SEC Form 10-K/A filed by Connexa Sports Technologies Inc. (Amendment)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 2)
(Mark One)
For
the fiscal year ended
For the transition period from _____________ to _____________
Commission
File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices, including Zip Code)
(Registrant’s Telephone Number, including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933. Yes ☐
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934. Yes ☐
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
reporting company | |
| Emerging
growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
The
aggregate market value of the common equity voting shares of the registrant held by non-affiliates on October 31, 2022, the registrant’s
most recently completed second fiscal quarter, was approximately $
The number of shares outstanding of the registrant’s Common Stock, $0.001 par value per share, as of September 14, 2023, was .
EXPLANATORY NOTE
This Amendment No. 2 is being filed solely to correct the date in respect of the Company’s financial position within the Report of Independent Registered Public Accounting Firm. This Amendment No. 2 includes: Item 8 of Part II “Financial Statements and Supplementary Data” in its entirety and without change from the Original 10-K other than the correction of the audit periods in the Report of Independent Registered Public Accounting Firm in the Original 10-K and Item 15 of Part IV, which, pursuant to the rules of the Securities and Exchange Commission, reflects currently dated certifications from the Company’s Chief Executive Officer and Chief Financial Officer, which are filed as exhibits to this Amendment No. 2.
Except for the foregoing amended information, this Amendment No. 2 does not amend or update any other information contained in the Original 10-K as amended by Amendment No. 1 or reflect events that have occurred after the filing the Original 10-K (including, but not limited to, the 1-40 reverse stock split of the Company’s common stock effected on September 25, 2023). Accordingly, this Amendment No. 2 should be read in conjunction with the Original 10-K and Amendment No. 1.
ITEM 8. FINANCIAL STATEMENTS
The financial statements and supplementary financial information required by this Item 8 are set forth immediately below and are incorporated herein by reference.
INDEX TO AUDITED FINANCIAL STATEMENTS
CONNEXA SPORTS TECHNOLOGIES INC.
TABLE OF CONTENTS
| F-1 |
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of
CONNEXA SPORTS TECHNOLOGIES INC.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Connexa Sports Technologies Inc (the ‘Company’) as of April 30, 2023 and 2022, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for the year ended April 30, 2023 and 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2023 and 2022, and the results of its operations and its cash flows for the years ended April 30, 2023 and 2022, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, the Company suffered an accumulated deficit of $(151,750,610), net loss of $(71,153,685) and a negative working capital of $(18,775,991). These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regards to these matters are also described in Note 2 to the financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. Communication of critical audit matters does not alter in any way our opinion on the financial statements taken as a whole and we are not, by communicating the critical audit matters, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.
| F-2 |
Complex Debt and Equity Transaction on disposal of PlaySight.
As disclosed in Note 16, on November 27, 2022, the company disposed of one of its subsidiaries, and the Company entered into debt and/or equity transactions and agreements that contained terms and provisions that were uncommon in practice. Due to the unusual nature of the agreements, ensuring the accounting for the transactions was challenging, subjective, and required complex auditor judgment, including detailed analysis and interpretation of accounting standards.
In order to audit these significant unusual transactions, we reviewed the Company analysis and had to perform a significant amount of research in order to gain comfort in the accounting for each.
(Chartered Accountants)
We have served as the Company’s auditor since 2023.
