Connexa Sports Technologies Inc
For the period ended Jul 31, 2024. Filed Sep 10, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 31, 2024 · Filed Sep 10, 2024
YYAI$0.85-8.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-01-31; filed 2024-03-05.
0001493152-24-008851
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-07-31; filed 2024-09-10.
0001493152-24-035597
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 103 previous paragraphs and 88 current paragraphs.
36 unchanged; 18 reworded; 33 added; 45 removed; 4 previous and 1 current paragraphs rearranged.
Tables are not compared: 4 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (33)
Current report
From April 2024 through May 2024, the Company acknowledged and agreed to the entrance into certain warrant purchase agreements (the “WPAs”) by the January 2024 Investors and 10 purchasers (the “Pre-Funded Warrant Purchasers”) pursuant to which the January 2024 Investors sold all of the 3,775,470 Pre-Funded Warrants to Pre-Funded Warrant Purchasers for an aggregate amount of $18,877,350 in cash.
Current report
On May 28, 2024, the Company filed a registration statement in respect of 1,925,000 shares of its common stock consisting of (a) 349,530 Shares and (b) 1,575,470 shares of Common Stock issuable upon the exercise of the Pre-Funded Warrants and on August 21, 2024 such registration statement became effective.
Current report
On March 18, 2024, the Company entered into a share purchase agreement (the “Purchase Agreement”) and a share exchange agreement (the “Exchange Agreement”) to acquire 70% of Yuanyu Enterprise Management Co., Limited (“YYEM”) from Mr. Hongyu Zhou, the sole shareholder of YYEM (“YYEM Seller”) for a combined $56 million (the “Acquisition”). $16.5 million of this amount was paid in cash pursuant to the Purchase Agreement, and the balance will be paid in shares pursuant to the Exchange Agreement. As of September 9, 2024, the Acquisition has not been completed. Such closing will result in a change of control of the Company, as the shareholders of YYEM will become the owners of approximately 75.3% of the issued and outstanding shares of Common Stock and the board of directors of Connexa (the “Board of Directors” or the “Board”) will comprise individuals designated by the YYEM Seller. As part of this transaction, the Company agreed to sell its wholly owned subsidiary, Slinger Bag Americas Inc., to a newly established Florida limited liability company called J&M Sports LLC (“J&M”). J&M is owned by Yonah Kalfa and Mike Ballardie.
Current report
The Company expects the Acquisition to close following receipt of Nasdaq’s approval of YYEM’s new listing application. The Acquisition will be completed via the purchase of 5,000 ordinary shares of YYEM, representing 50% of the issued and outstanding ordinary shares of YYEM, in exchange for 8,127,572 newly issued shares of Common Stock to the sole shareholder of YYEM, Mr. Hongyu Zhou representing 75.3% of the issued and outstanding shares of Common Stock as of the date of the closing. In this connection, the Company’s directors and officers intend to resign from their positions promptly following Nasdaq approval and to be replaced with the following individuals:
Current report
The following table lists the names, ages and positions of the individuals who are expected to serve as executive officers and directors of the Company upon completion of the Acquisition:
Current report
Set forth below is a brief description of the background and business experience for the past five years of individuals who are expected to serve as executive officers and directors of the Company upon completion of the Acquisition.
Current report
Thomas Tarala
Current report
Thomas Tarala has 30 years of international corporate finance experience in New York, London, and Hong Kong, including as a partner at two leading international law firms and as General Counsel for the international operations of one of the largest private conglomerates in China. As a partner of Baker McKenzie from 2022 to 2024 and another international firm earlier in his career, Thomas has led U.S. securities practices in Hong Kong, advising on equity and debt transactions, as well as cross-border joint ventures involving companies listed on Nasdaq. With a particular focus on the technology sector, he has acted for companies and investment banks in Mainland China, Hong Kong, Singapore, Indonesia, and Thailand, including on award-winning transactions in the region.
Current report
As General Counsel in the overseas headquarters of HNA Group (International) Company Limited, a large conglomerate, from 2017 to 2022, Thomas worked closely with the business teams on a wide range of corporate and finance transactions, including multi-billion dollar acquisitions and divestments of household-name companies, the sale of airlines, and a range of investments ranging from New York and London skyscrapers to global technology companies, as well as numerous companies that were number one globally in their respective fields.
Current report
Thomas graduatedmagna cum laudeand Phi Beta Kappa from Georgetown University with a Bachelor of Science degree in Foreign Service and holds a Juris Doctor degree from the University of Virginia School of Law. Thomas speaks English, French, Spanish, and Mandarin and is qualified to practice law in New York, Connecticut, Florida, England and Wales, and Hong Kong.
Current report
Guibao Ji
Current report
Guibao Ji has been a certified public accountant in China for 25 years and has worked as an accountant at Shenzhen Wanda Accounting Firm since January 2005. He is a partner of the firm and also an independent director of a number of listed companies, including Brightstar Technology Group and Hekeda Technology Co. Ltd.
Current report
Mr. Ji graduated from Central Radio and TV University in 1994 with a degree in Business Accounting. He was certified by the Chinese Institute of Certified Public Accountants in 1999.
