The following dialogue of our monetary situation and outcomes of operations
needs to be learn along side the monetary statements and associated notes
included elsewhere on this report and our Annual Report on Form 10-Okay for the
12 months ended April 30, 2021. Certain statements on this dialogue and elsewhere
on this report represent forward-looking statements. See “Cautionary Statement
Regarding Forward Looking Information” elsewhere on this report. Because this
dialogue entails dangers and uncertainties, our precise outcomes could differ
materially from these anticipated in these forward-looking statements.
Overview and Description of Business
Lazex Inc. (“Lazex”) was included underneath the legal guidelines of the State of Nevada on
July 12, 2015. On August 23, 2019, the bulk proprietor of Lazex entered right into a
Stock Purchase Agreement with Slinger Bag Americas Inc., a Delaware company
(“Slinger Bag Americas”), which was 100% owned by Slinger Bag Ltd. (“SBL”), an
Israeli firm. In reference to the Stock Purchase Agreement, Slinger Bag
Americas acquired 20,000,000 shares of frequent inventory of Lazex for $332,239. On
September 16, 2019, SBL transferred its possession of Slinger Bag Americas to
Lazex in change for the 20,000,000 shares of Lazex acquired on August 23,
2019. As a consequence of these transactions, Lazex owned 100% of Slinger Bag
Americas and the only real shareholder of SBL owned 20,000,000 shares of frequent inventory
(roughly 82%) of Lazex. Effective September 13, 2019, Lazex modified its
identify to Slinger Bag Inc.
On October 31, 2019, Slinger Bag Americas acquired management of Slinger Bag
Canada, Inc., (“Slinger Bag Canada”) a Canadian firm included on November
3, 2017. There had been no property, liabilities or historic operational exercise of
Slinger Bag Canada at the moment.
On February 10, 2020, Slinger Bag Americas turned the 100% proprietor of SBL, alongside
with SBL’s wholly owned subsidiary Slinger Bag International (UK) Limited
(“Slinger Bag UK”), which was shaped on April 3, 2019. The proprietor of SBL
contributed it to Slinger Bag Americas for no consideration.
On June 21, 2021, Slinger Bag Americas entered right into a membership curiosity
buy settlement with Charles Ruddy to amass a 100% possession stake in
Foundation Sports Systems, LLC (“Foundation Sports”).
The operations of Slinger Bag Inc., Slinger Bag Americas, Slinger Bag Canada,
Slinger Bag UK, SBL and Foundation Sports are collectively known as the
“Company” or “Slinger.”
The Company operates within the sporting and athletic items enterprise. The Company is
the proprietor of the Slinger Launcher, a extremely moveable and inexpensive ball
launcher constructed into a straightforward to move wheeled trolley bag. The Slinger
Launcher permits anybody to easily and simply management the pace, frequency and
elevation of balls which are launched for follow, coaching or health functions.
The Company has initially targeted all its energies on the tennis market
worldwide, however is within the early phases of creating ball launchers for different
ball sports activities.
For the common tennis participant, the Slinger Launcher is far more than a tennis
ball launcher. It additionally features as a whole tennis bag with ample room for
racquets, sneakers, towels, water bottles and different equipment and can cost
cell phones and different gadgets.
Tennis ball machines have been round because the 1950’s after they had been launched
by Renne Lacoste. Improvements to efficiency had been made within the 1970’s when
Prince began its tennis enterprise on the again of its first product – Little
Prince – which was a vacuum operated ball machine. In the 1990’s the primary
battery operated machines got here to the market and since that point little or no, if
something, has modified within the construction of ball machine merchandise outdoors of added
computerization. Typically, the machines being marketed by conventional ball
machine manufacturers are massive, cumbersome and awkward to function. They are additionally very
costly – usually effectively above U.S. $1,000. Up till in the present day the overwhelming majority of
all tennis ball machines have offered to tennis services, with just a few being
offered on to tennis enjoying customers.
According to the Tennis Industry Association (www.tia.org) the one largest
problem dealing with tennis participation is the truth that 34% of lapsed gamers
cited a “lack of enjoying accomplice” as the rationale for them stopping to play
tennis. The Slinger Launcher goes a protracted solution to fixing this situation.
The international tennis market is regarded by trade specialists, governing
organizations, tennis manufacturers and tennis-specific market analysis corporations as
having 100 million energetic gamers globally, with as many customers once more being
avid followers of the game. Of this 100 million tennis participant market, 20 million
gamers are considered frequent or avid gamers – gamers who play usually –
not less than 1 time per 30 days. These avid gamers drive the entire tennis trade
and account for 80% of all tennis revenues worldwide.
1
It is that this avid participant market that the Company is targeted on penetrating with
its Slinger Launcher and related tennis equipment.
The Company intends to disrupt this conventional tennis market by creating a brand new
ball machine class – known as Slinger Launcher – and advertising and marketing moveable and
inexpensive Slinger Launchers on to avid, common tennis gamers.
Constructed inside a wheeled trolley tennis bag, a Slinger Launcher weighs
round 15kgs / 34lbs when empty. If saved with 72 balls inside the burden
will increase to 19kgs / 42lbs. It can simply be saved in a automobile trunk, wheeled to
the courtroom and arrange inside minutes to make use of. The Slinger Launcher is powered by a
6.6Ah Lithium battery that may last as long as 3.5 hours of play relying on the
settings getting used and frequency of use. The Slinger Launcher’s comfort as
a tennis bag mixed with its ease of operation and total efficiency as a
tennis ball launcher is the premise that the Company will goal direct gross sales
to
these avid gamers.