April 10, 2024
| F-3 |
| CONNEXA SPORTS TECHNOLOGIES, INC. |
| CONSOLIDATED BALANCE SHEETS (IN US$) |
| APRIL 30, 2023 AND2022 |
| APRIL 30, 2023 | APRIL 30, 2022 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories, net | ||||||||
| Prepaid inventory | ||||||||
| Contract assets | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Current assets of discontinued operations | ||||||||
| Total Current Assets | ||||||||
| Non-Current Assets: | ||||||||
| Note receivable - former subsidiary | ||||||||
| Fixed assets, net of depreciation | ||||||||
| Intangible assets, net of amortization | ||||||||
| Goodwill | ||||||||
| Non-current assets of discontinued operations | ||||||||
| Total Non-Current Assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
| LIABILITIES | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Related party purchase obligation | ||||||||
| Contract liabilities | ||||||||
| Accrued interest | ||||||||
| Accrued interest - related party | ||||||||
| Current portion of notes payable, net of discount | ||||||||
| Current portion of convertible notes payable, net of discount | ||||||||
| Derivative liabilities | ||||||||
| Contingent consideration | ||||||||
| Other current liabilities | ||||||||
| Current liabilities of discontinued operations | ||||||||
| Total Current Liabilities | ||||||||
| Long-Term Liabilities: | ||||||||
| Notes payable related parties, net of current portion | ||||||||
| Non-current liabilities of discontinued operations | ||||||||
| Total Long-Term Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingency | ||||||||
| SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Common stock, par value, $, shares authorized, and shares issued and outstanding as of April 30, 2023 and 2022, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income (loss) | ||||||||
| Total Stockholders’ Equity (Deficit) | ( | ) | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
| CONNEXA SPORTS TECHNOLOGIES, INC |
| CONSOLIDATED STATEMENTS OF OPERATIONS (IN US$) |
| YEARS ENDED APRIL 30, 2023 AND 2022 |
| 2023 | 2022 | |||||||
| NET SALES | $ | $ | ||||||
| COST OF SALES | ||||||||
| GROSS PROFIT | ||||||||
| OPERATING EXPENSES | ||||||||
| Selling and marketing expenses | ||||||||
| General and administrative expenses | ||||||||
| Research and development costs | ||||||||
| Total Operating Expenses | ||||||||
| OPERATING LOSS | ( | ) | ( | ) | ||||
| NON-OPERATING INCOME (EXPENSE) | ||||||||
| Amortization of debt discounts | ( | ) | ( | ) | ||||
| Loss on extinguishment of debt | ( | ) | ||||||
| Loss on issuance of convertible notes | ( | ) | ||||||
| Gain on change in fair value of contingent consideration | ||||||||
| Change in fair value of derivative liability | ||||||||
| Derivative expense | ( | ) | ||||||
| Interest expense | ( | ) | ( | ) | ||||
| Interest expense - related party | ( | ) | ( | ) | ||||
| Total Non-Operating Income (Expenses) | ( | ) | ||||||
| NET LOSS FROM CONTINUING OPERATIONS BEFORE PROVISION FOR INCOME TAXES | ( | ) | ( | ) | ||||
| DISCONTINUED OPERATIONS | ||||||||
| Loss from discontinued operations | ( | ) | ( | ) | ||||
| Loss on disposal of subsidiaries | ( | ) | ||||||
| LOSS FROM DISCONTINUED OPERATIONS | ( | ) | ( | ) | ||||
| NET LOSS FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive income (loss) | ||||||||
| Foreign currency translations adjustment | ||||||||
| Comprehensive income (loss) | $ | ( | ) | $ | ( | ) | ||
| Net income (loss) per share - basic and diluted | ||||||||
| Continuing operations | $ | ) | $ | ) | ||||
| Discontinued operations | $ | ) | $ | ) | ||||
| Net loss per share - basic and diluted | $ | ) | $ | ) | ||||
| Weighted average common shares outstanding - basic and diluted | ||||||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
| CONNEXA SPORTS TECHNOLOGIES, INC |
| CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) (IN US$) |
| FOR THE YEARS ENDED APRIL 30, 2023 AND 2022 |
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Common Stock | Paid-In | Comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Amount | Capital | Income (Loss) | Deficit | Total | |||||||||||||||||||
| Balance - May 1, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Stock issued for: | ||||||||||||||||||||||||
| Conversion of notes payable - related parties | ||||||||||||||||||||||||
| Acquisition | ||||||||||||||||||||||||
| Conversion of shares issuanble (liability) | ||||||||||||||||||||||||
| Conversion of warrants | ||||||||||||||||||||||||
| Services | ||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||
| Elimination of related party derivative liability | - | |||||||||||||||||||||||
| Shares issuable in connection with Gameface acquisition | - | |||||||||||||||||||||||
| Shares issuable in connection with PlaySight acquisition | - | |||||||||||||||||||||||
| Change in comprehensive income (loss) | - | |||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance - April 30, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Balance - May 1, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||
| Stock issued for: | ||||||||||||||||||||||||
| Conversion of notes payable | ||||||||||||||||||||||||
| Acquisition | ||||||||||||||||||||||||
| Services | ||||||||||||||||||||||||
| Cash | ||||||||||||||||||||||||
| Cashless exercise of warrants | ( | ) | ||||||||||||||||||||||
| Fractional share issuance | ( | ) | ||||||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||
| Change in comprehensive income | - | |||||||||||||||||||||||
| Net loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance - April 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
The accompanying notes are an integral part of these financial statements.