Current report
Hongyu Zhou
Current report
Hongyu Zhou has 15 years of experience founding, growing, and managing successful enterprises. His experience extends to such areas as enterprise management, entertainment technology, and information technology, including as an investor and business manager of a technology company, as a founder and manager of an innovative entertainment company, and as the founder and manager of several technology companies. Mr. Zhou has served as the Chairman of each of Shenzhen Qiangwo Entertainment Technology Co., Ltd. and Shenzhen Qianyue Information Technology Co., Ltd. since 2021. Mr. Zhou founded Shenzhen Yuanzu Century Network Technology Co., Ltd. in 2020 and Shenzhen Qiangwo Entertainment Technology Co., Ltd. in 2017. In founding, managing, and growing companies across various industries, Mr. Zhou has honed his skills in strategic planning, business development, and team leadership.
Current report
Warren Thomson
Current report
Warren Thomson is a lawyer with over 20 years of experience at international law firms and companies. Mr. Thomson served as a partner at Hogan Lovells, an international law firm in Dubai from 2013 to 2017, where he advised companies of all sizes in the Middle East and Asia through the whole of their corporate lifecycle, from incorporation through financing and expansion, and sometimes to winding-up. This experience included mergers and acquisitions, and commercial transactions, as well as regulatory, employment, and corporate finance matters. Mr. Thomson worked at HNA Group (International) Company Limited as Senior Counsel from 2018 to 2022 and as General Counsel in 2022, and since 2022 he has served as General Counsel (Overseas) at Link Asset Management Limited, the manager of Link REIT, a multi-billion-dollar real estate investment trust listed in Hong Kong.
Current report
Mr. Thomson graduated with a Bachelor of Arts degree from Canberra University and a Bachelor of Laws degree with Honors from Australian National University before earning a Graduate Diploma in legal practice from the College of Law in Sydney. Mr. Thomson is a member of the Australian Chamber of Commerce (sitting on the Finance, Legal and Tax Committee) and the Association of Corporate Counsel and is qualified to practice law in New South Wales (Australia) and Hong Kong.
Current report
Chenlong Liu
Current report
Chenlong Liu is a certified public accountant, as well as an investor active in the technology industry. Mr. Liu’s career has focused on technology-related investments and mergers and acquisitions. He has participated in many well-known transactions in the industry. As an investment director at China Fusion Capital from 2016 to 2020, he helped execute Nasdaq-listed iQiyi’s convertible bond transactions, Kosdaq-listed Longtu’s acquisition and reverse takeover, Hong Kong-listed Kuaishou’s Series B investment round, and China Fusion Capital’s acquisition of Particle, Inc. Since 2020, Mr. Liu has served as a director of Particle, a San Francisco-based technology company.
Current report
Mr. Liu earned a Bachelor of Science degree in mathematics from the University of Minnesota–Twin Cities in 2013 and was awarded a master’s degree in accounting from George Washington University in 2015. Mr. Liu became a certified public accountant in Washington State in January 2019.
Current report
Kong Liu
Current report
Kong (“Luke”) Liu is an entrepreneur with experience in both traditional industries and the technology and Web3 areas. (He is not related to Chenlong Liu.) Mr. Liu has experience in management and strategy roles in companies ranging from startups to multinationals, and he has founded several companies over the years. Mr. Liu has has a particular focus on digital strategies at both traditional retailers and technology companies, as well as in the recruitment field. He serves as the CEO of World@Meta, a Singapore-based technology company developing mobile apps and games, where maximizing user engagement is a primary objective. He also serves as a managing director of MS Consultancy Pte Ltd, a business consultancy that he founded in November 2020. In such environments, Mr. Liu has been responsible for establishing the vision of the enterprise and working across teams to make that vision a reality.
Current report
Mr. Liu graduated from Nanyang Polytechnic, in Singapore, with a Diploma of Information Technology and from Trent University, in Canada, with a Bachelor of Business Administration.
Current report
The following table identifies the individual who are expected to serve as independent and non-independent board and committee members of the Company upon completion of the Acquisition:
Current report
As an inducement to the Company to complete the Acquisition, YYEM has agreed to make an aggregate payment to the Company of $4.5 million in cash of which $2 million has been transferred to the Company to-date and of which $556,629 has been transferred to the parties that arranged the Acquisition prior to the date hereof.
Current report
Following the closing of the Acquisition, the Company will sell, transfer and assign all of its legacy business, assets and liabilities related to or necessary for the operations of its “Slinger Bag” business or products (the “Legacy Business”) to a newly established Florida limited liability company called J&M Sports LLC (“J&M”) and will agree that J&M will have the sole right to and obligations of the Legacy Business and will be liable to the Company for any losses arising from third-party claims against the Company arising from liabilities related to the Legacy Business.
Current report
Established in November 2021, YYEM is based in Hong Kong and operates in the emerging love and marriage market sector. YYEM owns what the Company believes is proprietary intellectual property (IP), that the Company believes is unique to this business sector, covering YYEM’s online presence as well as its offline retail store operation. Its AI matchmaker application integrates with existing Big Data models and provides an ability to connect to other larger AI models.
Current report
A licensee partner of YYEM that is located in China operates 200 retail stores across 40 cities. One-time subscriber matchmaker fees, reaching up to $1,500, provide the subscriber with a bespoke matchmaking service, delivered through face-to-face interactions across Hand-in-Hand branded offline stores.
Current report
YYEM collected royalties of approximately $1.9 million (audited) in its fiscal year ended January 31, 2024 In addition, YYEM has entered into term sheets with three entities (one in Hong Kong for rights to use the IP in Japan and South Korea among other locations, one in the UK for rights to use the IP in Europe, and one in the USA for rights to use the IP in Sub-Saharan Africa, with cumulative possible revenues over the next three years of in excess of $70 million.