While the preliminary model focus is clearly on tennis, the Company is creating
comparable launchers to deal with different types of tennis across the globe which are
both quickly gaining new individuals or are already well-established sports activities
in their very own proper. These embody, however will not be restricted to, Pickleball (U.S.),
Soft Tennis (Japan), and Paddle Tennis (International markets), all of that are
presently in both improvement or testing and are deliberate for introduction
in
calendar 2022.
On December 3, 2020, Slinger signed an unique settlement with Flixsense Pty
Limited d/b/a Gameface for the event of a tennis particular synthetic
intelligence (AI) utility. The Company intends to introduce a market
disrupting tennis app for gamers of all ages and skills. This app will
present a variety of analytics and different providers and embody follow and
tennis health drills and actions, teaching ideas and recommendation and a full suite
of AI analytics. The Company will provide some providers free of cost and will
construct a tiered subscription mannequin for others. The app is predicted to be able to
launch to the market in calendar 2022.
In future years, the Company plans to enter new ball sport markets corresponding to
baseball, softball, and cricket, that are presently deliberate for introduction in
calendar 2023.
The Company delivers Slinger Launchers instantly from the ultimate meeting facility
in Xiamen, China to prospects both by direct cargo from the port in China,
or to 3rd get together logistics services in Columbia, SC (U.S.) to assist our
U.S. enterprise, Belleville, Ontario, Canada, Rotterdam, The Netherlands to
assist smaller distributors in Canada, Europe, the Middle East, Africa, and
Israel.
Additionally, we ship full containers of our Slinger Triniti tennis balls from
Wilson (our provider) in Thailand to the United States and Belgium for onward
distribution.
The Company has contracted with unique distributors globally. These embody
Japan, UK, Ireland, Switzerland, Scandinavian markets (protecting Denmark, Sweden,
Norway, Finland), Australia, New Zealand, Bulgaria, Czech Republic, Singapore,
Morocco, Slovenia, Slovkian Republic, Hungary, Croatia, Germany, Austria,
France, Italy, Spain, Portugal, Netherlands, Belgium and Luxembourg, Russia,
Middle East GCC markets, Egypt, Bangladesh, Pakistan, Malaysia, Greece, Panama,
South Africa, Hong Kong, Macau, China, Indonesia, Philippines, Ecuador and
Poland and we’re in varied phases of negotiation with different potential market
distribution corporations throughout the globe.
Strategic Brand Partnerships
The Company is actively engaged on securing a quantity of extremely seen
ground-breaking strategic partnerships throughout tennis. These partnerships will
each present the Company with co-branded merchandise to complement the core product
providing and, on the identical time, are anticipated to drive mutually useful
advertising and marketing campaigns geared toward reaching avid tennis gamers globally. Details of
such companions introduced and energetic in the present day embody:
? Wilson Sporting Goods: North America: The Company has entered a strategic
partnership with the worldwide chief in tennis, Wilson, for the provision of
co-branded Triniti tennis balls within the U.S. and Canada markets.
? Professional Tennis Registry (PTR): PTR is the world’s most prestigious
educating professional group with greater than 40,000 members. The Company has
partnered with PTR for the provision of Slinger Launchers to their membership.
? Peter Burwash International (PBI): A excessive profile group offering
teaching and tennis providers to excessive degree, top quality accommodations, resorts and
tennis services throughout the globe. The Company is the official provider of
Slinger Launchers to PBI, which shall be used at every location and PBI will provide
an affiliate marketing online program selling gross sales to its listing of international shoppers.
? DSV Logistics USA and OSL Logistics: DSV is one of the world’s main
suppliers of warehousing, freight forwarding and logistics. The Company will use
DSV warehousing providers within the U.S. to optimize logistical actions. OSL are
presently offering all freight forwarding for the U.S. markets and Europe as
effectively as third get together warehousing logistics in Rotterdam for Europe.
2
Competition
There are presently no rivals with merchandise which are much like the Slinger
Launcher, based mostly on its portability, affordability and tennis bag performance.
There are, nevertheless, different corporations that make tennis ball machines, together with
the next:
? Spinshot
? Lobster Sports
? Spinfire Pro 2
? Match Mate Rookie
? Sports Tutor
? Silent Partner
Raw Materials
All supplies used within the Slinger Launder can be found off-the-shelf. The
trolley bag is manufactured with 600D Polyester and has the CA65 certification
for the U.S. market. The launcher housing, Oscillator and Telescopic Ball Tube
components are produced utilizing an injection mould utilizing poly propylene combined with 30%
glass fibers. The digital motors, PCB boards and remote-control components are all
commonplace off-the-shelf objects.
Intellectual Property
As on the date hereof, the Company has utilized for worldwide design and
utility patent safety for its principal 3 merchandise: Slinger Launcher, Slinger
Oscillator and Slinger Telescopic Ball Tube. Patents have been utilized for in
all key markets together with the U.S., China, Taiwan, India, Israel and EU markets
and granted in China and Israel. Trademarks have been utilized for in all main
markets across the globe. Trademark safety has been utilized for and/or
obtained within the following international locations:
? U.S.
