projections, then our business, results of operations and financial condition will be adversely affected. 20 We rely on technical innovation and high-quality products to compete in the market for our products.
If we are unable to develop the integrated Play and Learn platform and expand our business internationally, our growth strategy and our financial results could be materially adversely affected. If we are unable to respond effectively to changes in market trends and consumer preferences, our market share, net sales and profitability could be adversely affected.
If we are unable to develop the integrated Play and Learn platform and expand our business internationally, our growth strategy and our financial results could be materially adversely affected. 16 If we are unable to respond effectively to changes in market trends and consumer preferences, our market share, net sales and profitability could be adversely affected.
We also may experience increased costs and difficulties in replacing that vendor and replacement services may not be available on commercially reasonable terms, on a timely basis, or at all. In addition, our platform may be accessed by many users at the same time.
We also may experience increased costs and difficulties in replacing that vendor and replacement services may not be available on commercially reasonable terms, on a timely basis, or at all. 27 In addition, our platform may be accessed by many users at the same time.
The new registration statement will cover both the shares originally registered for resale, the new conversion shares and the recent financing shares. 35 Certain of the Company’s large shareholders may be able to exert significant influence on the Company and their interests may conflict with the interests of its other shareholders .
The new registration statement will cover both the shares originally registered for resale, the new conversion shares and the recent financing shares. Certain of the Company’s large shareholders may be able to exert significant influence on the Company and their interests may conflict with the interests of its other shareholders .
If we are unable to successfully appeal to new and young consumers while maintaining our brand’s image with our core consumers, then our net sales and our brand image may be adversely affected. 18 Our business could suffer if we are unable to maintain our website or manage our inventory effectively.
If we are unable to successfully appeal to new and young consumers while maintaining our brand’s image with our core consumers, then our net sales and our brand image may be adversely affected. Our business could suffer if we are unable to maintain our website or manage our inventory effectively.
To the extent that the interests of these shareholders may differ from the interests of the Company’s other shareholders, the Company’s other shareholders may be disadvantaged by any actions that these shareholders may seek to pursue. Our stockholders may not be able to enforce judgments entered by United States courts against certain of our officers and directors.
To the extent that the interests of these shareholders may differ from the interests of the Company’s other shareholders, the Company’s other shareholders may be disadvantaged by any actions that these shareholders may seek to pursue. 36 Our stockholders may not be able to enforce judgments entered by United States courts against certain of our officers and directors.
Our current growth strategy depends on our ability to continue to expand our reach geographically in a number of international regions in Asia, Europe, North America, Africa and Australia. This growth strategy is contingent upon our ability to continually introduce our products to new markets.
Our current growth strategy depends on our ability to continue to expand our reach geographically in a number of international regions in Asia, Europe, North America, Africa and Australia. This growth strategy is contingent upon our ability to introduce our products to new markets.
In addition, if we are unable to successfully and cost-effectively employ advertising channels to promote our brand to new consumers and new markets, our growth strategy may be adversely affected. 19 We rely significantly on information technology to operate our business.
In addition, if we are unable to successfully and cost-effectively employ advertising channels to promote our brand to new consumers and new markets, our growth strategy may be adversely affected. We rely significantly on information technology to operate our business.
As a result, you should expect to receive a return on your investment in our common shares only if the market price of our common stock increases, which may never occur. Future sales, or the perception of future sales, of our common stock may depress the price of our common stock.
As a result, you should expect to receive a return on your investment in our common shares only if the market price of our common stock increases, which may never occur. 35 Future sales, or the perception of future sales, of our common stock may depress the price of our common stock.
The Company’s management has determined that there is substantial doubt about the Company’s ability to continue as a going concern and the report of our independent registered public accounting firm on our consolidated financial statements for the years ended April 30, 2022 and 2021 included an explanatory paragraph with respect to the foregoing.
The Company’s management has determined that there is substantial doubt about the Company’s ability to continue as a going concern and the report of our independent registered public accounting firm on our consolidated financial statements for the years ended April 30, 2023 and 2022 included an explanatory paragraph with respect to the foregoing.
Any losses or damages incurred by us could have a material adverse effect on our business, financial condition and results of operations. 16 Further, our operations could be disrupted by the obligations of our employees to perform military service. Our chief marketing officer is subject to the obligation to perform reserve military duty.
Any losses or damages incurred by us could have a material adverse effect on our business, financial condition and results of operations. 14 Further, our operations could be disrupted by the obligations of our employees to perform military service. Our chief marketing officer is subject to the obligation to perform reserve military duty.
As a result of our deficiency in working capital on April 30, 2022 and other factors, our auditors have included a paragraph in their audit report regarding substantial doubt about our ability to continue as a going concern.
As a result of our deficiency in working capital on April 30, 2023 and other factors, our auditors have included a paragraph in their audit report regarding substantial doubt about our ability to continue as a going concern.
Upon the sale, or the perception that a sale will occur, as described above, our stock price may decline significantly, even if our business is doing well. 38
Upon the sale, or the perception that a sale will occur, as described above, our stock price may decline significantly, even if our business is doing well. 39
This determination was based on the following factors: (i) the Company has a working capital deficit as of April 30, 2022, used cash in operations for the fiscal year ended April 30, 2022 of $11,464,464 in 2022, and the Company’s available cash as of the date of this filing will not be sufficient to fund its anticipated level of operations for the next 12 months; (ii) the Company will require additional financing for the fiscal year ending April 30, 2023 to continue at its expected level of operations; and (iii) if the Company fails to obtain the needed capital, it will be forced to delay, scale back, or eliminate some or all of its development activities or perhaps cease operations.
This determination was based on the following factors: (i) the Company has a working capital deficit as of April 30, 2023, used cash in operations for the fiscal year ended April 30, 2023 of $6,365,389 and the Company’s available cash as of the date of this filing will not be sufficient to fund its anticipated level of operations for the next 12 months; (ii) the Company will require additional financing for the fiscal year ending April 30, 2023 to continue at its expected level of operations; and (iii) if the Company fails to obtain the needed capital, it will be forced to delay, scale back, or eliminate some or all of its development activities or perhaps cease operations.
On October 10, 2022, we received a letter from the Listing Qualifications Department of the Nasdaq indicating that our common stock is subject to potential delisting from Nasdaq because, for a period of 30 consecutive business days, the bid price of the Company’s common stock closed below the minimum $1.00 per share requirement for continued listing under Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”).
On October 10, 2022, the Company received a letter from the Listing Qualifications Department of the Nasdaq indicating that the Company’s common stock is subject to potential delisting from Nasdaq because, for a period of 30 consecutive business days, the bid price of the Company’s common stock has closed below the minimum $1.00 per share requirement for continued listing under Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”).
We estimate these costs to be in excess of $250,000 per year and may be higher if our business volume or business activity increases significantly.
We estimate these costs to be in excess of $500,000 per year and may be higher if our business volume or business activity increases significantly.
If we are unable to successfully integrate this new technology with our existing products, we may not realize the benefits of the Gameface acquisition and / or our relationships with PlaySight and Foundation, and our business may be materially adversely affected. 21 Prior to our acquisition of Gameface and our licensing agreement with PlaySight, we focused on the production and sale of the Slinger Bag.
If we are unable to successfully integrate this new technology with our existing products, we may not realize the benefits of the Gameface acquisition and / or our relationships with Foundation, and our business may be materially adversely affected. Prior to our acquisition of Gameface, we focused on the production and sale of the Slinger Bag.
Part of our growth strategy is to introduce new consumers, including young consumers, to the Connexa brand. If we are unable to attract new consumers, including young consumers, our business and results of operations may be adversely affected as our core consumers’ age increases and purchasing frequency decrease.
Part of our growth strategy is to introduce new consumers, including young consumers, to our brands. If we are unable to attract new consumers, including young consumers, our business and results of operations may be adversely affected as our core consumers’ age increases and purchasing frequency decrease.
Customers may experience difficulty in integrating Playsight, Gameface, or Foundation Sports with third-party applications, which would inhibit sales. PlaySight, Gameface, and Foundation Sports may serve a customer base with a wide variety of constantly changing hardware, operating system software, packaged software applications and networking platforms.
Customers may experience difficulty in integrating Gameface with third-party applications, which would inhibit sales. Gameface may serve a customer base with a wide variety of constantly changing hardware, operating system software, packaged software applications and networking platforms.
The sale of a large number of shares of common stock by our principal shareholder could depress the market price of our common stock. As of April 30, 2022, Yonah Kalfa beneficially owned approximately 32% of our common stock outstanding. The shares may become available for resale, subject to the requirements of the U.S. securities laws.
The sale of a large number of shares of common stock by our principal shareholder could depress the market price of our common stock. As of April 30, 2023, Yonah Kalfa beneficially owned approximately 14.7% of our common stock outstanding. The shares may become available for resale, subject to the requirements of the U.S. securities laws.
We believe that our consumers value the status and reputation of brands we promote, and the superior quality, performance, functionality and durability that our brands represent. Building, maintaining and enhancing the status and reputation of our brands’ image is important to expanding our consumer base.
The reputation and integrity of our brands are essential to the success of our business. We believe that our consumers value the status and reputation of brands we promote, and the superior quality, performance, functionality and durability that our brands represent. Building, maintaining and enhancing the status and reputation of our brands’ image is important to expanding our consumer base.
We are subject to risks associated with our international operations, including, but not limited to: ● Foreign currency exchange rates; ● Economic or governmental instability in foreign markets in which we operate or in those countries from which we source our merchandise; ● Unexpected changes in laws, regulatory requirements, taxes or trade laws; ● Increases in the cost of transporting goods globally; ● Acts of war, terrorist attacks, outbreaks of contagious disease and other events over which we have no control; and ● Changes in foreign or domestic legal and regulatory requirements resulting in the imposition of new or more onerous trade restrictions, tariffs, duties, taxes, embargoes, exchange or other government controls. 17 Any of these risks could have an adverse impact on our results of operations, financial position or growth strategy.