Current report
Net sales decreased $2.42 million, or -77%, during the three months ended July 31, 2024 as compared to the three months ended July 31, 2023. The decrease was as a direct result of on-going inventory availability issues stemming back to the start of calendar 2024. The company had limited Tennis Launcher inventory (its primary revenue driver) available for sale through our e-commerce platform in North America nor to any of our international distributor-managed markets throughout the quarter ended July 31, 2024. The majority of revenues generated within the quarter came from our D2C Pickleball Launcher sales within North America.
Current report
Cost of sales decreased $$1.79 million or -81% during the three months ended July 31, 2024 as compared to the three months ended July 31, 2023, which is directly as a result of the decrease in net sales. Gross income decreased $0.62 million, or -70%, during the three months ended July 31, 2024 as compared to the three months ended July 31, 2023. This reduction in gross income is driven primarily as a result of the net sales reduction. Gross Margin on the actual sales made remained positive at 41%.
Current report
Selling and marketing expenses decreased $0.96 million, or -40%, during the three months ended July 31, 2024 as compared to the three months ended July 31, 2023. This decrease is a direct result of the reduction in net sales and the associated ceasing of all Tennis product related marketing activities.
Removed paragraphs (45)
Previous report
On June 8, 2023, the Company entered into a merchant cash advance agreement with Meged Funding Group (“Meged”) pursuant to which the Company sold $315,689 in future receivables to Meged (the “Meged Receivables Purchased Amount”) to in exchange for payment to the Company of $210,600 in cash less fees of $10,580. The Company agreed to pay Meged $17,538 each week until the Meged Receivables Purchased Amount is paid in full.
Previous report
On August 7, 2023, the Company entered into an agreement with UFS (the “UFS Agreement”) pursuant to which the Company sold $797,500 in future receivables (the “UFS Second Receivables Purchased Amount”) to UFS in exchange for payment to the Company of $550,000 in cash less fees of $50,000. The Company agreed to pay UFS $30,000 each week until the UFS Second Receivables Purchased Amount is paid in full.
Previous report
In order to secure payment and performance of the Company’s obligations to UFS under the UFS Agreement, the Company granted to UFS a security interest in the following collateral: all accounts receivable and all proceeds as such term is defined by Article 9 of the UCC. The Company also agreed not to create, incur, assume, or permit to exist, directly or indirectly, any lien on or with respect to any of such collateral.
Previous report
On September 19, 2023, the Company entered into an agreement with Meged (the “Second Meged Agreement”) pursuant to which the Company sold $423,000 in future receivables to Meged (the “Meged Second Receivable Amount”) in exchange for paying the then outstanding balance of $70,153.20 of the Meged Receivables Purchased Amount in full with the balance being retained by the Company in cash for general purposes. The Company agreed to pay Meged $15,107.14 each week until the Meged Second Receivable Amount is paid in full.
Previous report
In order to secure payment and performance of the Company’s obligations to Meged under the Second Meged Agreement, the Company granted to Meged a security interest in the following collateral: all accounts receivable and all proceeds as such term is defined by Article 9 of the UCC. The Company also agreed not to create, incur, assume, or permit to exist, directly or indirectly, any lien on or with respect to any of such collateral.
Previous report
On September 19, 2023, the Company entered into an agreement with Meged (the “Second Meged Agreement”) pursuant to which the Company sold $423,000 in future receivables to Meged (the “Meged Second Receivable Amount”) in exchange for paying the then outstanding balance of $70,153.20 of the Meged Receivables Purchased Amount in full with the balance being retained by the Company in cash for general purposes. The Company agreed to pay Meged $15,107.14 each week until the Meged Second Receivable Amount is paid in full.
Previous report
In order to secure payment and performance of the Company’s obligations to Meged under the Second Meged Agreement, the Company granted to Meged a security interest in the following collateral: all accounts receivable and all proceeds as such term is defined by Article 9 of the UCC. The Company also agreed not to create, incur, assume, or permit to exist, directly or indirectly, any lien on or with respect to any of such collateral.
Previous report
On October 11, 2023, the Company entered into a loan and security modification agreement (the “Loan and Security Modification Agreement”) with a one or more institutional investors (the “Lenders”) and a certain institutional investor, as agent for the Lenders (the “Agent”) amending the terms of the Loan and Security Agreement dated January 6, 2023 (the “LSA”) by and among the Company, the Lenders and the Agent to make an additional loan of $1,000,000 and modify the terms of the LSA to reflect the New Loan.
Previous report
In connection with the Loan and Security Modification Agreement, the Company agreed to issue to the investor warrants (the “Common Warrants”) to purchase up to 169,196 shares of Common Stock at an exercise price of $1.90 per share. The Common Warrants are exercisable nine months after their issuance and will expire five and one-half years from their date of issuance. The Common Warrants and the shares of our Common Stock issuable upon the exercise of the Common Warrants are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), were not offered pursuant to the Registration Statement and were offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act, and Rule 506(b) promulgated thereunder.
Previous report
On November 14, 2023, the Company issued 224,472 shares of Common Stock to Sapir LLC. Sapir LLC is controlled by Aitan Zacharin, an investor relations and financial structuring consultant to the Company who is a party to an amended and restated consulting agreement with the Company dated April 30, 2020 (the “AZ Consulting Agreement”). Pursuant to the AZ Consulting Agreement, the Company owed Mr. Zacharin $127,500 as consulting fee compensation through November 30, 2023 (the “Consulting Fee Compensation”). In addition, the Company granted Mr. Zacharin $127,500 as discretionary compensation (“Discretionary Compensation”) pursuant to Section 2.1(d) of the AZ Consulting Agreement. In consideration of the Consulting Fee Compensation and the Discretionary Compensation, the issuance of shares of Common Stock consisted of (i) 160,338 shares of Common Stock as payment of the Consulting Fee Compensation, and (ii) 64,134 shares of Common Stock as payment of the Discretionary Compensation.