? Chile
? Taiwan
? Mexico
? EU
? Russia
? Poland
? Czech Republic
? Australia
? New Zealand
? China
? South Korea
3
? Vietnam
? Singapore
? India
? Canada
? Argentina
? Brazil
? United Arab Emirates*
? South Africa*
? Columbia*
? Israel*
? Japan*
? Switzerland*
? Indonesia*
? Malaysia*
? Thailand*
? Turkey*
*Protection is pending.
The Company is engaged in ongoing efforts to register extra logos throughout an
increasing listing of merchandise, providers and functions, that are in varied
phases of the registration course of.
Slinger Bag Inc. owns the rights to its Slingerbag.com area.
Strategy
The Company has a possibility to disrupt the standard tennis market
globally. The Company expects to drive 80% of its international revenues via its
direct-to-consumer go-to-market technique, whether or not that be via its on-line
e-commerce platform at www.slingerbag.com or via related e-commerce
platforms established and managed by its distribution community. The steadiness of
revenues shall be pushed via partnerships with main wholesalers,
federations and educating professional organizations and different transactions throughout varied
markets. The Company will function a third-party distributor construction in all
markets with the exception of the United States, the most important tennis market
globally, Canada and its founder’s house market of Israel. Distributor companions
may have unique territories and may have a acknowledged background inside the
tennis trade for his or her market in addition to having the monetary capability and
service infrastructure to aggressively develop the Slinger model. Uniquely within the
sports activities trade, all client orders obtained into Slingerbag.com from markets
outdoors the United States shall be routed again to our native distribution companions
to meet and to service their native prospects. All distributor companions will
buy with superior orders, both based mostly on a vendor-direct FOB Asia direct
ship or via 1 of our 3 international third get together distribution services on an obligation
paid foundation and at premium value value. Currently, the Company has signed a quantity
of unique distribution agreements in key markets and has on-going discussions
with different key potential distributor companions in different markets across the globe.
The United States market will stay a direct to client marketplace for Slinger. As
the most important tennis market on the planet with 17.4 million gamers of which 10.5
million are common / avid gamers, the United States is a key market each to
set up the Slinger model and to drive demonstrable development. Recently the
trade reported a big improve in U.S. tennis participation and
total quantity of tennis play events, one thing that has been replicated in
different key tennis markets across the globe. Direct to client gross sales shall be
supplemented by a number of main tennis wholesalers who handle massive
databases of coach, participant, faculty, highschool and membership shoppers. This market
shall be serviced out of a third-party logistics facility in West Columbia, SC
and operated by one of Slinger’s most popular international logistics companions, DSV, one
of the world’s main suppliers of freight-forwarding, logistics and
warehousing.
Brand Marketing
As a direct-to-consumer e-commerce model, all advertising and marketing exercise and promoting
media shall be centered round pushing customers to www.slingerbag.com and
changing them to purchases. Slinger has engaged a quantity of main businesses
to assist its international advertising and marketing efforts:
Brand Nation is a world class influencer advertising and marketing company based mostly in London. Brand
Nation will lead all influencer programming globally. Slinger has seeded about
50% of its deliberate 1,000 international influencers to this point. Influencers focused are
broad ranging and embody main sports activities, tennis, movie, TV, music and blogger
celebrities all recognized for the truth that they play tennis usually and have a
fan base in extra of 10,000 followers. All influencer exercise is rolled again
as much as the Slinger social media platforms as a way of producing vital
model consciousness and product curiosity.
4
Ad Venture Media Group is a New York based mostly main PPC (pay-per-click) company
whose work is grounded in refined scientific evaluation of client knowledge and
client traits and they’re acknowledged globally as leaders in paid search and
paid social media campaigns. Ad Venture Media will lead all Slinger PPC exercise
on a performance-based price construction and is briefed to drive client
engagement, via bespoke promoting campaigns which are aligned to our
product profitability aims.
In the United States market, we have now partnered with a company known as Team
HQS who will handle an affiliate marketing online program throughout U.S. based mostly educating
professionals, gamers, juniors and occasions. These associates shall be supplied
with distinctive affiliate marketing online codes to share with their social media followers
and different such communities that they’re related to and every will obtain an
affiliate marketing online price based mostly on revenues generated by customers buying
Slinger merchandise attributable to their distinctive code.
We proceed to judge every assist company on a month-to-month foundation and on the identical
time are regularly exploring new avenues to increase our attain to our core
prospects.
Each of our distributor companions around the globe are establishing their Slinger
distribution enterprise as Slinger itself would do if it was establishing a
Slinger subsidiary in every market. As such, every distributor can even undertake all
types of Slinger model advertising and marketing applications in addition to initiating new native
ideas of their very own – all geared toward reaching the avid/common tennis participant
instantly and making certain that the Slinger model message is constant across the
globe. Slinger has agreed a neighborhood advertising and marketing funds construction with every
distributor as half of its distribution settlement. This advertising and marketing funds shall be
primarily funded by the distributor accomplice with an extra contribution
coming from Slinger with the contribution being linked to the distributor’s
buy aims. Each distributor will execute native grassroots applications
together with demonstration days, native educating professional partnerships, specialist tennis
community communications, seeding of Slinger product regionally as essential to native
key market tennis influencers to additional improve the depth of the
influencer effort. Marketing {dollars} can even be allotted to Google, Facebook,
YouTube and different social media promoting spend and, the place acceptable,
authorised and overseen by Ad Venture Media Group.