We are subject to risks associated with our international operations, including, but not limited to: ● Foreign currency exchange rates; ● Economic or governmental instability in foreign markets in which we operate or in those countries from which we source our merchandise; ● Unexpected changes in laws, regulatory requirements, taxes or trade laws; ● Increases in the cost of transporting goods globally; ● Acts of war, terrorist attacks, outbreaks of contagious disease and other events over which we have no control; and ● Changes in foreign or domestic legal and regulatory requirements resulting in the imposition of new or more onerous trade restrictions, tariffs, duties, taxes, embargoes, exchange or other government controls.
The Russian-Ukrainian Conflict may adversely affect our business, financial condition and results. In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. The specific impact on our financial condition, results of operations and cash flows is not determinable as of the date hereof.
In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. The specific impact on our financial condition, results of operations and cash flows is not determinable as of the date hereof.
The Platform will bring together our owned offerings of Gameface AI and Slinger Bag, and incorporate elements of our licensed offering of PlaySight and Foundation Sports, under the umbrella of the Connexa brand. We believe our success will in large part depend on our ability to develop a cohesive platform that integrates elements of performance analysis from each.
The Platform will bring together our owned offerings of Gameface and Slinger Bag under the umbrella of the Connexa brand. We believe our success will in large part depend on our ability to develop a cohesive platform that integrates elements of performance analysis from each.
We will need additional capital in the future to finance our planned growth, which we may not be able to raise or it may only be available on terms unfavorable to us or our stockholders, which may result in our inability to fund our working capital requirements and harm our operational results.
Such funding sources may not be available, or the terms of such funding sources may not be acceptable to the Company. 24 We will need additional capital in the future to finance our planned growth, which we may not be able to raise or it may only be available on terms unfavorable to us or our stockholders, which may result in our inability to fund our working capital requirements and harm our operational results.
With the acquisition of Gameface and licensing agreements with PlaySight and Foundation, we are slowly transforming from a sports products only company to offering an additional sports technology platform focused on the Play & Learn Platform.
With the acquisition of Gameface, we are slowly transforming from a sports products only company to offering an additional sports technology platform focused on the Play & Learn Platform.
In addition, under the terms of the loan agreements between the Company and Yonah Kalfa and Naftali Kalfa and the Company, we may not make any distributions until these loan agreements are repaid in full. At this time, such loans have not been repaid in full.
In addition, under the terms of certain loan agreements between the Company and its lenders, the Company, we may not make any distributions until these loan agreements are repaid in full. At this time, such loans have not been repaid in full.
Furthermore, some of our international operations are conducted in parts of the world that experience corruption to some degree. Our employees and wholesalers could take actions that violate applicable anti-corruption laws or regulations. Violations of these laws, or allegations of such violations, could have an adverse impact on our reputation, our results of operations or our financial position.
Any of these risks could have an adverse impact on our results of operations, financial position or growth strategy. Furthermore, some of our international operations are conducted in parts of the world that experience corruption to some degree. Our employees and wholesalers could take actions that violate applicable anti-corruption laws or regulations.
On January 6, 2023, the Company issued warrants to purchase 9,049,774 shares of the Company’s common stock (the “January Warrants”). The January Warrants have an exercise price per share equal $0.221.
On January 6, 2023, the Company issued warrants to purchase 18,099,548 shares of the Company’s common stock (the “January Warrants”). The January Warrants have an exercise price per share equal $0.221.
The failure of these systems to operate effectively, including as a result of security breaches, viruses, hackers, malware, natural disasters, vendor business interruptions or other causes, or failure to properly maintain, protect, repair or upgrade systems, or problems with transitioning to upgraded or replacement systems could cause delays in product fulfillment and reduced efficiency of our operations, could require additional capital to remediate the problem which may not be sufficient to cover all eventualities, and may have an adverse effect on our reputation, results of operations and financial condition.
The failure of these systems to operate effectively, including as a result of security breaches, viruses, hackers, malware, natural disasters, vendor business interruptions or other causes, or failure to properly maintain, protect, repair or upgrade systems, or problems with transitioning to upgraded or replacement systems could cause delays in product fulfillment and reduced efficiency of our operations, could require additional capital to remediate the problem which may not be sufficient to cover all eventualities, and may have an adverse effect on our reputation, results of operations and financial condition. 18 We also use Information Technology Systems to process financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting, legal and tax requirements.
If we are not able to successfully add staff resources with sufficient technical skills to develop and bring new products to market in a timely manner, achieve market acceptance of our products and services or identify new market opportunities for our products and services, our business and results of operations may be materially and adversely affected.
If we are not able to successfully add staff resources with sufficient technical skills to develop and bring new products to market in a timely manner, achieve market acceptance of our products and services or identify new market opportunities for our products and services, our business and results of operations may be materially and adversely affected. 28 The business-to-business e-commerce industry is highly competitive, and we may not be able to compete effectively.
Our business depends, in part, on the following factors: ● Our ability to integrate PlaySight, Gameface, or Foundation Sports with multiple platforms and existing systems and to modify our product as new versions of packaged applications are introduced; ● Access to application program interfaces for the third-party software products that are integrated with our products; ● Our ability to anticipate and support new standards; and ● Our management of software being developed by third parties for our customers or for use with Foundation Sports.
Our business depends, in part, on the following factors: ● Our ability to integrate Gameface with multiple platforms and existing systems and to modify our product as new versions of packaged applications are introduced; ● Access to application program interfaces for the third-party software products that are integrated with our products; and ● Our ability to anticipate and support new standards.
If PlaySight, Gameface, or Foundation Sports fails to gain broad market acceptance due to their inability to support a variety of these platforms, our operating results may suffer.
If Gameface fails to gain broad market acceptance due to its inability to support a variety of these platforms, our operating results may suffer.
If no securities or industry analysts commence coverage of our company, the trading price for our stock may be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price may decline.
In the event securities or industry analysts initiate coverage, if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price may decline.
There can be no assurance that a reverse stock split will result in a per share price that will attract institutional investors or investment funds or that such share price will satisfy the investing guidelines of institutional investors or investment funds. As a result, the trading liquidity of our common stock may not necessarily improve.
There can be no assurance that a reverse stock split will result in a per share price that will attract institutional investors or investment funds or that such share price will satisfy the investing guidelines of institutional investors or investment funds.
The growth of our business depends on the successful execution of our growth strategy, and our efforts to expand internationally by growing our e-commerce business. We are focused on developing an integrated Play and Learn platform under our Connexa brand.
We do not currently use the derivative markets to hedge foreign currency fluctuations. The growth of our business depends on the successful execution of our growth strategy, and our efforts to expand internationally by growing our e-commerce business. We are focused on developing an integrated Play and Learn platform under our Connexa brand.
The business-to-business e-commerce industry is highly competitive, and we may not be able to compete effectively. The market for business-to-business (“B2B”) e-commerce solutions is rapidly changing and intensely competitive. We expect competition to intensify as the number of entrants and new technologies increases. We may not be able to compete successfully against current or future competitors.
The market for business-to-business (“B2B”) e-commerce solutions is rapidly changing and intensely competitive. We expect competition to intensify as the number of entrants and new technologies increases. We may not be able to compete successfully against current or future competitors. The competitive pressures facing us may harm our business, operating results and financial condition.
This could make it more difficult to raise funds through future offerings of common stock. 36 If we implement a reverse stock split to regain compliance with the Bid-Price Rule, it may not result in a proportional increase in the per share price of our common stock. As described above under “Item 1.
If we implement a reverse stock split to regain compliance with the Bid-Price Rule, it may not result in a proportional increase in the per share price of our common stock. As described above under “Item 1.
There can be no assurances that our common stock will not be subject to potential delisting if we do not regain compliance with the listing requirements of the Nasdaq.
As a result, the trading liquidity of our common stock may not necessarily improve. 37 There can be no assurances that our common stock will not be subject to potential delisting if we do not regain compliance with the listing requirements of the Nasdaq.
We will be required to file an additional registration statement once we regain compliance with the Nasdaq listing requirements. On September 8, 2021, we filed a registration statement with the SEC to register 1,640,000 shares of common stock for resale by certain selling stockholders, which was declared effective on January 27, 2022.
On September 8, 2021, we filed a registration statement with the SEC to register 1,640,000 shares of common stock for resale by certain selling stockholders, which was declared effective on January 27, 2022.
Certain of the Company’s large shareholders, including our officers and directors, represent approximately 44.5% of the Company’s voting rights as of April 30, 2022.
Certain of the Company’s large shareholders, including our officers and directors, represented approximately 30% of the Company’s voting rights as of April 30, 2023.
We may decide to make substantial investments in these areas in order to maintain and enhance our brand, and such investments may not be successful. 15 Additionally, in order to expand our reach, we engage with third-party distributors.
We may decide to make substantial investments in these areas in order to maintain and enhance our brand, and such investments may not be successful. Additionally, in order to expand our reach, we engage with third-party distributors. To the extent those third-party distributors fail to comply with our operating guidelines, we may not be successful in protecting our brand image.
The terms of various open-source licenses to which we are subject have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to operate our systems, limits our use of the software, inhibits certain aspects of our systems and negatively affects our business operations.
The terms of various open-source licenses to which we are subject have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to operate our systems, limits our use of the software, inhibits certain aspects of our systems and negatively affects our business operations. 26 Some open-source licenses contain requirements that we make source code modifications or derivative works we create publicly available or make such modifications or derivative works available on unfavorable terms or at no cost, depending on the type of open-source software used.