Previous report
On November 16, 2023, the Company entered into an agreement with Agile Capital Funding (the “ACF Agreement”) pursuant to which the Company sold $693,500 in future receivables to ACF (the “ACF Receivable Amount”) in exchange for $450,000 in cash. The Company agreed to pay ACF $28,895.83 each week until the ACF Receivable Amount is paid in full.
Previous report
In order to secure payment and performance of the Company’s obligations to ACF under the ACF Agreement, the Company granted to ACF a security interest in the following collateral: all present and future accounts receivable. The Company also agreed not to create, incur, assume, or permit to exist, directly or indirectly, any lien on or with respect to any of such collateral.
Previous report
On December 6, 2023, the “Company entered into an inducement offer letter agreement (the “Inducement Letter”) with the Armistice Selling Shareholder of certain of the Company’s existing warrants to purchase up to a total of 4,972,203 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), consisting of: (i) 1,410,151 shares of Common Stock issuable upon the exercise of warrants issued on September 28, 2022 each at an exercise price of $3.546 per share with a term of five year (the “September 2022 Five Year Warrants”); (ii) 3,109,563 shares of Common Stock issuable upon the exercise of warrants issued on September 28, 2022 each at an exercise price of $3.546 per share with a term of seven and one half years (the “September 2022 Seven and a Half Year Warrants”); and (iii) 452,489 shares of Common Stock issuable upon the exercise of warrants issued on January 6, 2023 (the “January 2023 Warrants” and, together with the September 2022 Five Year Warrants and the September 2022 Seven and a Half Year Warrants, the “Existing Warrants).
Previous report
Pursuant to the Inducement Letter, the Armistice Selling Shareholder agreed to exercise for cash its Existing Warrants to purchase an aggregate of 4,972,203 shares of Common Stock at a reduced exercise price of $0.294 per share in consideration of the Company’s agreement to issue new common stock purchase warrants (the “New Warrants”), as described below, to purchase up to an aggregate of 9,944,406 shares of Common Stock (the “New Warrant Shares”). The Company received aggregate gross proceeds of $1,461,827.68 from the exercise of the Existing Warrants by the Holder, before deducting offering expenses payable by us. The transaction closed on December 7, 2023 (the “Closing Date”).
Previous report
The resale of the shares of the Common Stock underlying the Existing Warrants and 224,472 shares of Common Stock owned by Sapir LLC, a consultant engaged by the Company were registered pursuant to an existing registration statement on Form S-1 (File No. 333-275407), declared effective by the Securities and Exchange Commission (the “SEC”) on December 4, 2023.
Previous report
The Company also agreed to file a registration statement on Form S-1 (or other appropriate form if it is not then Form S-1 eligible) providing for the resale of the New Warrant Shares issued or issuable upon the exercise of the New Warrants (the “Resale Registration Statement”), within sixty (60) days after the Closing Date, and to use commercially reasonable efforts to have such Resale Registration Statement declared effective by the SEC within 120 days following the Closing Date and to keep the Resale Registration Statement effective at all times until no holder of the New Warrants owns any New Warrants or New Warrant Shares. The Company will have to pay partial liquidated damages pursuant to the Resale Registration Statement provision of the Inducement Letter if certain deadlines and requirements are not met. In the Inducement Letter, the Company agreed not to issue any shares of Common Stock or Common Stock equivalents or to file any other registration statement with the SEC (in each case, subject to certain exceptions) until sixty (60) days after the Closing Date. The Company also agreed not to effect or agree to effect any Variable Rate Transaction (as defined in the Inducement Letter) until one (1) year after the Closing Date (subject to an exception). In addition, the Company agreed in the Inducement Letter to grant the Holder a participation right in future financings until the date the principal amount of a promissory note issued to the Holder in January 2023 and as modified in October 2023 has been fully repaid.
Previous report
On December 12, On December 12, 2023, the Company received a letter (“Notice”) from the Listing Qualifications Department (the “Staff”) of The Nasdaq Capital Market (“Nasdaq”) informing the Company that because the closing bid price for the Company’s common stock listed on Nasdaq was below $1.00 for 30 consecutive trading days, the Company is not in compliance with the minimum bid price requirement for continued listing on the Nasdaq as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), the Company has a period of 180 calendar days from December 12, 2023, or until June 10, 2024, to regain compliance with the Minimum Bid Price Requirement. If at any time before June 10, 2024, the closing bid price of the Company’s common stock closes at or above $1.00 per share for a minimum of 10 consecutive trading days (which number days may be extended by Nasdaq), Nasdaq will provide written notification that the Company has achieved compliance with the Minimum Bid Price Requirement, and the matter would be resolved. The Notice also disclosed that in the event the Company does not regain compliance by June 10, 2024, the Company may be eligible for an additional 180-calendar day compliance period. To qualify for additional time, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for Nasdaq, with the exception of the bid price requirement, and would need to provide written notice of its intention to cure the deficiency during the second compliance period, by effecting a reverse stock split, if necessary. 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. If the Company is notified by Nasdaq that its securities will be subject to delisting, the Company may appeal the delisting determination and request a hearing before the Nasdaq Hearings Panel (the “Panel”). If the request for a Panel is timely made, any further suspension or delisting action would be stayed pending the conclusion of the hearing process and expiration of any extension that may be granted by the Panel. There can be no assurance that the Company will be able to satisfy the Nasdaq’s continued listing requirements, regain compliance with the Minimum Bid Price Requirement, the Minimum Stockholders’ Equity Requirement, and maintain compliance with other Nasdaq listing requirements.