| F-6 |
| CONNEXA SPORTS TECHNOLOGIES, INC |
| CONSOLIDATED STATEMENTS OF CASH FLOWS (IN US$) |
| YEARS ENDED APRIL 30, 2023 AND 2022 |
| 2023 | 2022 | |||||||
| CASH FLOW FROM OPERTING ACTIVIITES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Depreciation, amortization and impairment expense | ||||||||
| Change in fair value of derivartive liability | ( | ) | ( | ) | ||||
| Shares and warrants issued for services | ||||||||
| Share-based compensation | ||||||||
| Loss on disposal | ||||||||
| Change in fair value of contingent consideration | ( | ) | ||||||
| Loss on extinguishment of debt | ||||||||
| Amortization of debt discounts | ||||||||
| Derivative expense | ||||||||
| Non-cash transaction costs | ||||||||
| Loss on conversion of convertible notes | ||||||||
| Changes in assets and liabilities, net of acquired amounts | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ||||||
| Prepaid inventory | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Contract liabilities | ( | ) | ( | ) | ||||
| Other current liabilities | ( | ) | ||||||
| Accrued interest | ||||||||
| Accrued interest - related parties | ||||||||
| Total adjustments | ||||||||
| Net cash used in operating activities of continuing operations | ( | ) | ( | ) | ||||
| Net cash provided by operating activities of discontinued operations | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Cash acquired as part of Gameface acquisition | ||||||||
| Note receivable issuance | ( | ) | ||||||
| Net cash used in investing activities of continuing operations | ( | ) | ||||||
| Net cash provided by operating activities of discontinued operations | ||||||||
| Net cash used in investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITES | ||||||||
| Proceeds from issuance of common stock for cash | ||||||||
| Debt issuance costs on convertible notes payable and other financing activities | ( | ) | ||||||
| Proceeds from notes payable | ||||||||
| Proceeds from related party notes payable | ||||||||
| Proceeds from convertible notes payable | ||||||||
| Payments of notes payable - related parties | ( | ) | ||||||
| Payments of notes payable | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate fluctuations on cash and cash equivalents | ( | ) | ||||||
| NET DECREASE IN CASH AND RESTRICTED CASH | ( | ) | ( | ) | ||||
| CASH AND RESTRICTED CASH - BEGINNING OF PERIOD | ||||||||
| CASH AND RESTRICTED CASH - END OF PERIOD | $ | $ | ||||||
| CASH PAID DURING THE PERIOD FOR: | ||||||||
| Interest expense | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| SUPPLEMENTAL INFORMATION - NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Shares issued in connection with acquisition | $ | $ | ||||||
| Conversion of convertible notes payable and accrued interest to common stock | $ | $ | ||||||
| Shares issued for contingent consideration | $ | $ | ||||||
| Elimination of related party derivative liabilities | $ | $ | ||||||
| Derivative liabilities recorded as debt discounts of convertible notes | $ | $ | ||||||
| Derivative liability recorded for shares and warrants issued in private placement | $ | $ | ||||||
| Note receivable issued in sale of PlaySight | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| F-7 |
CONNEXA SPORTS TECHNOLOGIES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: ORGANIZATION AND NATURE OF BUSINESS
Organization
Lazex
Inc. (“Lazex”) was incorporated under the laws of the State of Nevada on July 12, 2015. On August 23, 2019, the majority
owner of Lazex entered into a Stock Purchase Agreement with Slinger Bag Americas Inc., a Delaware corporation (“Slinger Bag Americas”),
which was
On October 31, 2019, Slinger Bag Americas acquired control of Slinger Bag Canada, Inc., (“Slinger Bag Canada”) a Canadian company incorporated on November 3, 2017. There were no assets, liabilities or historical operational activity of Slinger Bag Canada.
On
February 10, 2020, Slinger Bag Americas became the
On
June 21, 2021, Slinger Bag Americas entered into a membership interest purchase agreement with Charles Ruddy to acquire a
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 (refer to Note 5).