There is a risk we may be unable to sell excess products ordered from manufacturers. Inventory levels in excess of customer demand may result in inventory write-downs, and the sale of excess inventory at discounted prices could significantly impair our brand image and have an adverse effect on our operating results, financial condition and cash flows.
Inventory levels in excess of customer demand may result in inventory write-downs, and the sale of excess inventory at discounted prices could significantly impair our brand image and have an adverse effect on our operating results, financial condition and cash flows.
We may be adversely affected by the financial health of our third-party internet partners, wholesale purchasers, retailers, and distributors. We extend credit to our distributors and to a select number of third party internet partners based on an assessment of a customer’s financial condition, generally without requiring collateral.
We extend credit to our distributors and to a select number of third party internet partners based on an assessment of a customer’s financial condition, generally without requiring collateral.
Consumer purchases in general may decline during recessions, periods of prolonged declines in the equity markets or housing markets and periods when disposable income and perceptions of consumer wealth are lower, and these risks may be exacerbated for us due to our focus on discretionary premium sporting good items.
Recent dramatic downturns in the strength of global stock markets, currencies and key economies have highlighted many if not all, of these risks. 23 Consumer purchases in general may decline during recessions, periods of prolonged declines in the equity markets or housing markets and periods when disposable income and perceptions of consumer wealth are lower, and these risks may be exacerbated for us due to our focus on discretionary premium sporting good items.
Current economic and political conditions make tax laws and regulations, or their interpretation and application, in any jurisdiction subject to significant change.
We are subject to the tax laws in the U.S. and numerous foreign jurisdictions. Current economic and political conditions make tax laws and regulations, or their interpretation and application, in any jurisdiction subject to significant change.
Our operating margins are also sensitive to a number of additional factors that are beyond our control, including manufacturing and transportation costs, shifts in product sales mix and geographic sales trends, all of which we expect to continue. Results of operations in any period should not be considered indicative of the results to be expected for any future period.
Our operating margins are also sensitive to a number of additional factors that are beyond our control, including manufacturing and transportation costs, shifts in product sales mix and geographic sales trends, all of which we expect to continue.
Further, our effective tax rate in a given financial period may be materially impacted by changes in mix and level of earnings or by changes to existing accounting rules or regulations.
Further, our effective tax rate in a given financial period may be materially impacted by changes in mix and level of earnings or by changes to existing accounting rules or regulations. In addition, tax legislation enacted in the future could negatively impact our current or future tax structure and effective tax rates.
Some open-source licenses contain requirements that we make source code modifications or derivative works we create publicly available or make such modifications or derivative works available on unfavorable terms or at no cost, depending on the type of open-source software used. 26 While we monitor our use of open-source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open-source license, such use could inadvertently occur, or could be claimed to have occurred, in part because open-source license terms are often ambiguous.
While we monitor our use of open-source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open-source license, such use could inadvertently occur, or could be claimed to have occurred, in part because open-source license terms are often ambiguous.
These factors could cause our future results to differ materially from our historical results and from expectations reflected in forward-looking statements. Risks Related to Our Business, Operations, and Industry We depend on the strength of our brands.
These factors could cause our future results to differ materially from our historical results and from expectations reflected in forward-looking statements. Risks Related to Our Business, Operations, and Industry We depend on the strength of our brands. We expect to derive substantially all of our net sales from sales of branded products and services we own, including Slinger and Gameface.
Energy costs have fluctuated dramatically in the past and may fluctuate in the future. Rising energy costs may increase our costs of transporting our products for distribution and the costs of products that we source from independent suppliers.
Such price increases by our independent manufacturers could be rapid in the absence of manufacturing contracts. Energy costs have fluctuated dramatically in the past and may fluctuate in the future. Rising energy costs may increase our costs of transporting our products for distribution and the costs of products that we source from independent suppliers.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our company.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline. The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business.
We generally do not enter into non-competition agreements as part of our employment agreements with our employees and it may be difficult for us to restrict our competitors from benefitting from the expertise our former employees or consultants developed while working for us.
We generally do not enter into non-competition agreements as part of our employment agreements with our employees and it may be difficult for us to restrict our competitors from benefitting from the expertise our former employees or consultants developed while working for us. 31 We could be subject to changes in tax rates, adoption of new tax laws, additional tax liabilities or increased volatility in our effective tax rate.
The liquidity of the shares of our common stock may also be affected adversely by a forward stock split given the reduced number of shares that will be outstanding following a reverse stock split, especially if the market price of our common stock does not increase as a result of the forward stock split.
The liquidity of the shares of our common stock may also be affected adversely by a forward stock split given the reduced number of shares that will be outstanding following a reverse stock split, especially if the market price of our common stock does not increase as a result of the forward stock split. 34 Our stock price may be volatile, or may decline regardless of our operating performance, and you could lose all or part of your investment as a result.
The market price of our common stock could drop due to sales of a large number of shares of our common stock in the market or the perception that such sales could occur.
The market price of our common stock could drop due to sales of a large number of shares of our common stock in the market or the perception that such sales could occur. This could make it more difficult to raise funds through future offerings of common stock.
Business—Recent Developments,” Nasdaq informed us on October 10, 2022, that we were not in compliance with the Bid Price Rule and that we had until April 10, 2023 to regain such compliance. To do so, our Board of Directors is contemplating a 1-for-10 reverse stock split.
Business—Recent Developments,” Nasdaq informed us on October 10, 2022, that we were not in compliance with the Bid Price Rule and that we had until April 10, 2023 to regain such compliance.
This may result in the inability to approve otherwise qualified applicants through our platform, which may adversely impact our business by negatively impacting our reputation and reducing our transaction volume. 27 To the extent we use or are dependent on any particular third-party data, technology, or software, we may also be harmed if such data, technology, or software becomes non-compliant with existing regulations or industry standards, becomes subject to third-party claims of intellectual property infringement, misappropriation, or other violation, or malfunctions or functions in a way we did not anticipate.
To the extent we use or are dependent on any particular third-party data, technology, or software, we may also be harmed if such data, technology, or software becomes non-compliant with existing regulations or industry standards, becomes subject to third-party claims of intellectual property infringement, misappropriation, or other violation, or malfunctions or functions in a way we did not anticipate.
Any delays, interruption or increased costs in labor or wages, or the supply of materials or manufacture of our products could have an adverse effect on our ability to meet retail customer and consumer demand for our products and result in lower revenues and net income both in the short- and long-term. 23 Because independent manufacturers make all of our products outside of our principal sales markets, our products must be transported by third parties over large geographic distances.
Any delays, interruption or increased costs in labor or wages, or the supply of materials or manufacture of our products could have an adverse effect on our ability to meet retail customer and consumer demand for our products and result in lower revenues and net income both in the short- and long-term.
If we provide products and services related to sports betting, our business may become subject to a variety of U.S. and foreign laws, many of which are unsettled and still developing and which could subject us to claims or otherwise harm our business.
Any lawsuit or claim seeking monetary damages significantly exceeding our coverage or outside of our coverage may have a material adverse effect on our business and financial condition. 30 If we provide products and services related to sports betting, our business may become subject to a variety of U.S. and foreign laws, many of which are unsettled and still developing and which could subject us to claims or otherwise harm our business.
In addition, product sales are dependent in part on high quality digital advertising and merchandising to attract consumers, which requires continuing investments by the company, our distributors and our third party internet partners.
In addition, product sales are dependent in part on high quality digital advertising and merchandising to attract consumers, which requires continuing investments by the company, our distributors and our third party internet partners. Distributors or partners that experience financial difficulties may fail to make such investments or delay them, resulting in lower sales and orders for our products.
Additionally, legal regimes outside the U.S., particularly those in Asia, including China, may not always protect intellectual property rights to the same degree as U.S. laws, or the time required to enforce our intellectual property rights under these legal regimes may be lengthy and delay our recovery. 30 We may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result in litigation and adversely affect our business.
Additionally, legal regimes outside the U.S., particularly those in Asia, including China, may not always protect intellectual property rights to the same degree as U.S. laws, or the time required to enforce our intellectual property rights under these legal regimes may be lengthy and delay our recovery.
Further, as a result of these scaled regulatory requirements, our disclosure may be more limited than that of other publicly reporting companies and you may not have the same protections afforded to shareholders of such companies. 33 We are subject to the periodic reporting requirements of the Exchange Act that require us to incur audit fees and legal fees in connection with the preparation of such reports.
Further, as a result of these scaled regulatory requirements, our disclosure may be more limited than that of other publicly reporting companies and you may not have the same protections afforded to shareholders of such companies.
We believe that maintaining and enhancing our brands image in new markets where we have limited brand recognition is important to expanding our consumer base. If we are unable to maintain or enhance our brands in new markets, then our growth strategy could be adversely affected.
We believe that maintaining and enhancing our brands image in new markets where we have limited brand recognition is important to expanding our consumer base.
For as long as we are a “smaller reporting company,” we will not be required to comply with certain reporting requirements that apply to other publicly reporting companies. We cannot predict whether the reduced disclosure requirements applicable to smaller reporting companies will make our common shares less attractive to investors. We are currently a “smaller reporting company”.
We cannot predict whether the reduced disclosure requirements applicable to smaller reporting companies will make our common shares less attractive to investors. We are currently a “smaller reporting company”.
In addition, significant or volatile changes in exchange rates between the U.S. dollar and other currencies may have a material adverse impact upon our liquidity, revenues, costs and operating results. 20 Additionally, natural disasters and public health emergencies, such as extreme weather events and the COVID-19 pandemic and the Ukraine War, could have a significant adverse effect on our business, including interruption of our business operations, supply chain disruption, endangerment of our personnel, and other delays or losses of materials and results.