Previous report
There can be no assurance that the Company will be able to satisfy the Nasdaq’s continued listing requirements, regain compliance with the Minimum Bid Price Requirement, and maintain compliance with other Nasdaq listing requirements.
Previous report
On January 10, 2024, the Company entered into an agreement with Agile Capital Funding, LLC (the “Agile Jan Agreement”) pursuant to which the Company sold $1,460,000 in future receivables to Agile Capital Funding, LLC (the “Agile Jan Receivable Amount”) in exchange for $1,000,000 in cash. The Company agreed to pay Agile Capital Funding, LLC (“Agile”) $52,142.86 each week until the Agile Receivable Amount is paid in full. In order to secure payment and performance of the Company’s obligations to Agile under the Agile Jan Agreement, the Company granted to Agile a security interest in the following collateral: all present and future accounts receivable. The Company also agreed not to create, incur, assume, or permit to exist, directly or indirectly, any lien on or with respect to any of such collateral. The proceeds from the sale of future receivables were used, in part, to pay the outstanding balance of the ACF Receivable Amount (as defined below).
Previous report
On January 23, 2024, the Company issued 200,000 shares of Common Stock to Smartsports LLC. Smartsports LLC is an investor relations consultant to the Company who is a party to a consulting agreement with the Company dated January 23, 2024 (the “Smartsports Consulting Agreement”). Pursuant to the Smartsports Consulting Agreement, the Company agreed to issue and deliver to Smartsports LLC 200,000 shares of its common stock as a consulting fee for the provision of investor relations services (the “Consulting Fee Compensation”) and use its commercially reasonable efforts to prepare and file with the Securities Exchange Commission a registration statement covering the resale of all of the Shares on Form S-1 as soon as is reasonably practicable.
Previous report
On January 29, 2024, the Company entered into an agreement with Cedar Advance LLC (the “Cedar Agreement”) pursuant to which the Company sold $1,183,200 in future receivables to Cedar Advance LLC (the “Cedar Receivable Amount”) in exchange for $752,000 in cash. The Company agreed to pay Cedar Advance LLC (“Cedar”) $39,440 each week until the Cedar Receivable Amount is paid in full. In order to secure payment and performance of the Company’s obligations to Cedar under the Cedar Agreement, the Company granted to Cedar a security interest in the following collateral: all present and future accounts receivable. The Company also agreed not to create, incur, assume, or permit to exist, directly or indirectly, any lien on or with respect to any of such collateral.
Previous report
The Company operates in the sports equipment and technology business. 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, providing AI technology and performance analytics for sports.
Previous report
Net sales increased $463,776, or 29%, during the three months ended January 31, 2024 as compared to the three months ended January 31, 2023. The increase was due to incremental sales being driven by Slinger Bag Pickleball as compared to the 3 months to 31, January 2023 as Slinger Bag Pickleball had not been introduced to the market at that time. This increase in net sales came despite on-going inventory shortage issues that resulted in significant delays to meeting consumer demand due to higher than planned sales orders. Had inventory been at our normal levels, sales would have been greater in this three month period.
Previous report
Cost of sales increased $240,887 or 45% during the three months ended January 31, 2024 as compared to the three months ended January 31, 2023, which is primarily due to the increase in net sales. Gross income increased $222,889, or 21%, during the three months ended January 31, 2024 as compared to the three months ended January 31, 2023. This improvement in gross income is driven by a combination of the higher levels of net sales and a greater efficiencies realized in our supply chain across both container rates and ocean freight.
Previous report
Selling and marketing expenses increased $464,853, or 172%, during the three months ended January 31, 2024 as compared to the three months ended January 31, 2023. This increase is largely driven by an increase in social media advertising across both Tennis and Pickleball, and other investments in our public relations presence. Marketing investment was also made behind the beta launch of the Slinger Bag App for tennis.
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Results of Operations for the Nine Months Ended January 31, 2024 and 2023
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Net sales
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Net sales decreased $147,232, or 2%, during the nine months ended January 31, 2024 as compared to the nine months ended January 31, 2023. The decrease was primarily due to inventory shortages in January 2024 due to higher than planned sales orders.
Previous report
Cost of sales decreased $601,500 or 11% during the nine months ended January 31, 2024 as compared to the nine months ended January 31, 2023, which is primarily due to the reduction in net sales combined with greater efficiencies realized in our supply chain, resulting in a gross margins of 37.8% and 31.2% for the nine months to 31, January 2024 and 2023 respectively. Gross income increased $454,268, or 19%, during the nine months ended January 31, 2024 as compared to the nine months ended January 31, 2023 due to the reduction in cost of sales resulting from reduced net sales and efficiencies realized in both container volumes and rates and associated ocean freight.
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Selling and marketing expenses
Previous report
Selling and marketing expenses decreased $91,709, or 7%, during the nine months ended January 31, 2024 as compared to the nine months ended January 31, 2023. This decrease is largely driven by a decrease in the costs associated with ambassador agreements that expired and were not renewed, offset by a net increase in spend against social media advertising and other investments in our public relations presence.