Distribution Agreements
Slinger Bag Americas has entered into unique distribution agreements for
Slinger’s line of merchandise, together with, however not restricted to, tennis ball launcher
gadgets, tennis ball launcher equipment, sports activities luggage, tennis balls, tennis
courtroom equipment and different tennis associated merchandise within the following markets and
with the next distributors:
Minimum Purchase
Requirement of Slinger
Bag
Territory Distributor Tennis Ball Launchers
32,500 via the tip of
Japan Globeride Inc. January 2025
United Kingdom and Framework Sports & 9,000 via the tip of
Ireland Marketing Ltd May 2025
3,000 via the tip of
Switzerland Ace Distribution May 2025
Denmark, Finland, Norway 6,500 via the tip of
and Sweden Frihavnskompagniet ApS December 2025
1,000 via the tip of
Morocco Planet Sport Sarl December 2025
Sportsman Warehouse t/a 2,500 via the tip of
Australia Tennis Only 2025
Sporting Goods 100 via the tip of
New Zealand Specialists 2025
950 via the tip of
Bulgaria Ark Dream EOOD 2025
165 via the tip of
Chile Sporting Brands Ltda 2025
Croatia, Hungary and 380 via the tip of
Slovenia Go 4 d.o.o. 2025
Austria, Belgium, France,
Germany, Italy,
Luxembourg, Portugal, Dunlop International 120,000 via the tip
Spain and The Netherlands Europe Ltd of 2025
950 via the tip of
Singapore Tennis Bot Pte Ltd 2025
10,000 via the tip of
India Racquets4U 2025
2,050 via the tip of
Israel Eran Shine 2025
Bahrain, Bangladesh,
Egypt, Kuwait, Maldives,
Oman, Pakistan, Qatar,
Saudi Arabia, Sri Lanka,
Tunisia and United Arab 3,000 via the tip of
Emirates Color Sports Inc 2025
380 via the tip of
Greece Elsol 2025
50 via the tip of
Panama Orange Pro 2021
1,900 via the tip of
Russia Neva Sport 2025
500 via the tip of
Malaysia Tennis Bot 2025
Czech and Slovak 3,000 via the tip of
Republics RaketSport s.r.o 2025
5,000 via the tip of
South Africa Golf Racket Pty Ltd 2025
750 via the tip of
Hong Kong and Macau Tennis Bot 2025
650 via the tip of
Indonesia and Philippines Tennis Bot 2026
Xiamen Powerway Sports 17,500 via the tip of
China Co. Ltd 2026
1,850 via the tip of
Poland Frameworks Sports Poland 2026
Brandsinc SA / Siati 240 via the tip of
Ecuador Express 2026
Total 223,915
5
Brand Endorsements
We have reached agreements with a number of globally acknowledged tennis gamers and
coaches to turn out to be model ambassadors.
Tommy Haas (former ATP #2 Player) has been appointed the Slinger Bag Chief
Ambassador. In this function Tommy will assist Slinger in constructing out its international
ambassador crew targeted on figuring out ambassadors in our key international enterprise
markets of the U.S., Japan, Europe, Australia, China, Brazil and India. Tommy
can even be very energetic supporting and selling Slinger throughout the globe with
private appearances at Slinger occasions and by way of on-line coaching and drill movies.
Mike and Bob Bryan (aka the Bryan Brothers – the foremost doubles crew within the
tennis world) have prolonged their ambassador agreements and will proceed to
function prominently in our advertising and marketing actions and messaging.
Additionally, we have now model endorsements with the next athletes and
coaches:
? Eugenie Bouchard
? Luke and Murphy Jensen (aka the Jensen Brothers)
? Darren Cahill
? Nick Bollettieri
? Patrick Mouratoglou
? Dustin Brown
Each of the foregoing athletes and coaches is or was both a world-ranked
singles or doubles tennis participant or, within the case of Nick Bollettieri and Patrick
Mouratoglou, the coach of a quantity of world-ranked tennis gamers, has a big
following of followers and supporters and is energetic throughout many points of tennis
in the present day.
The Professional Tennis Registry (PTR) – a United States-based educating trainer
affiliation with roughly 40,000 members will turn out to be a non-exclusive
strategic accomplice for Slinger with all their members in a position to entry an affiliate
member half of our web site.
Peter Burwash International (PBI) – a United States-based, extremely revered,
international tennis providers firm arrange by Peter Burwash some 35 years in the past. PBI
supplies tennis applications and different tennis providers to as many as 56 of the
globes main accommodations and resorts. Slinger Launchers shall be out there to make use of at
every resort and the PBI crew shall be actively selling Slinger as half of
our
affiliate marketing online exercise.
PTCA Central Europe – a European coach group of main touring professional
coaches and they, like others, will undertake an affiliate marketing online strategy.
Tie Break 10s – a worldwide group that owns and operates Tie Break 10 occasions
each independently and in partnership with main international tour occasions, e.g.,
Indian Wells. These occasions contain prime gamers enjoying ‘tie-break’ matches with
the occasion totally accomplished in a single night and with a big money prize for
the winner. Slinger shall be promoted at every of these occasions and shall be
out there for followers to check out in addition to the Slinger model identify being
prominently used on Tie Break 10s social media.