Additionally, natural disasters and public health emergencies, such as extreme weather events and the COVID-19 pandemic and the Ukraine War, could have a significant adverse effect on our business, including interruption of our business operations, supply chain disruption, endangerment of our personnel, and other delays or losses of materials and results. 19 The Russian-Ukrainian Conflict may adversely affect our business, financial condition and results.
The Nasdaq notice indicated that, in accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company will be provided 180 calendar days, or until April 10, 2023, to regain compliance.
The Nasdaq notice indicated that, in accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company would be provided 180 calendar days, or until April 10, 2023, to regain compliance. If the Company were to fail to regain compliance with the Bid Price Rule before April 10, 2023, t he Company may be eligible for an additional 180-calendar day compliance period.
Our efforts to enforce our intellectual property rights can potentially be met with defenses and counterclaims attacking the validity and enforceability of our intellectual property rights. Unplanned increases in legal fees and other costs associated with protecting our intellectual property rights could result in higher operating expenses.
Unplanned increases in legal fees and other costs associated with protecting our intellectual property rights could result in higher operating expenses.
In addition, the adoption of new laws or regulations, or changes in the interpretation of existing laws or regulations, may result in significant unanticipated legal and reputational risks. Any current or future legal or regulatory proceedings could divert management’s attention from our operations and result in substantial legal fees.
In addition, the adoption of new laws or regulations, or changes in the interpretation of existing laws or regulations, may result in significant unanticipated legal and reputational risks.
In order to comply with these requirements, our independent registered public accounting firm will have to review our financial statements on a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel will have to review and assist in the preparation of such reports.
We are required to file periodic reports with the SEC pursuant to the Exchange Act and the rules and regulations promulgated thereunder. In order to comply with these requirements, our independent registered public accounting firm will have to review our financial statements on a quarterly basis and audit our financial statements on an annual basis.
The failure of third-party developers to integrate their cognitive engines seamlessly into our platform and/or provide reliable, scalable services may impact the reliability of our platform and harm our reputation and business, results of operations and financial conditions. 28 If we are not able to enhance or introduce new products that achieve market acceptance and keep pace with technological developments, our business, results of operations and financial condition could be harmed.
If we are not able to enhance or introduce new products that achieve market acceptance and keep pace with technological developments, our business, results of operations and financial condition could be harmed.
Labor costs at our independent manufacturers’ sites have been increasing and it is unlikely that these increases will abate. Wage and price inflation in our source countries could cause unanticipated price increases, which may be significant. Such price increases by our independent manufacturers could be rapid in the absence of manufacturing contracts.
Increasing costs for raw materials, labor or freight could make our sourcing processes more costly and negatively affect our gross margin and profitability. Labor costs at our independent manufacturers’ sites have been increasing and it is unlikely that these increases will abate. Wage and price inflation in our source countries could cause unanticipated price increases, which may be significant.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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LEGAL PROCEEDINGS On February 8, 2023, Oasis Capital, LLC (“Oasis”) filed a lawsuit against the Company in the United States District Court for the Southern District of New York seeking damages (i) in the amount of $764,647.53 in for an alleged breach of the terms of the 8% senior convertible note and the securities purchase agreement entered into between Oasis and the Company in connection with the Note (as defined below), which in December 2021 was increased to $600,000 in principal amount (the “Note”) and (ii) an unspecified amount of damage for an alleged breach of the exclusivity provisions of a term sheet that the Company and Oasis entered into on July 7, 2022 plus an actual damages in an amount to be proven at trial, interest and costs, reasonable attorney’s fees and such other legal and equitable relief as the court deems just and proper.
LEGAL PROCEEDINGS On February 8, 2023, Oasis Capital, LLC (“Oasis”) filed a complaint against the Company in the United States District Court for the Southern District of New York seeking damages (i) in the amount of $764,647.53 in for an alleged breach of the terms of the 8% senior convertible note and the securities purchase agreement entered into between Oasis and the Company in connection with the Note (as defined below), which in December 2021 was increased to $600,000 in principal amount (the “Note”) and (ii) an unspecified amount of damage for an alleged breach of the exclusivity provisions of a term sheet that the Company and Oasis entered into on July 7, 2022 plus an actual damages in an amount to be proven at trial, interest and costs, reasonable attorney’s fees and such other legal and equitable relief as the court deems just and proper.
The Company believes the lawsuit is without merit and is vigorously defending itself. We know of no pending proceedings to which any director, member of senior management, or affiliate is either a party adverse to us or has a material interest adverse to us.
Except for the Oasis lawsuit against Mike Ballardie, we know of no pending proceedings to which any director, member of senior management, or affiliate is either a party adverse to us or has a material interest adverse to us.
Added
On June 30, 2023, the United States District Court for the Southern District of New York granted the Company’s motion to dismiss this complaint but with leave to amended complaint.
Added
On July 31, Oasis filed an amended complaint against the Company and its Chief Executive Officer, Mike Ballardie, seeking damages in an amount to be proven at trial, interest and costs for breach of fiduciary duty and violations of Section 10(b) of the Securities and Exchange Act of 1934, as amended, and Rule 10b-5 thereunder.
Added
The Company believes the claims made in the amended complaint are without merit and the Company and Mike Ballardie are vigorously defending itself.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities Since May 1, 2021, the Company has issued an aggregate of 6,881,655 shares of its common stock consisting of: On June 16, 2022, we issued 4,389,469 shares of common stock to the investors who purchased on August 6, 2021 our 8% Senior Convertible Note in an aggregate principal amount of $11,000,000.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities Since May 1, 2022, the Company has issued an aggregate of 6,881,655 shares of its common stock consisting of: On June 16, 2022, we issued 4,389,469 shares of common stock to the investors who purchased on August 6, 2021 our 8% Senior Convertible Note in an aggregate principal amount of $11,000,000.
On August 25, 2022, we issued 30,000 shares of common stock to Midcity Capital Ltd (“Midcity”) pursuant to a cashless conversion of warrants Midcity received from its warrant agreement with company dated March 2020.
On August 25, 2022, we issued 30,000 shares of common stock to Midcity Capital Ltd (“Midcity”) pursuant to a cashless conversion of warrants Midcity received from its warrant agreement with company dated March 2020.
Furthermore, we expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors. 39 Equity Compensation Plans On November 11, 2020, the Board of Directors of the Company approved the Slinger Bag Inc.
Furthermore, we expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors. Equity Compensation Plans On November 11, 2020, the Board of Directors of the Company approved the Slinger Bag Inc.
The shares of common stock and Pre-Funded Warrants were sold in the offering together with common stock warrants to purchase 12,820,512 shares of common stock at an exercise price of $0.39 per share and a term of five years following the initial exercise date (the “5-Year Warrants”) and warrants to purchase 25,641,024 shares of common stock at an exercise price of $0.43 per share and a term of seven and one half years (the “7.5-Year Warrants”) following the initial exercise date (collectively, the “September Warrants”.
The shares of common stock and Pre-Funded Warrants were sold in the offering together with common stock warrants to purchase 12,820,512 shares of common stock at an exercise price of $0.39 per share and a term of five years following the initial exercise date (the “5-Year Warrants”) and 25,641,024 common stock warrants to purchase 25,641,024 shares of common stock at an exercise price of $0.43 per share and a term of seven and one half years (the “7.5-Year Warrants”) following the initial exercise date (collectively, the “Warrants”).
ITEM 5. MARKET FOR COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information As of April 30, 2022, our shares of common stock were quoted on the OTCQB by the OTC Markets Group Inc. of the Financial Industry Regulatory Authority, Inc. (“FINRA”) under the symbol “SLBG” (since November 2019).
ITEM 5. MARKET FOR COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information As of April 30, 2023, our shares of common stock were quoted on the OTCQB by the OTC Markets Group Inc. of the Financial Industry Regulatory Authority, Inc. (“FINRA”) under the symbol “SLBG” (since November 2019).
The company used the net proceeds it received from its registered offering on June 14, 2022 (i.e., $4,195,000) for the following purposes (dollars in thousands): Use of Net Proceeds Working Capital $ 1,970 Repayment of Midcity Capital loan (1) $ 500 Payment to Mr.
The company used the net proceeds it received from its registered offering on June 14, 2022 (i.e., $4,195,000) for the following purposes (dollars in thousands): Use of Net Proceeds Working Capital $ 3,195 Repayment of Midcity Capital loan (1) $ 500 Payment to Mr.
The Board of Directors in its discretion may terminate the 2020 Plan at any time with respect to any shares for which awards have not theretofore been granted; provided, however, that the 2020 Plan’s termination shall not materially and adversely impair the rights of a holder, without the consent of the holder, with respect to any award previously granted.
The Board of Directors in its discretion may terminate the 2020 Plan at any time with respect to any shares for which awards have not theretofore been granted; provided, however, that the 2020 Plan’s termination shall not materially and adversely impair the rights of a holder, without the consent of the holder, with respect to any award previously granted. 41 Future new hires, non-employee directors and additional non-employee consultants are eligible to participate in the 2020 Plan as well.
Quarter Ended High Bid Low Bid April 30, 2022 $ 13.50 $ 13.50 January 31, 2022 $ 15.80 $ 14.30 October 31, 2021 $ 30.80 $ 29.00 July 31, 2021 $ 33.90 $ 30.80 April 30, 2021 $ 52.30 $ 50.30 Holders of Record On May 17, 2023, there were 235 holders of record of our common stock, as reported by the Company’s transfer agent.