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General and administrative expenses
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Research and development costs
Previous report
Research and development costs decreased $65,164 or 100% during the nine months ended January 31, 2024 as compared to the nine months ended January 31, 2023. This decrease is primarily a result of our need to pause all development activity in the period due to limited cash flow being available for research and development investments.
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Loss from Operations
Previous report
Loss from operations improved $3,299,926 or 38% in the nine months ended 31 January 2024 as compared to the nine months ended January 31, 2023. This improvement was driven by a combination of increased gross income $454,268 or 19% coupled with a reduction in total operating expenses of $2,845,658 or 26%.
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Other expense
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Total other expense improved $12,136,713 or 125% during the nine months ended January 31, 2024 as compared to the nine months ended January 31, 2023. We recorded a gains in fair value of derivatives of $18,523,422 compared to $3,295,687, in the nine months to January 31, 2024 compared to January 31, 2023. Excluding this gain, we had other expenses totaling $16,058,511 for the period to January 31 2024 compared to $12,967,489 for the same period to January 31, 2023 respectively, an increase in expense of $3,091,022. The increases in these other expenses for the nine months ended January 31, 2024 as compared to January 31, 2023 was a reduction in amortization of debt discounts and interest paid to related parties offset by increased expenses in loss on conversion of accounts payable to common stock and derivative expenses.
Previous report
On June 8, 2023, the Company entered into a merchant cash advance agreement with Meged Funding Group (“Meged”) pursuant to which the Company sold $315,689 in future receivables to Meged (the “Meged Receivables Purchased Amount”) to in exchange for payment to the Company of $210,600 in cash less fees of $10,580. The Company agreed to pay Meged $17,538 each week until the Meged Receivables Purchased Amount is paid in full.
Previous report
On August 7, 2023, the Company entered into an agreement with UFS (the “UFS Agreement”) pursuant to which the Company sold $797,500 in future receivables (the “UFS Second Receivables Purchased Amount”) to UFS in exchange for payment to the Company of $550,000 in cash less fees of $50,000. The Company agreed to pay UFS $30,000 each week until the UFS Second Receivables Purchased Amount is paid in full.
Showing the first 40 of 45 passages. Open the source sections for the rest.
Reworded paragraphs (18)
Previous wording
On February 2, 2022, the Company entered into a share purchase agreement with Flixsense Pty, Ltd. (“Gameface”). As a result of the share purchase agreement, Gameface would become a wholly owned subsidiary of the Company.
Current wording
On February 2, 2022, the Company entered into a share purchase agreement with Flixsense Pty, Ltd. (“Gameface”). As a result of the share purchase agreement, Gameface became a wholly owned subsidiary of the Company.
Previous wording
The total loss on disposal of Foundation Sports and PlaySight amounted to $41,413,892 in the year ended April 30, 2023.
Current wording
The total loss on disposal of Foundation Sports and PlaySight amounted to $0 in the year ended April 30, 2024.
Previous wording
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. 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. 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. 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. The Company impaired all goodwill as of April 30, 2023.
Current wording
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. 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. 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, 2024. 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 $0 in the year ended April 30, 2024. The Company impaired all goodwill as of April 30, 2024.
Previous wording
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”). In addition, the Company did not meet the alternatives of listed securities or net income from continuing operations as of the date of the letter. 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. On January 22, 2024, the Company consummated and received a cash investment of $16,500,000 (as described in more detail below), which increased the company’s stockholder equity to $4,484,993, which has brought the Company back into compliance with the Minimum Stockholders’ Equity Requirement. On January 30, 2024, the Company received a letter from Nasdaq confirming that following the receipt of a an investment of $16.5 million as disclosed in the Company’s current report filed on Form 8-K on January 24, 2024 (i) the Company has regained compliance with the minimum shareholder equity requirement in Listing Rule 5550(b)(1) (the “Equity Rule”), as required by the Nasadaq Hearing Panel’s decision dated April 12, 2023, and (ii) in application of Listing Rule 5815(d)(4)(B), the Company will be subject to a mandatory panel monitor for a period of one year from the date of such letter. If, within that one-year monitoring period, the Company is no longer in compliance with the Equity Rule, then, notwithstanding Rule 5810(c)(2), the Company will not be permitted to provide Nasdaq with a plan of compliance with respect to such deficiency and Nasdaq will not be permitted to grant additional time for the Company to regain compliance with respect to such deficiency, nor will the Company be afforded an applicable cure or compliance period pursuant to Ruel 5810(c)(3). Instead, Nasdaq will issue a delist determination letter and the Company will have the opportunity to request a new hearing. The Company will have the opportunity to respond/present to the hearing panel as provided by Listing Rule 5815(d)(4)(C) and the Company’s securities may at that time be delisted from Nasdaq.
Current wording
Although the Company is currently in compliance with Nasdaq listing requirements, if the Company loses its compliance with the minimum shareholder equity requirement in Nasdaq Listing Rule 5550(b)(1) (the “Equity Rule”), then, notwithstanding Rule 5810(c)(2), the Company will not be permitted to provide Nasdaq with a plan of compliance with respect to such deficiency and Nasdaq will not be permitted to grant additional time for the Company to regain compliance with respect to such deficiency, nor will the Company be afforded an applicable cure or compliance period pursuant to Rule 5810(c)(3). Instead, Nasdaq will issue a delist determination letter and the Company will have the opportunity to request a new hearing. The Company will have the opportunity to respond/present to the hearing panel as provided by Listing Rule 5815(d)(4)(C) and the Company’s securities may at that time be delisted from Nasdaq.