Tennis One App – a United States-based firm that has developed and
efficiently marketed an all-inclusive tennis app for gamers throughout the globe.
Slinger has engaged with Tennis One to assist its coaches nook section – a
weekly podcast sequence and in doing so advantages from the model publicity out there
via the attain of the customers utilizing the app regularly.
Functional Tennis – an Ireland based mostly social media tennis weblog web site with an
extra of 250,000 followers. Slinger is engaged with Functional Tennis in a
selection of methods and is the presenting sponsor of its weekly Tennis Podcast.
We are presently in discussions with different organizations, occasions, outstanding
coaches and gamers and must date seeded Slinger merchandise to 12 of the Top 20
ATP male gamers, 5 of the highest 20 WTA ladies gamers, plus quite a few different
top-class touring and educating professionals.
Throughout 2020 we sponsored a number of outstanding tennis occasions, e.g., Battle of
the Brits, Tie Break 10s (all proven stay throughout the globe).
Research and Development
The Company is concerned in extra analysis and improvement of transportable,
inexpensive and player-enhancing ball launching machines and related recreation
enchancment merchandise for all ball sports activities. Following a profitable launch of its
tennis ball launcher, Slinger is presently area testing its new pickleball,
paddle and smooth tennis launchers, that are anticipated to be launched to the
market in calendar 2022. Slinger plans to introduce comparable transportable,
versatile and inexpensive ball launchers for baseball, softball, cricket,
badminton and different excessive participation ball sports activities over the course of the subsequent 3
years. In this connection, on September 10, 2020, Slinger entered into an
settlement with Igloo Design, which is similar firm that designed the Slinger
Launcher for tennis, for a Slinger ball launcher for baseball and softball. This
improvement commenced within the second half of 2020 and preliminary design concepts and
additional course have been supplied.
We retain outdoors consultants to supply analysis and product design providers
and every marketing consultant has a particular experience (e.g., molding expertise,
electronics, product design, bag design, as examples). We are also working with
a choose group of extremely certified and resourceful third-party suppliers in
Asia. We are regularly striving to determine product enhancements, new ideas
and enchancment to the manufacturing course of on an on-going every day foundation. In respect
of any new undertaking, administration supplies detailed briefs, market knowledge, product
value targets, aggressive evaluation, timelines and undertaking value objectives to both
the product consultants or distributors and manages them to agreed upon key
efficiency indicators (“KPIs”). These KPI’s embody, however will not be restricted to:
(i) manufacturing to focus on prices; (ii) agreed improvement timelines; (iii)
established high quality standards; and (iv) outlined efficiency standards.
We additionally retain specialist trademark and patent attorneys and work with these
attorneys on the initiatives, as wanted.
Government Regulation
Both Slinger Launcher and Slinger Oscillator meet all of the U.S. authorities
necessities for electrical, radio wave and battery requirements in addition to having
all mandatory and required certification to facilitate international advertising and marketing and
gross sales of these merchandise.
6
Results of Operations for the Three Months Ended October 31, 2021 and 2020
The following are the outcomes of our operations for the three months ended
October 31, 2021 as in comparison with 2020:
For the Three Months Ended
October 31, October 31,
2021 2020 Change
(Unaudited) (Unaudited)
Net gross sales $ 5,400,542 $ 2,620,068 $ 2,780,474
Cost of gross sales 3,315,605 1,579,750 1,735,855
Gross revenue 2,084,937 1,040,318 1,044,619
Operating bills:
Selling and advertising and marketing bills 887,809 397,922
489,887
General and administrative bills 36,197,888 829,510
35,368,378
Research and improvement prices 103,318 15,439
87,879
Total working bills 37,189,015 1,242,871 35,946,144
Loss from operations (35,104,078 ) (202,553 ) (34,901,525 )
Other expense (revenue):
Amortization of debt reductions 2,629,069 52,543
2,576,526
Loss on extinguishment of debt 1,978,295 1,999,487 (21,192 )
Induced conversion loss – 51,412 (51,412 )
Gain on change in honest worth of
derivatives (4,803,569 ) – (4,803,569 )
Loss on issuance of convertible
notes 3,689,369 –
3,689,369
Interest expense – associated get together 22,495 144,085
(121,590 )
Interest expense, internet 205,620 74,046 131,574
Total different expense 3,721,279 2,321,573 1,399,706
Loss earlier than revenue taxes (38,825,357 ) (2,524,126 ) (36,301,231 )
Provision for revenue taxes – – –
Net loss $ (38,825,357 ) $ (2,524,126 ) $ (36,301,231 )
Net gross sales
Net gross sales elevated $2,780,474, or 106%, through the three months ended October
31, 2021 as in comparison with the three months ended October 31, 2020. The improve is
resulting from a rise within the quantity of new orders positioned on the Company’s web site
and from its worldwide distributors and fulfilled through the three months
ended October 31, 2021 as in comparison with the three months ended October 31, 2020
when the product was nonetheless comparatively new to the market. As of October 31, 2021,
we had deferred income of $71,242 representing quantities obtained for models that
haven’t been shipped to prospects. We anticipate these orders to be fulfilled and
the gross sales to be acknowledged within the Company’s subsequent fiscal quarter.