Quarter Ended High Bid Low Bid April 30, 2023 $ 0.18 $ 0.15 January 31, 2023 $ 0.25 $ 0.22 October 31, 2022 $ 0.27 $ 0.23 July 31, 2022 $ 1.08 $ 0.87 Quarter Ended High Bid Low Bid April 30, 2022 $ 13.50 $ 13.50 January 31, 2022 $ 15.80 $ 14.30 October 31, 2021 $ 30.80 $ 29.00 July 31, 2021 $ 33.90 $ 30.80 April 30, 2021 $ 52.30 $ 50.30 Holders of Record On September 14, 2023, there were 239 holders of record of our common stock, as reported by the Company’s transfer agent.
Future new hires, non-employee directors and additional non-employee consultants are eligible to participate in the 2020 Plan as well. The number of awards to be granted to officers, non-employee directors, employees and non-employee consultants cannot be determined at this time as the grant of awards is dependent upon various factors such as hiring requirements and job performance.
The number of awards to be granted to officers, non-employee directors, employees and non-employee consultants cannot be determined at this time as the grant of awards is dependent upon various factors such as hiring requirements and job performance.
On September 28, 2022, we issued 1,018,510 shares of common stock and pre-funded warrants (the “Pre-Funded Warrants”) to purchase an aggregate of 11,802,002 shares of its common stock, together with accompanying common stock warrants, at a combined purchase price of $0.39 per share of the common stock and associated common stock warrant and $0.3899 per Pre-Funded Warrant and associated common stock warrants to Armistice Capital Master Fund Ltd.
On September 28, 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with a single institutional investor (the “Investor”) for the issuance and sale of (i) 1,018,510 shares of common stock and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase an aggregate of 11,802,002 shares of its common stock, together with accompanying common stock warrants, at a combined purchase price of $0.39 per share of the common stock and associated common stock warrant and $0.3899 per Pre-Funded Warrant and associated common stock warrants for an aggregate amount of approximately $5.0 million (the “Offering”).
On January 6, 2023, the Company issued warrants to purchase 9,049,774 shares of the Company’s common stock (the “January Warrants”). The January Warrants have an exercise price per share equal $0.221.
The Warrants have an exercise price per share equal to the closing price of the common stock of the Company on the date of the issuance of the Note, or $0.221 per share and a term of five- and one-half (5½) years following the initial exercise date.
Added
The Warrants issued in the Offering contain variable pricing features. The Warrants and Pre-Funded Warrants will be exercisable beginning on the date stockholder approval is received and effective allowing exercisability of the Warrants and Pre-Funded Warrants under Nasdaq rules. On September 28, 2022, the Company and the Investor entered into a registration rights agreement (the “Registration Rights Agreement”).
Added
The Registration Rights Agreement provides that the Company shall file a registration statement with the Securities and Exchange Commission (“SEC”) covering the resale of the unregistered shares of common stock and the shares of common stock issuable upon exercise of the Warrants and Pre-Funded Warrants no later than December 20, 2022 (the “Filing Date”) and to use best efforts to have the registration statement declared effective as promptly as practical thereafter, and in any event no later than sixty (60) days after the Filing Date.
Added
On January 6, 2023, the Company entered into a loan and security agreement (the “Loan and Security Agreement”) with a one or more institutional investors (the “Lenders”) and Armistice Capital Master Fund Ltd. as agent for the Lenders (the “Agent”) for the issuance and sale of (i) a note in an aggregate principal amount of up to $2,000,000 (the “Note”) with the initial advance under the Loan and Security Agreement being $1,400,000 and (ii) warrants (the “Warrants”) to purchase a number of shares of common stock of the Company equal to 200% of the face amount of the Note divided by the closing price of the common stock of the Company on the date of the issuance of the Notes (collectively, the “Initial Issuance”).
Added
The closing price of the Company’s common stock on January 6, 2023, as reported by Nasdaq, was $0.221 per share, so the Warrants in respect of the initial advance under the Note are exercisable for up to 18,099,548 shares of the Company’s common stock.
Added
The initial exercise date of the Warrants will be the date stockholder approval is received and effective allowing exercisability of the Warrants under Nasdaq rules. Pursuant to the terms of the Loan and Security Agreement, an additional advance of $600,000 may be made by to the Company under the Note.
Added
The Company’s obligations under the terms of the Loan and Security Agreement are fully and unconditionally guaranteed by all of the Company’s subsidiaries (the “Guarantors”). 42 In connection with the Loan and Security Agreement, the Company and each of the Guarantors entered into a pledge and security agreement with the Agent (the “Pledge and Security Agreements”).
Added
The Pledge and Security Agreements provide that the Company and the Guarantors will grant the Agent a security interest in all of the Company’s and each Guarantor’s respective assets.
Added
The Company used the net proceeds from the Loan and Security Agreement to pay expenses, including accounting and legal fees, relating to the registration of certain previously issued securities of the Company, which securities were issued to an affiliate of the Agent, and following the payment of such expenses, to fund the Company’s operations.
Added
On May 23, 2023, Connexa Sports Technologies Inc.
Added
(the “Company”) issued the following shares of its common stock (“Shares”) to the following persons in transactions that were exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) of the Securities Act as transactions by an issuer not involving any public offering: 1. 2,700,000 Shares to vendors in exchange for a reduction of $270,000 in the amount owed to such vendors; 2. 790,000 Shares to Mike Ballardie, the Company’s chief executive officer and director, pursuant to an exercise of warrants by Mr.
Added
Ballardie; 3. 290,000 Shares to Yona Kalfa, the Company’s chief innovation officer and director, pursuant to an exercise of warrants by Mr.
Added
Kalfa; 4. 6,000 Shares to ambassadors as compensation to such ambassadors under their ambassador agreements; and 5. 54,000 Shares to the former owner and staff of Foundation Sports Systems, LLC (“Foundation”) as final payment to such persons for 100% of the membership interests of Foundation pursuant to the Membership Interest Purchase Agreement between the Company and Charlie Ruddy dated June 18, 2021.
Added
On June 8, 2023, the Company issued (i) 1,500 shares to an ambassador as compensation to such ambassador under its ambassador agreement and (ii) 1,737442 shares to a lender (the “Lender”) in connection with the conversion of the outstanding principal amount of a $1,000,000 2.25% Promissory Note due April 30, 2021 into shares of common stock of the Company in exchange for a sufficient amount of shares of the Company to realize $1,500,000 in proceeds from the sale of shares of the Company’s common stock (the “Lender”).
Added
On June 20, 2023, the Company issued 272,332 shares of common stock to the Lender in connection with the Conversion. On July 26, 2023, the Company issued 1,737,442 shares of common stock to the Lender in connection with the Conversion.
Added
On August 1, 2023, the Company issued 1,241,658 shares of common stock to Armistice upon the exercise of its Pre-Funded Warrants. On August 17, 2023, the Company issued 75,003 shares of common stock to Rodney Rapson as compensation for Mr. Rapson’s advisory services under the advisory agreement between the Company and Mr. Rapson.
Added
On August 31, 2023, the Company issued 1,700,000 shares of common stock to the Lender in connection with the Conversion.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

45 edited+38 added−60 removed48 unchanged
The Company does not expect the adoption of this ASU to have a material impact on the Company’s financial statements. The FASB has issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).
The Company does not expect the adoption of this ASU to have a material impact on the Company’s financial statements. 49 The FASB has issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).
As a result of the share purchase agreement, Gameface would become a wholly owned subsidiary of the Company. On February 22, 2022, the Company entered into a merger agreement with PlaySight Interactive Ltd. (“PlaySight”) and Rohit Krishnan (the “Shareholders’ Representative”). As a result of the merger agreement, PlaySight would become a wholly owned subsidiary of the Company.
As a result of the share purchase agreement, Gameface would become a wholly owned subsidiary of the Company. On February 22, 2022, the Company entered into a merger agreement with PlaySight Interactive Ltd. (“PlaySight”) and Rohit Krishnan (the “Shareholders’ Representative”). As a result of the merger agreement, PlaySight became a wholly owned subsidiary of the Company.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts that are more likely than not to be realized. Long-Lived Assets In accordance with ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts that are more likely than not to be realized. 47 Long-Lived Assets and Goodwill In accordance with ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable.
The Company continued to classify Foundation Sports in continuing operations, until December 5, 2022 when they sold 75% of Foundation Sports back to the original owners at which time it deconsolidated this subsidiary and recorded a loss on the sale. The Company also determined to dispose of the PlaySight entity during the year ended April 30, 2023.
The Company previously classified Foundation Sports in continuing operations, until December 5, 2022 when they sold 75% of Foundation Sports back to the original owners at which time it deconsolidated this subsidiary and recorded a loss on the sale. The Company also determined to dispose of the PlaySight entity during the year ended April 30, 2023.
As a result of the transactions described above, the accompanying consolidated financial statements include the combined results of Slinger Bag Inc., Slinger Bag Americas, Slinger Bag Canada, Slinger Bag UK, SBL, Foundation Sports, PlaySight, and Gameface for the years ended April 30, 2022 and 2021. All intercompany accounts and transactions have been eliminated in consolidation.
As a result of the transactions described above, the accompanying consolidated financial statements include the combined results of Slinger Bag Inc., Slinger Bag Americas, Slinger Bag Canada, Slinger Bag UK, SBL and Gameface for the years ended April 30, 2023 and 2022. All intercompany accounts and transactions have been eliminated in consolidation.
Description of Indebtedness Notes Payable - Related Party On January 14, 2022, the Company entered into two loan agreements with Yonah Kalfa and Naftali Kalfa, each for $1,000,000, pursuant to which we received a total amount of $2,000,000.
Notes Payable - Related Party On January 14, 2022, the Company entered into two loan agreements with Yonah Kalfa and Naftali Kalfa, each for $1,000,000 (together, the “Loan Agreements”), pursuant to which we received a total amount of $2,000,000.