Previous wording
On January 19, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with three investors (the “Investors”) for the issuance and sale to each investor of (i) 2,330,200 shares of common stock (the “Shares”) and (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase an aggregate of 25,169,800 shares of its common stock at a combined purchase price of $0.20 per share of the common stock for an aggregate amount of approximately $16.5 million (the “Offering”). The Pre-Funded Warrants have an exercise price of $0.00001 per share of common stock and are exercisable beginning on the date stockholder approval is received and effective allowing exercisability of Pre-Funded Warrants under Nasdaq rules until the Pre-Funded Warrants are exercised in full. The aggregate number of Shares to be issued is 6,990,600 and the aggregate number of Pre-Funded Warrants is 75,509,400.
Current wording
On January 19, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with three investors (the “January 2024 Investors”) for the issuance and sale to each investor of (i) 116,510 shares of Common Stock (the “Shares”) and (ii) pre-funded warrants to purchase an aggregate of 1,258,490 shares of Common Stock (the “Pre-Funded Warrants”) at a combined purchase price of $4 per share of Common Stock for an aggregate amount of approximately $16.5 million. The Pre-Funded Warrants have an exercise price of $0.0002 per share of Common Stock and became exercisable beginning on May 15, 2024, the date stockholder approval was received and effective, allowing exercisability of Pre-Funded Warrants under Nasdaq rules until the Pre-Funded Warrants are exercised in full. The aggregate number of shares issued to the January 2024 Investors is 349,530 and the aggregate number of Pre-Funded Warrants is 3,775,470.
Previous wording
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.”
Current wording
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.” Following the closing of the Acquisition and the separation of the Legacy Business, the Company’s historic operations will no longer be part of the Company’s operations and YYEM will be the Company’s operating subsidiary. The results of the Company’s operations for the three months ended July 31, 2024 reflect the Legacy Business operations and are not necessarily representative of what the results of operations of the Company (based on YYEM’s results of operations) will be following the closing of the Acquisition.
Previous wording
General and administrative expenses, which primarily consist of compensation (including share-based compensation) and other employee-related costs, as well as legal fees and fees for professional services, increased $914,179 or 50% during the three months ended January 31, 2024 as compared to the three months ended January 31, 2023. This increase is primarily driven by an increase in debt settlement, legal and other professional fees in the period.
Current wording
General and administrative expenses, which primarily consist of compensation (including share-based compensation) and other employee-related costs, as well as legal fees and fees for professional services, increased $0.88 million or 35% during the three months ended July 31, 2024 as compared to the three months ended July 31, 2023. This increase is primarily driven by an increase in debt settlement, issuance of share-based compensation to several employees and board directors and on-going legal and other professional fees related to the acquisition of YYEM and management of the company’s Nasdaq compliance within the period.
Previous wording
Research and development costs decreased $3,638 or 100% during the three months ended January 31, 2024 as compared to the three months ended January 31, 2023. This decrease is primarily driven by our need to pause all development activity in the period due to limited cash flow being available for investment.
Current wording
Research and development costs remained at $0 or 0% during the three months ended July 31, 2024 as compared to the three months ended July 31, 2023. This inactivity in research and development activity is primarily driven by the Company’s limited cash flow being available for investment, linked to our significant reduction in net sales.
Previous wording
Loss from operations increased by $1,152,505 or 111%% in the three months ended January 31, 2024 as compared to the three months ended January 31, 2023. This increase in loss in operations was driven by a combination of an $1,375,394 increase in total operating expenses recorded in the quarter, offset by an improvement in gross income of $222,889.
Current wording
Loss from operations increased by $1.4 million or 76% in the three months ended July 31, 2024 as compared to the three months ended July 31, 2023. This increase in loss in operations was driven by a combination of an $0.78 million increase in total operating expenses recorded in the quarter, coupled with a reduced in gross profit of $0.62 million.
Previous wording
Total other expense decreased $4,210,649 or 65% during the three months ended January 31, 2024 as compared to the three months ended January 31, 2023. We recorded an improvement in both amortization of debt discounts of $217,775 and in fair value of derivatives of $5,070,525. Excluding these improvements, we recorded other expenses totaling $3,102,141 and $2,024,490 for the periods to January 31, 2024 and 2023 respectively, an increase of $1,077,651. The increases in other expenses for the three months ended January 31, 2024 as compared to January 31, 2023 included an increase in derivative and interest expenses offset by a reduction in interest to related parties.
Current wording
Total other expense decreased $2.00 million or 196% during the three months ended July 31, 2024 as compared to the three months ended July 31, 2023. We recorded an improvement in both amortization of debt discounts of $0.78 million; in loss on conversion of accounts payable to common stock of $0.29 million; in fair value of derivatives of $2.15 million. Excluding these improvements, we recorded an increasein interest payments of $0.90 million for the periods to July 31, 2024 and 2023 respectively, an increase of 1290%.
Previous wording
Our financial statements have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future. We had an accumulated deficit of $154,607,884 as of January 31, 2024, 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. Our 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.
Current wording
Our financial statements have been prepared on a going concern basis, which assumes we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future. We had an accumulated deficit of $171,607,773 as of July 31, 2024, 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. Our 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.
Previous wording
The following is a summary of our cash flows from operating, investing and financing activities for the nine months ended January 31, 2024 and 2023:
Current wording
The following is a summary of our cash flows from operating, investing and financing activities for the three months ended July 31, 2024 and 2023:
Previous wording
We had cash and cash equivalents of $17,192,733 as of January 31, 2024, as compared to $202,095 as of April 30, 2023.