Cost of gross sales and Gross revenue
Cost of gross sales elevated $1,735,855, or 110%, through the three months ended
October 31, 2021 as in comparison with the three months ended October 31, 2020, which
was primarily as a result of improve in internet gross sales. Gross revenue elevated
$1,044,619, or 100%, through the three months ended October 31, 2021 as in contrast
to the three months ended October 31, 2020. The slight lower in gross margin
as in comparison with prior 12 months is primarily resulting from elevated freight and obligation prices
within the present 12 months as in comparison with prior 12 months.
7
Selling and advertising and marketing bills
Selling and advertising and marketing bills elevated $489,887, or 123%, through the three
months ended October 31, 2021 as in comparison with the three months ended October 31,
2020. This improve is basically pushed by a rise in social media
promoting, sponsorships, and different investments in our public relations
presence within the present 12 months so as to drive gross sales and construct model consciousness.
General and administrative bills
General and administrative bills, which primarily consist of compensation
(together with share-based compensation) and different employee-related prices, as effectively
as authorized charges and charges for skilled providers, elevated $35,368,378 throughout
the three months ended October 31, 2021 as in comparison with the three months ended
October 31, 2020. This improve is primarily pushed by a rise of
$32,381,309 of share-based compensation associated to warrants granted to
workers, a $681,155 improve in expense associated to shares and warrants issued
in reference to providers the bulk of which relate to the warrants issued
to the lead placement agent as half of the issuance of the Convertible Notes,
and a $1,000,000 improve in authorized charges associated to closing prices incurred as
half of the acquisitions of PlaySight Interactive Ltd. and Flixsense Pty Ltd.
d/b/a Gameface through the three months ended October 31, 2021. The the rest of
the rise is basically resulting from a rise in compensation expense resulting from
elevated headcount to assist the continued development of the enterprise in addition to
the acquisition of Foundation Sports in 2021.
Research and improvement prices
Research and improvement prices elevated $87,879 through the three months ended
October 31, 2021 as in comparison with the three months ended October 31, 2020. This
improve is primarily pushed by our funding in a brand new platform and app that
will combine synthetic intelligence (AI) expertise to supply extra worth to
our prospects, which we started creating in December 2020, in addition to the
continued improvement and testing of launchers for brand spanking new ball sports activities which are
anticipated to be delivered to market sooner or later.
8
Other expense
Total different expense elevated $1,399,706 through the three months ended October
31, 2021 as in comparison with the three months ended October 31, 2020. The improve
was primarily as a result of loss on the issuance of the Convertible Notes as effectively
as a rise in amortization of debt reductions and curiosity expense, internet due
to the issuance of the Convertible Notes through the three months ended October
31, 2021. These will increase had been partially offset by the elevated acquire on the
change in honest worth of derivatives in addition to a lower within the loss on
extinguishment of debt, induced conversion loss, and associated get together curiosity
expense consequently of decrease associated get together debt balances 12 months over 12 months.
Results of Operations for the Six Months Ended October 31, 2021 and 2020
The following are the outcomes of our operations for the six months ended October
31, 2021 as in comparison with 2020:
For the Six Months Ended
October 31, October 31,
2021 2020 Change
(Unaudited) (Unaudited)
Net gross sales $ 7,938,115 $ 3,185,053 $ 4,753,062
Cost of gross sales 5,067,956 2,516,650 2,551,306
Gross revenue 2,870,159 668,403 2,201,756
Operating bills:
Selling and advertising and marketing bills 1,594,906 699,940
894,966
General and administrative bills 38,592,687 1,588,778
37,003,909
Research and improvement prices 277,366 43,549
233,817
Total working bills 40,464,959 2,332,267 38,132,692
Loss from operations (37,594,800 ) (1,663,864 ) (35,930,936 )
Other expense (revenue):
Amortization of debt reductions 2,650,285 286,251
2,364,034
Loss on extinguishment of debt 7,096,730 1,432,820
5,663,910
Induced conversion loss – 51,412 (51,412 )
Gain on change in honest worth of
derivatives (9,130,913 ) – (9,130,913 )
Loss on issuance of convertible
notes 3,689,369 –
3,689,369
Interest expense – associated get together 78,728 316,549
(237,821 )
Interest expense, internet 281,670 147,256 134,414
Total different expense 4,665,869 2,234,288 2,431,581
Loss earlier than revenue taxes (42,260,669 ) (3,898,152 ) (38,362,517 )
Provision for revenue taxes – – –
Net loss $ (42,260,669 ) $ (3,898,152 ) $ (38,362,517 )
Net gross sales
Net gross sales elevated $4,753,062, or 149%, through the six months ended October 31,
2021 as in comparison with the six months ended October 31, 2020. The improve is due
to a rise within the quantity of new orders positioned on the Company’s web site and
from its worldwide distributors and fulfilled through the six months ended
October 31, 2021 as in comparison with the six months ended October 31, 2020 when a
massive portion of the orders through the first three months of the 12 months had been
associated to the Kickstarter and Indiegogo crowdfunding campaigns initiated in
fiscal 12 months 2019.
Cost of gross sales and Gross revenue
Cost of gross sales elevated $2,551,306, or 101%, through the six months ended October
31, 2021 as in comparison with the six months ended October 31, 2020, which was
primarily as a result of improve in internet gross sales. Gross revenue elevated $2,201,756,
or 329%, through the six months ended October 31, 2021 as in comparison with the six
months ended October 31, 2020.