On February 22, 2022, the Company entered into a merger agreement with PlaySight Interactive Ltd. (“PlaySight”) and Rohit Krishnan (the “Shareholders’ Representative”). As a result of the merger agreement, PlaySight would become a wholly owned subsidiary of the Company (refer to Note 5). In November 2022, the Company sold PlaySight and recorded a loss on the sale. See Note 16 for further details on the sale of PlaySight.
On May 16, 2022, the Company changed its domicile from Nevada to Delaware. On April 7, 2022, the Company effected a name change to Connexa Sports Technologies Inc. We also changed our ticker symbol, “CNXA”.
The operations of Slinger Bag Inc., Slinger Bag Americas, Slinger Bag Canada, Slinger Bag UK, SBL, and Gameface are collectively referred to as the “Company.”
On
June 14, 2022, the Company effected a
For further details on PlaySight and Foundation Sports we refer you to our Annual Report on Form 10-K for the year ended April 30, 2022, filed with the Securities and Exchange Commission on May 17, 2023. This Form 10-K and the consolidated financial statements will concentrate on our existing business as reflected in the following paragraph.
| F-8 |
The Company operates in the sport equipment and technology business. The Company is the owner of the Slinger Launcher, which is a portable tennis ball launcher as well as other associated tennis accessories and Gameface AI an Australian artificial intelligence sports software company.
Basis of Presentation
The accompanying consolidated financial statements of the Company are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). As a result of the transactions described above, the accompanying consolidated financial statements include the combined results of Slinger Bag Inc., Slinger Bag Americas, Slinger Bag Canada, Slinger Bag UK, SBL, and Gameface for the years ended April 30, 2023 and 2022. The operations of Foundation Sports and PlaySight are included as discontinued operations in our statements of operations as these entities were sold in November 2022 and December 2022 as disclosed in Note 16.
The Company reports Gameface on a one-month calendar lag allowing for the timely preparation of financial statements. Gameface operates on fiscal year end periods as of December 31. This one-month reporting lag is with the exception of significant transactions or events that occur during the intervening period. The Company did not identify any significant transactions during the one month ended April 30, 2023 at Gameface that would need to be disclosed as not included within the Company’s consolidated financial statements.
Impact of COVID-19 Pandemic
The Company has been carefully monitoring the COVID-19 pandemic and its impact on its business. In that regard, while the Company has continued to sell its products and grow its business it did experience certain disruptions in its supply chains. The Company expects the significance of the COVID-19 pandemic, including the extent of its effect on the Company’s financial and operational results, to be dictated by, among other things, its duration, the success of efforts to contain it and the impact of actions taken in response. While the Company has not experienced any material disruptions to its business and operations as a result of the COVID-19 pandemic, it is possible such disruptions may occur in the future which may impact its financial and operational results, and which could be material.
Impact of Russian and Ukrainian Conflict
In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. We are closely monitoring the unfolding events due to the Russia-Ukraine conflict and its regional and global ramifications. We have one distributor in Russia, which is not material to our overall financial results. We do not have operations in Ukraine or Belarus. We are monitoring any broader economic impact from the current crisis. The specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements. However, to the extent that such military action spreads to other countries, intensifies, or otherwise remains active, such action could have a material adverse effect on our financial condition, results of operations, and cash flows.
Note 2: GOING CONCERN
The
financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize its assets and discharge
its liabilities in the normal course of business for the foreseeable future. The Company has an accumulated deficit of $
The
ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or being able
to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they
become due. Management intends to finance operating costs over the next twelve months with existing cash on hand, loans from related
parties, and/or private placement of debt and/or common stock. In the event that the Company is unable to successfully raise capital
and/or generate revenues, the Company will likely reduce general and administrative expenses, and cease or delay its development plan
until it is able to obtain sufficient financing. The Company has begun reducing operating expenses and cash outflows by selling PlaySight,
as well as selling
| F-9 |
Note 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Accordingly, actual results could differ from those estimates.
Financial Statement Reclassification
Certain prior year amounts within accounts payable, accrued expenses, and certain operating expenses have been reclassified for consistency with the current year presentation and had no effect on the Company’s balance sheet, net loss, shareholders’ deficit or cash flows.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. The majority of payments due from banks for credit card transactions process within 24 to 48 hours and are accordingly classified as cash and cash equivalents.