On June 28, 2022, the Company entered into amendments for the two related party loan agreements with the lenders in which the repayment date was extended to July 31, 2024. There were $2,000,000 and $6,220,000 in outstanding borrowings from the Company’s related parties for the years ended April 30, 2022 and 2021, respectively.
On June 28, 2022, the Company entered into amendments for the two related party loan agreements with the lenders in which the repayment date was extended to July 31, 2024. There were $1,953,842 and $2,000,000 in outstanding borrowings from the Company’s related parties for the years ended April 30, 2023 and 2022, respectively.
Net cash used in investing activities was $1,618,341 for the year ended April, 30 2022, compared with net cash used in investing activities of $30,000 for the for year ended April 30, 2021.
Net cash used in investing activities was $0 for the year ended April, 30 2023, compared with net cash used in investing activities of $1,618,341 for the for year ended April 30, 2022.
We had an accumulated deficit of $80,596,925 as of April 30, 2022, and more losses are anticipated in the development of the business. Accordingly, there is substantial doubt about our ability to continue as a going concern.
We had an accumulated deficit of $151,750,610 as of April 30, 2023, and more losses are anticipated in the development of the business. Accordingly, there is substantial doubt about our ability to continue as a going concern.
Effect of Inflation and Changes in Prices We do not believe that inflation and changes in prices will have a material effect on our operations.
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements. Effect of Inflation and Changes in Prices We do not believe that inflation and changes in prices will have a material effect on our operations.
The new guidance must be applied on a prospective basis and is effective for periods beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU 2017-04 effective May 1, 2021. The adoption of the new standard did not have a material effect on the Company’s consolidated financial statements.
The new guidance must be applied on a prospective basis and is effective for periods beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU 2017-04 effective May 1, 2021.
If outside of the measurement period, any subsequent adjustments are recorded to the consolidated statement of operations. 42 Fair Value of Financial Instruments Fair value of financial and non-financial assets and liabilities is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
Fair Value of Financial Instruments Fair value of financial and non-financial assets and liabilities is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
We continue to collect information and reevaluate these estimates and assumptions periodically and record any adjustments to preliminary estimates to goodwill, provided we are within the measurement period.
We continue to collect information and reevaluate these estimates and assumptions periodically and record any adjustments to preliminary estimates to goodwill, provided we are within the measurement period. If outside of the measurement period, any subsequent adjustments are recorded to the consolidated statement of operations.
Accrued interest due to related parties as of April 30, 2022 and 2021 amounted to $908,756 and $747,636, respectively.
Accrued interest due to related parties as of April 30, 2023 and 2022 amounted to $917,957 and $908,756, respectively.
The loans bear interest at a rate of 8% per annum, and we have agreed to repay the loans in full by July 3, 2022, or such other date as may be accepted by the lenders. We are not permitted to make any distribution or pay any dividends unless or until the loans are repaid in full.
The loans bear interest at a rate of 8% per annum, and we agreed to repay the loans in full by July 3, 2022, or such other date as may be accepted by the lenders.
The Company’s standard terms are non-cancelable and do not provide for the right-of-return, other than for defective merchandise covered under the Company’s standard warranty. The Company has not historically experienced any significant returns or warranty issues.
The Company’s standard terms are non-cancelable and do not provide for the right-of-return, other than for defective merchandise covered under the Company’s standard warranty.
This increase is largely driven by an increase in social media advertising, sponsorships, and other investments in our public relations presence in order to drive sales and build brand awareness. General and administrative expenses General and administrative expenses consist primarily of compensation, including share-based compensation, and other employee-related costs, as well as legal fees and fees for professional services.
This decrease is largely driven by a decrease in social media advertising, sponsorships, and other investments in our public relations presence based on lower cash flows being generated by lower sales. General and administrative expenses General and administrative expenses consist primarily of compensation, including share-based compensation, and other employee-related costs, as well as legal fees and fees for professional services.
The increase in other expenses for the year ended April 30, 2022 as compared to April 30, 2021 was primarily due amortization of discounts and losses incurred on extinguishment of our convertible notes totaling net of decreases in interest expense from 2021 to 2022 due to changes in our long-term debt.
The decrease in other expenses for the year ended April 30, 2023 as compared to April 30, 2022 was primarily due a reduction in amortization of discounts and losses incurred on extinguishment of our debt and convertible notes, a decrease in interest expense from 2022 to 2023 due to changes in our long-term debt, offset by increases in derivative expense and interest to related parties.
The Company is required to estimate the fair value of share-based awards on the measurement date and recognize as expense that value of the portion of the award that is ultimately expected to vest over the requisite service period.
The Company also grants warrants in connection with certain note payable agreements and other key arrangements. The Company is required to estimate the fair value of share-based awards on the measurement date and recognize as expense that value of the portion of the award that is ultimately expected to vest over the requisite service period.
If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired and the Company will not record an impairment charge.
If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired and the Company will not record an impairment charge. Valuation of Warrants The Company grants warrants to key employees and executives as compensation on a discretionary basis.
Our cash used in operating activities during the year ended April 30, 2022 was primarily the result of our net loss of $51,773,652 for the year as well as increases in inventory, prepaid inventory, accounts receivable, and prepaid expenses, which was partially offset by non-cash expenses of $38,363,555, and increases in accounts payable, accrued expenses, accrued interest, and a decrease in contract liabilities.
Our cash used in operating activities during the year ended April 30, 2023 was primarily the result of our net loss of $71,153,685 for the year which was partially offset by our non-cash expenses of $56,348,619 as well as increases in accounts receivable, accounts payable, accrued interest and contract liabilities.
The guidance in this update has various elements, some of which are applied on a prospective basis and others on a retrospective basis with earlier application permitted. The Company has not yet adopted this update and is currently evaluating the effect of this ASU on the Company’s financial statements and related disclosures.
The guidance in this update has various elements, some of which are applied on a prospective basis and others on a retrospective basis with earlier application permitted. The adoption of the new standard did not have a material effect on the Company’s consolidated financial statements.
Long-lived assets related to Foundation Sports in the amount of $1,056,599 were fully impaired as of April 30, 2022, resulting in an impairment loss. There was no impairment of long-lived assets identified during the year ended April 30, 2021. Goodwill The Company accounts for goodwill in accordance with ASC 350, Intangibles - Goodwill and Other (“ASC 350”).
Long-lived assets and goodwill related to Gameface in the amount of $11,421,817 were fully impaired as of April 30, 2023, resulting in an impairment loss. The Company accounts for goodwill in accordance with ASC 350, Intangibles - Goodwill and Other (“ASC 350”).
Other expenses During the year ended April 30, 2022, we recorded a gain on change in fair value of derivatives of $18,557,184, compared to $1,939,639 during the year ended April 30, 2021.
Other expenses During the year ended April 30, 2023, we recorded a gain on change in fair value of derivatives of $10,950,017, compared to $18,557,184 during the year ended April 30, 2022. $0 gain on change in fair value of contingent consideration and $4,847,000 was recorded during the years ended April 30, 2023 and 2022.
During April 2022, the Company determined that the technology utilized in the Foundation Sports acquired entity would take substantially more financial resources and more time to bring to market and achieve profitability than originally anticipated.
The total loss on disposal of Foundation Sports and PlaySight amounted to $41,413,892 in the year ended April 30, 2023. In April 2023, the Company determined that the technology utilized in Gameface would take substantially more financial resources and more time to bring to market and achieve profitability than originally anticipated.
We use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. One of the most significant estimates relates to the determination of the fair value of these assets and liabilities. The determination of the fair values is based on estimates and judgments made by management.
One of the most significant estimates relates to the determination of the fair value of these assets and liabilities. The determination of the fair values is based on estimates and judgments made by management. Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable.
As a result, the goodwill and intangible assets related to Foundation Sports were fully impaired as of April 30, 2022, resulting in an impairment loss of $3,486,599. In addition, during April 2022 the Company decided to sell a portion of Foundation Sports.
As a result, the goodwill and intangible assets related to Gameface were fully impaired as of April 30, 2023, resulting in an impairment loss of $11,421,817.
Net cash used in operating activities was $11,463,464 during the year ended April 30, 2022, compared with $4,517,457 during the year ended April 30, 2021.
Net cash used in operating activities was $6,365,389 during the year ended April 30, 2023, compared with $12,366,700 during the year ended April 30, 2022.
No fractional shares were issued in connection with the reverse stock split and all such fractional interests were rounded up to the nearest whole number of shares of common stock. All references to the outstanding stock have been retrospectively adjusted to reflect this reverse split.
On June 14, 2022, the Company effected a 1-for-10 reverse stock split, where the Company’s common stock began to trade on a reverse split adjusted basis. No fractional shares were issued in connection with the reverse stock split and all such fractional interests were rounded up to the nearest whole number of shares of common stock.
Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued Accounting Standards Update (“ASU”), 2019-12, Simplifying the Accounting for Income Taxes , which amends ASC 740, Income Taxes (ASC 740).
The adoption of the new standard did not have a material effect on the Company’s consolidated financial statements. 48 In December 2019, the FASB issued Accounting Standards Update (“ASU”), 2019-12, Simplifying the Accounting for Income Taxes , which amends ASC 740, Income Taxes (ASC 740).
Business Combinations Upon acquisition of a company, we determine if the transaction is a business combination, which is accounted for using the acquisition method of accounting. Under the acquisition method, once control is obtained of a business, the assets acquired, and liabilities assumed, are recorded at fair value.
Under the acquisition method, once control is obtained of a business, the assets acquired, and liabilities assumed, are recorded at fair value. We use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date.