9
The improve in gross margin is basically as a result of first quarter of the prior
12 months leading to a gross loss on internet gross sales resulting from (1) discounted pricing on the
preliminary crowdfunding orders, (2) as achievement was later than initially
scheduled we fulfilled orders with the “deluxe” model of launcher (together with
all options), in addition to tennis balls, each of which elevated value of gross sales,
and (3) resulting from sanctions by the U.S. towards Chinese sourced merchandise, the
import obligation was raised on all launchers introduced into the U.S. growing our
value of gross sales. As a consequence, our value of gross sales exceeded preliminary gross sales values
raised in our crowdfunding campaigns. As of the start of the third quarter
within the prior 12 months, considerably all of the preliminary crowdfunding orders had
been
fulfilled.
Selling and advertising and marketing bills
Selling and advertising and marketing bills elevated $894,966, or 128%, through the six
months ended October 31, 2021 as in comparison with the six months ended October 31,
2020. This improve is basically pushed by a rise in social media
promoting, sponsorships, and different investments in our public relations
presence within the present 12 months so as to drive gross sales and construct model consciousness.
General and administrative bills
General and administrative bills, which primarily consist of compensation
(together with share-based compensation) and different employee-related prices, as effectively
as authorized charges and charges for skilled providers, elevated $37,003,909 throughout
the six months ended October 31, 2021 as in comparison with the six months ended
October 31, 2020. This improve is primarily pushed by a rise of
$32,381,309 of share-based compensation associated to warrants granted to
workers, a $1,233,883 improve in expense associated to shares and warrants
issued in reference to providers the bulk of which relate to the warrants
issued to the lead placement agent as half of the issuance of the Convertible
Notes and shares and warrants issued to model ambassadors, and a $1,000,000
improve in authorized charges associated to closing prices incurred as half of the
acquisitions of PlaySight Interactive Ltd. and Flixsense Pty Ltd. d/b/a Gameface
through the six months ended October 31, 2021. The the rest of the rise is
largely resulting from a rise in compensation expense resulting from elevated headcount to
assist the continued development of the enterprise in addition to the acquisition of
Foundation Sports in 2021.
Research and improvement prices
Research and improvement prices elevated $233,817 through the six months ended
October 31, 2021 as in comparison with the six months ended October 31, 2020. This
improve is primarily pushed by our funding in a brand new platform and app that
will combine synthetic intelligence (AI) expertise to supply extra worth to
our prospects, which we started creating in December 2020, in addition to the
continued improvement and testing of launchers for brand spanking new ball sports activities which are
anticipated to be delivered to market sooner or later.
Other expense
Total different expense elevated $2,431,581 through the six months ended October 31,
2021 as in comparison with the six months ended October 31, 2020. The improve was
primarily as a result of loss on the issuance of the Convertible Notes, a rise
in loss on extinguishment of debt consequently of the conversion of the notes
payable – associated get together, and will increase in amortization of debt reductions and
curiosity expense, internet as a result of issuance of the Convertible Notes through the
six months ended October 31, 2021. These will increase had been partially offset by an
elevated acquire on the change in honest worth of derivatives in addition to a lower
in induced conversion loss and associated get together curiosity expense consequently of
decrease associated get together debt balances 12 months over 12 months.
Liquidity and Capital Resources
Our monetary statements have been ready on a going concern foundation, which
assumes we will understand our property and discharge our liabilities in
the conventional course of enterprise for the foreseeable future. We had an gathered
deficit of $71,083,942 as of October 31, 2021, and extra losses are anticipated
within the improvement of the enterprise. Accordingly, there’s substantial doubt
about our skill to proceed as a going concern. Our monetary statements do
not embody any changes associated to the recoverability and classification of
property or the quantities and classification of liabilities that may be mandatory
ought to we be unable to proceed as a going concern.
10
The skill to proceed as a going concern depends upon our producing
worthwhile operations sooner or later and/or with the ability to receive the mandatory
financing to fulfill our obligations and repay our liabilities arising from regular
enterprise operations after they turn out to be due. Management intends to finance
working prices over the subsequent twelve months with current money available, loans
from associated events, and/or non-public placement of debt and/or frequent inventory.
The following is a abstract of our money flows from working, investing and
financing actions for the six months ended October 31, 2021 and 2020:
For the Six Months Ended
October 31, October 31,
2021 2020
Net money utilized in working actions $ (5,999,433 ) $ (1,544,039 )
Net money utilized in investing actions (1,400,000 )
–
Net money supplied by financing actions 8,209,420 2,120,000
We had money and money equivalents of $1,747,661 as of October 31, 2021, as
in comparison with $928,796 as of April 30, 2021.
Net money utilized in working actions was $5,999,433 through the six months ended
October 31, 2021, as in comparison with $1,544,039 throughout the identical interval in 2020. Our
internet money utilized in working actions through the six months ended October 31,
2021 was primarily the consequence of our internet loss of $42,260,669 for the interval as
effectively as will increase in stock, pay as you go bills and different present property, and
accounts receivable in addition to decreases in accrued payroll and bonuses and
deferred income through the interval, which was partially offset by internet non-cash
bills of $38,424,269 and will increase in accounts payable and accrued bills
and accrued curiosity – associated get together through the interval. Our internet money utilized in
working actions through the six months ended October 31, 2020 was primarily
the consequence of our internet loss of $3,898,152 for the interval in addition to will increase in
stock and accounts receivable through the interval, which was partially offset
by internet non-cash bills of $1,954,328, will increase in accounts payable and
accrued bills, accrued payroll and bonuses, deferred income and accrued
curiosity – associated get together in addition to a lower in pay as you go bills and different
present property through the interval.