Accounts Receivable
The
Company’s accounts receivable are non-interest bearing trade receivables resulting from the sale of products and payable over terms
ranging from 15 to 60 days. The Company provides an allowance for doubtful accounts at the point when collection is considered doubtful.
Once all collection efforts have been exhausted, the Company charges-off the receivable with the allowance for doubtful accounts. The
Company recorded $
Inventory
Inventory is valued at the lower of the cost (determined principally on a first-in, first-out basis) or net realizable value. The Company’s valuation of inventory includes inventory reserves for inventory that will be sold below cost and the impact of inventory shrink. Inventory reserves are based on historical information and assumptions about future demand and inventory shrink trends. The Company’s inventory as of April 30, 2023 and April 30, 2022 consisted of the following:
| April 30, 2023 | April 30, 2022 | |||||||
| Finished Goods | $ | $ | ||||||
| Component/Replacement Parts | ||||||||
| Capitalized Duty/Freight | ||||||||
| Inventory Reserve | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Prepaid Inventory
Prepaid inventory represents inventory that is in-transit that has been paid for but not received from the Company’s third-party vendors. The Company typically prepays for the purchase of materials and receives the products within three months after making payments. The Company continuously monitors delivery from, and payments to, the vendors. If the Company has difficulty receiving products from a vendor, the Company would cease purchasing products from such vendors in future periods. The Company has not had difficulty receiving products during the reporting periods.
| F-10 |
Property and equipment
Property
and equipment acquired through business combinations are stated at the estimated fair value at the date of the acquisition. Purchases
of property and equipment are stated at cost, net of accumulated depreciation and impairment losses. Expenditures that materially increase
the useful life of the assets are capitalized. Ordinary repairs and maintenance are expensed as incurred. Depreciation and amortization
are computed using the straight-line method over the estimated useful lives of the related assets, which is an average of
Concentration of Credit Risk
The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. While we may be exposed to credit risk, we consider the risk remote and do not expect that any such risk would result in a significant effect on our results of operations or financial condition. See Note 4 for further details on the Company’s concentration of credit risk as well as other risks and uncertainties.
Revenue Recognition
The Company recognizes revenue for their continuing operations in accordance with Accounting Standards Codification (“ASC”) 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. The Company recognizes revenue for its performance obligation associated with its contracts with customers at a point in time once products are shipped. Amounts collected from customers in advance of shipping products ordered are reflected as contract liabilities on the accompanying consolidated balance sheets. The Company’s standard terms are non-cancelable and do not provide for the right-of-return, other than for defective merchandise covered under the Company’s standard warranty. The Company has not historically experienced any significant returns or warranty issues.
The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers”. The core principle of this revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
Step 1: Identify the contract with the customer
The Company determines that it has a contract with a customer when each party’s rights regarding the products or services to be transferred can be identified, the payment terms for the services can be identified, the Company has determined the customer has the ability and intent to pay, and the contract has commercial substance. At contract inception, the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation.
Step 2: Identify the performance obligations in the contract
The Company’s customers are buying an integrated system. In evaluating whether the equipment is a separate performance obligation, the Company’s management considered the customer’s ability to benefit from the equipment on its own or together with other readily available resources and if so, whether the service and equipment are separately identifiable (i.e., is the service highly dependent on, or highly interrelated with the equipment). Because the Products and Services included in the customer’s contract are integrated and highly interdependent, and because they must work together to deliver the Solution, the Company has concluded that Products installed on customer’s premise and Services contracted for by the customer are generally not distinct within the context of the contract and, therefore, constitute a single, combined performance obligation.
| F-11 |
Step 3: Determine the transaction price
The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration promised in a contract with a customer includes predetermined fixed amounts, variable amounts, or both. The Company’s contracts do not include any rights of returns or refunds.
The Company collects each year’s service fees in advance and should therefore consider the existence of a significant financing component. However, due to the fact that the payments are provided for the service of a one-year term, the Company elected to apply the practical expedient under ASC 606 which exempts the adjustment of the consideration for the existence of a significant financing component when the period between the transfer of the services and the payment for such services is one year or less.
Step 4: Allocate the transaction price to the performance obligations in the contract
Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on each performance obligation’s relative standalone selling price (“SSP”). The Company has identified a single performance obligation in the contract, and therefore, the allocation provisions under ASC 606 do not apply to the Company’s contracts.