Current wording
We had cash and cash equivalents of $1,711,283 as of July 31, 2024, as compared to $229,705 as of April 30, 2024.
Previous wording
Net cash used in operating activities was $(2,748,446) during the nine months ended January 31, 2024, as compared to net cash used in operating activities of $(6,845,810) during the same period in 2023. Our net cash used in operating activities during the nine months ended January 31, 2024 was primarily the result of our net income of $(2,857,274) for the period, and our net non-cash expenses of $1,379,337, incorporating the change in fair value of derivative liability, reductions in shares and warrants issued for services, share-based compensation, amortization of debt discounts, interest and interest due to related parties, settlement expense, loss on depreciation, amortization and impairment expenses, as well as changes in our current assets and liabilities related to our operations. The most notable changes occurred in our accounts receivables. inventory and prepaid inventory which all significantly decreased in the nine month periods, together with significant decreases in accounts payable, accrued expenses, derivative liabilities, contingent consideration and an increases in accrued interest, current portion of notes payable, net of discount related and other current liabilities.
Current wording
Net cash used in operating activities was $(72,646) during the three months ended July 31, 2024, as compared to net cash used in operating activities of $803,363 during the same period in 2023. Our net cash used in operating activities during the three months ended July 31, 2024 was primarily the result of our net income of $(4,220,745) for the period, and our net non-cash expenses of $(965,550), incorporating the change in fair value of derivative liability, reductions in shares and warrants issued for services, share-based compensation, amortization of debt discounts, interest and interest due to related parties, settlement expense, loss on depreciation, amortization and impairment expenses, as well as changes in our current assets and liabilities related to our operations. The most notable changes occurred in our inventory and prepaid inventory which decreased in the three month periods, together with significant decreases in accounts payable, accrued expenses, derivative liabilities, contingent consideration and an increases in accounts receivable, accrued interest, current portion of notes payable, net of discount related and other current liabilities.
Previous wording
We incurred no investing activities in either of the nine-month periods ended January 31, 2024 and 2023.
Current wording
We incurred $0 and no investing activities in either of the three-month periods ended July 31, 2024 and 2023.
Previous wording
Net cash used in financing activities was $19,689,673 for the nine months ended January 31, 2024, as compared to net cash provided by financing activities of $6,481,772 for the same period in 2023. The changes is financing activities for the nine months ended January 31, 2024 primarily consisted of proceeds of $17,961,828 resulting from issuance of common stock and warrants, $3,728,000 from notes payable, offset by $710,216 in payments of notes payable to related parties and $1,289,939 in payments of notes payable. Changes in financing activities for the nine months ended January 31, 2023 consisted of proceeds of $9,194,882 resulting from issuance of common stock, offset with $62,434 in payments of notes to related parties and $4,040,676 in payment of notes payable.
Current wording
Net cash used in financing activities was $1,614,958 for the three months ended July 31, 2024, as compared to net cash provided by financing activities of $601,002 for the same period in 2023. The changes is financing activities for the three months ended July 31, 2024 primarily consisted of proceeds of $1,618,176 resulting from the exercise of warrants, $(3,218) from proceeds of notes payable, offset by $0 in payments of notes payable to related parties and $0 in payments of notes payable. Changes in financing activities for the three months ended July 31, 2023 consisted of 0$(298,834) in payments of notes to related parties and $(302,168) in payment of notes payable.
Previous wording
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 the Company received a total amount of $2,000,000. The loans bear interest at a rate of 8% per annum and are required to be repaid in full by July 31, 2024 or such other date as may be accepted by the lenders. The Company is not permitted to make any distribution or pay any dividends unless or until the loans are repaid in full.
Current wording
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 the Company received a total amount of $2,000,000. The loans bear interest at a rate of 0% per annum and are required to be repaid in full by July 31, 2024 or such other date as may be accepted by the lenders. The Company is not permitted to make any distribution or pay any dividends unless or until the loans are repaid in full. The company has subsequently agreed with the lenders to extend the repayment deadline to Jully 31, 2025.
Previous wording
There were $1,244,584 and $1,953,115 in outstanding borrowings from the Company’s related parties for the period ended January 31, 2024 and 2023, respectively. Accrued interest due to related parties as of January 31, 2024 and 2023 amounted to $917,957 and $ 917,957, respectively.
Current wording
There were $1,169,291 and $1,169,291 in outstanding borrowings from the Company’s related parties for the period ended July 31, 2024 and April 30, 2024, respectively. Accrued interest due to related parties as of July 31, 2024 and April 30, 2024 amounted to $917,957 and $917,957, respectively.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
On June 27, 2024, the Company (i) increased the number of authorized shares of common stock from 300,000,000 to 1,000,000,000 and (ii) effected a 1-for-20 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.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
The following are the results of our operations for the nine months ended January 31, 2024 as compared to 2023:
Previous report — wording carried elsewhere
Cost of sales and Gross income
Previous report — wording carried elsewhere
General and administrative expenses, which primarily consist of compensation (including share-based compensation) and other employee-related costs, as well as legal fees and fees for professional services, decreased $2,688,785 or 28% during the nine months ended January 31, 2024 as compared to the nine months ended January 31, 2023. This decrease is primarily driven by a decrease in share-based compensation as well as in both headcount and outside consulting costs and in all professional fees.
Previous report — wording carried elsewhere
Our net cash used in operating activities during the nine months ended January 31, 2024 was primarily the result of our net loss of $2,857,274 for the period and our net non-cash expenses of $1,279,377 as well as the changes in our operating current assets and liabilities.