Net money utilized in investing actions was $1,400,000 and $0 for the six months
ended October 31, 2021 and 2020. Our internet money utilized in investing actions
through the six months ended October 31, 2021 consisted of $1,400,000 in
issuances associated to a word receivable.
Net money supplied by financing actions was $8,209,420 for the six months
ended October 31, 2021, as in comparison with $2,120,000 for a similar interval in 2020.
Cash supplied by financing actions for the six months ended October 31, 2021
primarily consisted of proceeds of $11,000,000 from convertible notes payable
and proceeds of $1,000,000 from notes payable with a associated get together, which was
partially offset by a $2,000,000 compensation of a word payable, a $1,000,000
compensation of associated get together notes payable and $800,251 in debt issuance prices
associated to the convertible notes payable. Cash supplied by financing actions
for the six months ended October 31, 2021 consisted of proceeds of $2,000,000
from notes payable with a associated get together and proceeds of $120,000 from a word
payable.
11
Description of Indebtedness
Notes Payable – Related Party
There had been no excellent borrowings from the Company’s associated get together lender as
of October 31, 2021. Accrued curiosity resulting from this associated get together as of October
31, 2021 amounted to $821,925.
See Note 5 to the condensed consolidated monetary statements for extra
data.
Convertible Notes Payable
On August 6, 2021, the Company consummated the closing (the “Closing”) of a
non-public placement providing (the “Offering”) pursuant to the phrases and situations
of that sure Securities Purchase Agreement, dated as of August 6, 2021 (the
“Purchase Agreement”), between the Company and sure accredited buyers (the
“Purchasers”). At the Closing, the Company offered to the Purchasers (i) 8% Senior
Convertible Notes (the “Convertible Notes”) in an combination principal quantity of
$11,000,000 and (ii) warrants to buy as much as 7,333,334 shares of frequent inventory
of the Company (the “Warrants” and along with the Convertible Notes, the
“Securities”). The Company obtained an combination of $11,000,000 in gross
proceeds from the Offering, earlier than deducting providing bills and commissions.
Total excellent borrowings associated to the Convertible Notes as of October 31,
2021 had been $11,000,000. The excellent quantity is internet of whole reductions of
$8,372,222 for a internet guide worth of $2,627,778 as of October 31, 2021.
See Note 6 to the condensed consolidated monetary statements for extra
data.
Note Payable
On April 15, 2021, the Company entered right into a $2,000,000 word payable (the
“Note”). The Note matures April 14, 2023 and bears curiosity at fifteen p.c
(15%) per 12 months. The Company pays curiosity at maturity, at which period all
principal and unpaid curiosity is due.
On August 6, 2021, the Company used the web proceeds from the issuance of the
Convertible Notes to pay 100% of the excellent principal and accrued curiosity
of the Note.
See Note 7 to the condensed consolidated monetary statements for extra
data.
Future quantities due as of October 31, 2021 are summarized as follows:
Payments due by interval
Total Less than 1 12 months 1-3 years 3-5 years More than 5 years
Convertible notes payable $ 11,000,000 $ 11,000,000 $
– $ – $ –
Total $ 11,000,000 $ 11,000,000 $ – $ – $ –
We anticipate that working capital necessities will proceed to be funded via a
mixture of our current funds, money flows from operations and additional
issuances of debt and/or securities. Our working capital necessities are
anticipated to extend in step with the expansion of our enterprise.
Existing working capital, additional advances and debt devices, and anticipated
money circulate are anticipated to be sufficient to fund our operations over the subsequent
twelve months. We haven’t any strains of credit score or different financial institution financing preparations.
Generally, we have now financed operations to this point via the proceeds of non-public
placement of fairness and debt devices. In reference to our marketing strategy,
administration anticipates extra will increase in working bills and capital
expenditures regarding the (i) acquisition of stock; (ii) developmental
bills related to a start-up enterprise; and (iii) advertising and marketing bills. We
intend to finance these bills with additional issuances of securities and debt
issuances. Thereafter, we anticipate we might want to elevate extra capital and
generate revenues to fulfill long-term working necessities. Additional issuances
of fairness or convertible debt securities will lead to dilution to our present
shareholders. Further, such securities might need rights, preferences or
privileges senior to our frequent inventory. Additional financing might not be out there
upon acceptable phrases, or in any respect. If sufficient funds will not be out there or not
out there on acceptable phrases, we could not be capable of take benefit of
potential new enterprise endeavors or alternatives, which might considerably
and materially limit our enterprise operations.
Off-Balance Sheet Arrangements
We haven’t any off-balance sheet preparations.
Effect of Inflation and Changes in Prices
We don’t consider that inflation and modifications in costs may have a cloth
impact on our operations.
Going Concern
Our impartial registered public accounting agency auditors’ report accompanying
our April 30, 2021 monetary statements contained an explanatory paragraph
expressing substantial doubt about our skill to proceed as a going concern.
The monetary statements have been ready assuming that we are going to proceed as a
going concern, which contemplates that we are going to understand our property and fulfill
our liabilities and commitments within the atypical course of enterprise.
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