Step 5: Recognize revenue when the Company satisfies a performance obligation
Revenues for the Company’s single, combined performance obligation are recognized on a straight-line basis over the customer’s contract term, which is the period in which the parties to the contract have enforceable rights and obligations (Typically 3-4 years).
Business Combinations
Upon acquisition of a company, we determine if the transaction is a business combination, which is accounted for using the acquisition method of accounting. Under the acquisition method, once control is obtained of a business, the assets acquired, and liabilities assumed, are recorded at fair value. We use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. One of the most significant estimates relates to the determination of the fair value of these assets and liabilities. The determination of the fair values is based on estimates and judgments made by management. Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable. Measurement period adjustments are reflected at the time identified, up through the conclusion of the measurement period, which is the time at which all information for determination of the values of assets acquired and liabilities assumed is received and is not to exceed one year from the acquisition date. We may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. The Company elected to apply pushdown accounting to all entities acquired.
Additionally, uncertain tax positions and tax-related valuation allowances are initially recorded in connection with a business combination as of the acquisition date. We continue to collect information and reevaluate these estimates and assumptions periodically and record any adjustments to preliminary estimates to goodwill, provided we are within the measurement period. If outside of the measurement period, any subsequent adjustments are recorded to the consolidated statement of operations.
Fair Value of Financial Instruments
Fair value of financial and non-financial assets and liabilities is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs used in the methodologies of measuring fair value for assets and liabilities, is as follows:
Level 1 — Quoted prices in active markets for identical assets or liabilities
Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities
Level 3 — Unobservable pricing inputs in the market
| F-12 |
Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. Our assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their categorization within the fair value hierarchy.
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, and accounts payable. The carrying amount of these financial instruments approximates fair value due to their short-term maturity.
The
Company’s contingent consideration in connection with the acquisition of Gameface was calculated using Level 3 inputs. The fair
value of contingent consideration as of April 30, 2023 and 2022 was $
The Company estimates the fair value of its intangible assets using Level 3 assumptions, primarily based on the income approach utilizing the discounted cash flow method.
The Company’s derivative liabilities were calculated using Level 2 assumptions on the issuance and balance sheet dates via a Black-Scholes option pricing model and consisted of the following ending balances and gain amounts as of and for the year ended April 30, 2023:
| April 30, 2023 | (Gain) loss for the year | |||||||
| Note derivative is related to | ending balance | ended April 30, 2023 | ||||||
| 4/11/21 profit guaranty | $ | $ | ||||||
| 8/6/21 convertible notes | ( | ) | ||||||
| 6/17/22 underwriter warrants | ( | ) | ||||||
| Other derivative liabilities eliminated in uplist | ( | ) | ||||||
| 9/30/22 warrants issued with common stock | ( | ) | ||||||
| 1/6/2023 warrants issued with note payable | ( | ) | ||||||
| Total | $ | $ | ( | ) | ||||
The
Company also recognized derivative expense of $
| Year Ended April 30, 2023 | Year Ended April 30, 2022 | ||||||||
| Expected life in years | |||||||||
| Stock price volatility | % | % | |||||||
| Risk free interest rate | % | % | |||||||
| Expected dividends | % | % | |||||||
Refer to Note 10 and Note 11 for more information regarding the derivative instruments.
Income Taxes
Income taxes are accounted for in accordance with the provisions of ASC 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts that are more likely than not to be realized.
| F-13 |
Intangible Assets
Intangible assets relate to the “Slinger” technology trademark, which the Company purchased on November 10, 2020. The Company also acquired intangible assets as a part of the Gameface acquisition. These intangible assets include tradenames, internally developed software, and customer relationships. The acquired intangible assets are amortized based on the estimated present value of cash flows of each class of intangible assets in order to determine their economic useful life. All intangible assets acquired with the PlaySight transaction are included in discontinued operations. Refer to Note 6 for more information.
Impairment of Long-Lived Assets
In accordance with ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. Factors which could trigger impairment review include significant underperformance relative to historical or projected future operating results, significant changes in the manner of use of the assets or the strategy for the overall business, a significant decrease in the market value of the assets or significant negative industry or economic trends. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. If those net undiscounted cash flows do not exceed the carrying amount, impairment, if any, is based on the excess of the carrying amount over the fair value based on the market value or discounted expected cash flows of those assets and is recorded in the period in which the determination is made. There was impairment of long-lived assets identified during the year ended April 30, 2023 and 2022 in our continuing operations. Refer to Note 6 for more information.