The Company is the owner of the Slinger Launcher, which is comprised of a portable tennis ball launcher, a portable padel tennis ball launcher and a portable pickleball launcher and Gameface AI, providing AI technology and performance analytics. 41 Critical Accounting Policies and Estimates Basis of Presentation The consolidated financial statements of the Company are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The Company is the owner of the Slinger Bag Launcher, which is comprised of a portable tennis ball launcher, a portable padel tennis ball launcher and a portable pickleball launcher and Gameface AI, providing AI technology and performance analytics for sports. Critical Accounting Policies and Estimates The critical accounting policies relate exclusively to our continuing operations.
Our net sales during the year ended April 30, 2021 were $10,804,214 which consisted partially of shipped orders related to our Kickstarter and Indiegogo crowdfunding campaigns initiated in fiscal year 2019, as well as new orders placed and fulfilled to consumers via our online marketplace and to our international distributors.
Net sales consisted partially of shipped orders related to new orders placed and fulfilled to consumers via our online marketplace and to our international distributors.
Net cash provided by financing activities was $13,734,286 for the year ended April, 30 2022, compared with $5,420,000 for the year ended April 30, 2021.
Investing activities for the year ended April, 30 2022 mostly related to the issuance of a note receivable in the amount of $2,250,000, offset by cash received in acquisitions of the entities acquired in fiscal April 30, 2022. 52 Net cash provided by financing activities was $5,821,178 for the year ended April 30 2023, compared with $13,734,286 for the year ended April 30, 2022.
Our gross margins slightly increased in 2022 versus 2021 related to the above items. 45 Selling and marketing expenses During the year ended April 30, 2022, we incurred selling and marketing expenses of $3,536,617 compared with $1,881,434 during the year ended April 30, 2021.
Selling and marketing expenses During the year ended April 30, 2023, we incurred selling and marketing expenses of $1,928,198 compared with $3,477,570 during the year ended April 30, 2022, a reduction of -45%.
Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from related parties, and/or private placement of debt and/or common stock. 46 The following is a summary of our cash flows from operating, investing and financing activities for the years ended April 30, 2022 and 2021: For the Years Ended April 30, 2022 2021 Cash flows used in operating activities $ (11,463,464 ) $ (4,517,457 ) Cash flows used in investing activities $ (1,618,341 ) $ (30,000 ) Cash flows provided by financing activities $ 13,734,286 $ 5,420,000 We had cash and cash equivalents of $1,424,360 as of April 30, 2022, as compared to $928,796 as of April 30, 2021.
The following is a summary of our cash flows from operating, investing and financing activities for the years ended April 30, 2023 and 2022: For the Years Ended April 30, 2023 2022 Cash flows used in operating activities $ (6,365,389 ) $ (12,366,700 ) Cash flows used in investing activities $ - $ (1,618,341 ) Cash flows provided by financing activities $ 5,700,362 $ 13,734,286 We had cash and cash equivalents of $202,095 as of April 30, 2023, as compared to $665,002 as of April 30, 2022.
The operations of Slinger Bag Inc., Slinger Bag Americas, Slinger Bag Canada, Slinger Bag UK, SBL, Foundation Sports, PlaySight and Gameface are collectively referred to as the “Company.” On June 14, 2022, the Company effected a 1-for-10 reverse stock split, where the Company’s common stock began to trade on a reverse split adjusted basis.
The operations of Slinger Bag Inc., Slinger Bag Americas, Slinger Bag Canada, Slinger Bag UK, SBL and Gameface are collectively referred to as the “Company.” 45 The Company operates in the sports equipment and technology business.
Cash provided by financing activities for the year ended April 30, 2021, consisted of proceeds of $3,300,000, from notes payable with a related party, proceeds of $3,120,000 from notes payable, and a repayment of notes payable with a related party of $1,000,000.
Cash provided by financing activities for the year ended April 30, 2023 consisted of proceeds of $8,744,872 from issuance of common stock, $2,000,000 from notes payable, offset by $4,377,537 in repayments of notes payable and $546,158 in repayments of notes payable to related parties.
Early adoption is permitted for all entities, including adoption in an interim period.
Early adoption is permitted for all entities, including adoption in an interim period. The Company does not expect the adoption of this ASU to have a material impact on the Company’s financial statements.
During the year ended April 30, 2022, we incurred general and administrative expenses of $43,424,105 compared with $4,629,642 during the year ended April 30, 2021. The increase in general and administrative expenses is largely due to our share based compensation that resulted in an expense of $32,176,087.
The decrease in general and administrative expenses is largely due to a reduction in our share based compensation that resulted in an expense of $31,727,091, and our impairment loss on the intangible assets and goodwill of Gameface of $11,421,817 in the year ended April 30, 2023.
The Company also consummated a public offering of shares of its common stock and the listing of its common stock on the Nasdaq Capital Market. The Company operates in the sports equipment and technology business.
All references to the outstanding stock have been retrospectively adjusted to reflect this reverse split. The Company also consummated a public offering of shares of its common stock and the listing of its common stock on the Nasdaq Capital Market. On November 17, 2022, Gabriel Goldman and Rohit Krishnan resigned from the board of directors of the Company.
Research and development costs During the year ended April 30, 2022, we incurred research and development costs of $855,660 compared with $339,385 during the year ended April 30, 2021.
During the year ended April 30, 2023, we incurred general and administrative expenses of $22,743,877 compared with $46,718,986 during the year ended April 30, 2022, a reduction of -51%.
Cost of sales Our cost of sales during the year ended April 30, 2022 were $12,346,712, which represents the costs of units shipped during the period, and resulted in a gross profit of $4,484,765, or 26.65%.
Cost of sales Our cost of sales during the year ended April 30, 2023 were $7,144,335, compared to $11,878,010 for the period to April 30, 2022, a reduction of -40%. Cost of Sales represents the costs of units shipped during the period. This reduction in Cost of Sales is a direct result of the reduction in net sales.
The Company’s obligations in this transaction are guaranteed by the Company’s subsidiaries. The Company’s obligations under the convertible notes are jointly and severally, unconditionally and irrevocably guaranteed by its subsidiaries.
The Company’s obligations under the terms of the Loan and Security Agreement are fully and unconditionally guaranteed by all of the Company’s subsidiaries (the “Guarantors”).
The Company completed the sale in November 2022 and recorded a loss on the sale at that time. In April 2022, the Company changed its domicile from Nevada to Delaware. On April 7, 2022, the Company effected a name change to Connexa Sports Technologies Inc. We also changed our ticker symbol, “CNXA”.
The Company completed the sale in November 2022 and recorded a loss on the sale at that time. The total loss on disposal of Foundation Sports and PlaySight amounted to $41,413,892 in the year ended April 30, 2023.
Removed
Connexa is now the holding company under which Slinger Bag, PlaySight, Gameface and Foundation Sports reside.
Added
Gabriel and Rohit were members of the audit and compensation committees. Gabriel Goldman was a member of the Company’s Nominating and Corporate Governance Committee. Neither Gabriel nor Rohit advised the Company of any disagreement with the Company on any matter relating to its operations, policies or practices.
Removed
Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable.
Added
On December 5, 2022, the Company assigned 75% of its membership interest in Foundation Sports to Charles Ruddy, its founder and granted him the right for a period of three years to purchase the remaining 25% of its Foundation Sports membership interests for $500,000 in cash.
Removed
The Company determined in April 2022 that the fair value of the reporting unit was less than the carrying value of the net assets assigned to the reporting unit, and therefore goodwill was fully impaired for Foundation Sports at April 30, 2022, resulting in an impairment loss of $2,430,000.
Added
As of December 5, 2022, the results of Foundation Sports were no longer be consolidated in the Company’s financial statements, the Company recorded a loss on the sale and the investment is now accounted for as an equity method investment.
Removed
There was no impairment of goodwill as of April 30, 2021. 43 Valuation of Warrants The Company grants warrants to key employees and executives as compensation on a discretionary basis. The Company also grants warrants in connection with certain note payable agreements and other key arrangements.
Added
On December 5, 2022, the Company analyzed this investment and established a reserve for the investment at the full amount of $500,000. 44 On November 27, 2022, the Company entered into a share purchase agreement (the “Agreement”) with PlaySight, Chen Shachar and Evgeni Khazanov (together, the “Buyer”) pursuant to which the Buyer purchased 100% of the issued and outstanding shares of PlaySight from the Company in exchange for (1) releasing the Company from all of PlaySight’s obligations towards its vendors, employees, tax authorities and any other (past, current and future) creditors of PlaySight; (2) waiver by the Buyer of 100% of the personal consideration owed to them under their employment agreements in the total amount of U.S. $600,000 (which would have been increased in December 2022 to U.S. $800,000); and (3) cash consideration of U.S. $2 million to be paid to the Company as follows: (i) a promissory note in the amount of U.S. $2 million issued and delivered to the Company (the “Promissory Note”).
Removed
The Company is currently evaluating the impact that the adoption of ASU 2021-04 will have on the Company’s consolidated financial statement presentation or disclosures. 44 Results of Operations for the Years Ended April 30, 2022 and 2021 The following are the results of our operations for the year ended April 30, 2022 as compared to April 30, 2021: For the Years Ended April 30, 2022 2021 Change ($) Change (%) Net sales $ 16,831,477 $ 10,804,214 $ 6,027,263 55.79 % Cost of sales 12,346,712 7,680,290 4,666,422 60.74 6% Gross profit 4,484,765 3,123,924 1,360,841 43.56 % Operating expenses: Selling and marketing expenses 3,536,617 1,881,434 1,655,183 87.97 % General and administrative expenses 43,424,105 4,629,642 38,794,463 837.96 % Research and development costs 855,660 339,385 516,275 152.12 % Impairment loss 3,486,599 — 3,486,599 N/A Transaction costs 5,109,522 — 5,109,522 N/A Total operating expenses 56,412,503 6,850,461 49,562,042 723.48 % Loss from operations (51,927,738 ) (3,726,537 ) (48,201,201 ) 1293.46 % Other expenses (income): Amortization of debt discount 8,150,284 376,506 7,773,778 2064,72 % Loss on extinguishment of debt 7,096,730 3,030,495 4,066,235 134.18 % Loss on issuance of convertible notes 5,889,369 - 5,889,369 N/A Gain on change in fair value of derivatives (18,557,184 ) (1,939,639 ) (16,617,545 ) 856.73 % Gain on change in fair value of contingent consideration (4,847,000 ) — (4,847,000 ) N/A Interest expense - related party 165,558 608,668 (443,110 ) (72.80 )% Interest expense 1,948,157 12,792,193 (10,844,036 ) (84.77 )% Total other (income) expense (154,086 ) 14,868,223 (15,022,309 ) (101.04 )% Loss before income taxes (51,773,652 ) (18,594,760 ) (33,178,892 ) 178.43 % Provision for income taxes — — — N/A Net loss $ (51,773,652 ) $ (18,594,760 ) $ (33,178,892 ) 178.43 % Net sales Our net sales during the year ended April 30, 2022 were $16,831,477, which consisted partially of shipped orders related to new orders placed and fulfilled to consumers via our online marketplace and to our international distributors.
Added
(ii) The maturity due date of the Promissory Note is December 31, 2023 subject to a one year extension in the discretion of the Buyer until December 31, 2024. (iii) The Promissory Note can be partially paid over the time, but in the event it is not paid in full by December 31, 2024, then the remaining amount due (i.e.
Removed
The increases to our online marketplace in Slinger Bag contributed to the increase in sales along with increases related to the purchase of PlaySight in February 2022. As of April 30, 2022 and 2021, we had contract liabilities of $2,656,706 and $99,531, respectively, representing units that have not been shipped at year end.
Added
U.S. $2 million less any amount paid), will be converted into ordinary shares of PlaySight (the “Deposited Shares”), which will be deposited with the escrow company of Altshuler Shaham Trust Ltd.
Removed
Our cost of sales during the year ended April 30, 2021 were $7,680,290, which represents the costs of units shipped during the period, and resulted in a gross profit of $3,123,924, or 28.91%.
Added
(the “Escrow Agent”) for the benefit of the Company or, at the election of the Company, issued in the form of a stock certificate or recorded in some other market-standard format to be held by the Escrow Agent.
Removed
During the first quarter of the current year, we experienced a gross loss as the bulk of our sales in that period related to the shipment of initial crowdfunding orders.
Added
(iv) The number of the Deposited Shares shall be determined according to the post-money valuation of the last investment round of the Company, and in the absence of such investment round, the total number of the Deposited Shares shall be $2 million divided by the Company’s valuation to be determined at that time by a third party appraiser, to be nominated by both the Company and the Buyer (the “Appraiser”).
Removed
The loss on these shipments was due to (1) discounted pricing on the initial crowdfunding orders, (2) as fulfillment was later than initially scheduled we fulfilled orders with the “deluxe” version of launcher (including all features), as well as tennis balls, both of which increased costs, and (3) due to sanctions by the U.S. against Chinese sourced products, the import duty was raised on all launchers brought into the U.S. increasing our cost of sales.
Added
The Company and the Buyer have agreed that the identity of the Appraiser shall be Murray Devine Valuation Advisers, to the extent their cost of the appraisal shall not be higher than the cost of other appraisers from the big 4 accounting firms (i.e., E&Y, KPMG, PWC and Deloitte).
Removed
As a result, our cost of sales exceeded initial sales values raised in our crowdfunding campaigns. As of the beginning of the third quarter of the previous year, substantially all of the initial crowdfunding orders had been fulfilled.
Added
The Company and the Buyer have agreed to split the cost of the Appraiser.
Removed
Sales generated during the last two fiscal quarters represented new orders placed and fulfilled during the current year by consumers and distributors, which resulted in a positive gross profit. Currently, our cost of sales is being negatively impacted by the large increase in container costs out of Asia.
Added
The Company also released PlaySight from all of its obligations (except for those created by the Agreement) in respect of the Company, including any inter-company debts on the books, and the Buyer has released the Company from all of its obligations (except for those created by the Agreement) in respect of PlaySight and the Buyer.
Removed
In addition, we had increases in 2022 cost of sales related to the purchase of PlaySight in February 2022.
Added
On September 13, the Company held a special meeting of stockholders in which the following items were approved: (i) the issuance of (i) 1,018,510 shares of the our common stock, par value $0.001 per share, that were issued on October 3, 2022, and, (ii) 11,802,002 shares of our common stock issuable upon exercise of Pre-Funded Warrants at an exercise price of $0.00001 per share, (iii) 12,820,512 shares of common stock issuable upon the exercise of 5-Year Warrants at an exercise price of $0.39 per share, (iv) 25,641,024 shares of common stock issuable upon the exercise of 7.5 Year Warrants at an exercise price of $0.43 per share and (v) 18,099,548 shares of our common stock issuable upon the exercise of 5.5 Year Warrants at an at an exercise price per share equal to $0.221 per share to Armistice Capital Master Fund Ltd and (ii) a reverse stock split of our common stock within a range of one (1)-for-ten (10) to one (1)-for-forty (40) (“Reverse Stock Split”), with the Board of Directors of the Company to set the specific ratio and determine the date for the reverse split to be effective and any other action deemed necessary to effectuate the Reverse Stock Split, without further approval or authorization of stockholders, at any time within 12 months of the special meeting date.
Removed
This increase is mainly driven by our investment in new slinger bag launcher products for Pickleball and Padel as well as costs relating to the development of a consumer app that will integrate artificial intelligence (AI) technology that is targeted to provide performance and training insights to provide more value to our customers.
Added
Basis of Presentation The consolidated financial statements of the Company are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Removed
Impairment loss During the year ended April 30, 2022, we incurred an impairment loss of $3,486,599 due to the full impairment of goodwill and intangible assets for Foundation Sports. Transaction costs During the year ended April 30, 2022, we incurred transaction costs of $5,109,522 associated with completing the acquisitions of Gameface, PlaySight and Foundation Sports.
Added
The Company has not historically experienced any significant returns or warranty issues. 46 Business Combinations Upon acquisition of a company, we determine if the transaction is a business combination, which is accounted for using the acquisition method of accounting.
Removed
A gain on change in fair value of contingent consideration of $4,847,000 and $0 was recorded during the years ended April 30, 2022 and 2021, respectively, relating to the acquisition of PlaySight. Excluding the gains, during the years ended April 30, 2022 and 2021, we had other expenses totaling $23,250,098 and $16,807,862, respectively.
Added
Results of Operations for the Years Ended April 30, 2023 and 2022 The following are the results of our operations for the year ended April 30, 2023 as compared to April 30, 2022: For the Years Ended April 30, 2023 2022 Change ($) Change (%) Net sales $ 9,922,799 $ 16,102,672 $ (6,179,873 ) -38 % Cost of sales 7,144,335 11,878,010 (4,733,675 ) -40 % Gross profit 2,778,464 4,224,662 (1,446,198 ) -34 % Operating expenses: Selling and marketing expenses 1,928,198 3,447,570 (1,549,372 ) -45 % General and administrative expenses 22,743,877 46,718,986 (23,975,109 ) 49 % Research and development costs 65,164 736,141 (670,977 ) -91 % Total operating expenses 24,737,239 50,932,697 (26,195,458 ) 49 % Loss from operations (21,958,775 ) (46,708,035 ) 24,749,260 -53 % Other expenses (income): Amortization of debt discount (4,095,030 ) 8,150,284 4,055,254 -50 % Loss on extinguishment of debt - (7,096,730 ) 7,096,730 -100 % Loss on issuance of convertible notes - (5,889,369 ) 5,889,369 -100 % Gain on change in fair value of derivative liability 10,950,017 18,557,184 (7,607,167 ) -41 % Gain on change in fair value of contingent consideration - 4,847,000 (4,847,000 ) -100 % Derivative Expense (8,995,962 ) (8,995,962 ) -100 % Interest expense - related party (293,090 ) 165,558 (127,532 ) 77 % Interest expense (884,985 ) (1,920,183 ) 1,035,198 -54 % Total other (income) expense (3,319,050 ) (182,060 ) (3,501,110 ) -1,923 % Net loss from Continuing Operations $ (25,227,825 ) $ (46,525,975 ) $ 21,248,150 -46 % 50 Net sales Our net sales during the year ended April 30, 2023 were $9,922,799, compared to net sales of $16,102,672, in the same period to April 30, 2022, a reduction of -38%.
Removed
Our net cash used in operating activities during the year ended April 30, 2021 was primarily the result of our net loss of $18,594,760 during the year as well as increases in inventory and accounts receivable, which was partially offset by non-cash expenses of $14,892,030 and increases in accounts payable and accrued expenses, as well as a decrease in prepaid expenses and other current assets.
Added
The significant decrease in our online consumer marketing of Slinger Bag, coupled with the general marketplace impact resulting from the increased consumer social mobility following the lifting of all covid -related restrictions contributed to the significant decrease in sales.
Removed
Investing activities for the year ended April, 30 2022 related to cash acquired from Gameface and PlaySight acquisitions, and a note receivable issuance, while investing activities for the year ended April 30, 2021 were related to the purchase of the Slinger trademark.
Added
This resulted in a gross profit of $2,778,464, or 28.00%. compared to a gross profit of $4,224,622, or 26.24% for the period to April 30, 2022.
Removed
Securities Purchase Agreement and Convertible Notes On August 6, 2021, the Company consummated the closing of a private placement offering pursuant to the terms and conditions of that certain Securities Purchase Agreement, dated as of August 6, 2021 (the “Purchase Agreement”), between the Company and certain accredited investors.

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