Goodwill
The Company accounts for goodwill in accordance with ASC 350, Intangibles - Goodwill and Other (“ASC 350”). ASC 350 requires that goodwill not be amortized, but reviewed for impairment if impairment indicators arise and, at a minimum, annually. The Company records goodwill as the excess purchase price over assets acquired and includes any work force acquired as goodwill. Goodwill is evaluated for impairment on an annual basis.
With the adoption of the ASU 2017-04, which eliminates the second step of the goodwill impairment test, the Company tests impairment of goodwill in one step. In this step, the Company compares the fair value of each reporting unit with goodwill to its carrying value. The Company determines the fair value of its reporting units with goodwill using a combination of a discounted cash flow and a market value approach. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, the Company will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired and the Company will not record an impairment charge.
The
Company impaired the remaining $
The Company accounts for share-based compensation in accordance with ASC 718, Compensation-Stock Compensation (ASC 718). Under the fair value recognition provisions of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is the vesting period.
Warrants
The Company grants warrants to key employees and executives as compensation on a discretionary basis. The Company also grants warrants in connection with certain note payable agreements and other key arrangements. The Company is required to estimate the fair value of share-based awards on the measurement date and recognize as expense that value of the portion of the award that is ultimately expected to vest over the requisite service period. Warrants granted in connection with ongoing arrangements are more fully described in Note 11 and Note 14.
| F-14 |
The warrants granted during the years ended April 30, 2023 and 2022 were valued using a Black-Scholes option pricing model on the date of grant using the following assumptions:
Year Ended April 30, 2023 | Year Ended April 30, 2022 | |||||||
| Expected life in years | ||||||||
| Stock price volatility | ||||||||
| Risk free interest rate | ||||||||
| Expected dividends | ||||||||
Foreign Currency Translation
Our functional currency is the U.S. dollar. The functional currency of our foreign operations, generally, is the respective local currency for each foreign subsidiary. Assets and liabilities of foreign operations denominated in local currencies are translated at the spot rate in effect at the applicable reporting date. Our consolidated statements of comprehensive loss are translated at the weighted average rate of exchange during the applicable period. The resulting unrealized cumulative translation adjustment is recorded as a component of accumulated other comprehensive loss in shareholders’ equity. Realized and unrealized transaction gains and losses generated by transactions denominated in a currency different from the functional currency of the applicable entity are recorded in other income (loss) in the period in which they occur.
Basic earnings per share are calculated by dividing income available to shareholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are computed using the weighted average number of common and dilutive common share equivalents outstanding during the period.
All common stock equivalents such as shares to be issued for the conversion of notes payable and warrants were excluded from the calculation of diluted earnings per share as the effect is antidilutive. As a result, the basic and diluted earnings per share are the same for each of the periods presented.
Recent Accounting Pronouncements
Recently Adopted
In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Under ASU 2017-04, goodwill impairment will be tested by comparing the fair value of a reporting unit with its carrying amount, and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The new guidance must be applied on a prospective basis and is effective for periods beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU 2017-04 effective May 1, 2021. The adoption of the new standard did not have a material effect on the Company’s consolidated financial statements.
In December 2019, the FASB issued Accounting Standards Update (“ASU”), 2019-12, Simplifying the Accounting for Income Taxes, which amends ASC 740, Income Taxes (ASC 740). This update is intended to simplify accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and amending existing guidance to improve consistent application of ASC 740. This update is effective for fiscal years beginning after December 15, 2021. The guidance in this update has various elements, some of which are applied on a prospective basis and others on a retrospective basis with earlier application permitted. The adoption of the new standard did not have a material effect on the Company’s consolidated financial statements.
| F-15 |
In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective for public companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of ASU 2020-06 will have on the Company’s consolidated financial statement presentation or disclosures.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”). The guidance replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credits, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases. ASC 326 requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses as well as the credit quality and underwriting standards of a company’s portfolio. In addition, ASC 326 made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities the Company does not intend to sell or believes that it is more likely than not they will be required to sell. The ASU can be adopted no later than January 1, 2020 for SEC filers and January 1, 2023 for private companies and smaller reporting companies. The Company has not yet adopted this ASU as it qualifies as a smaller reporting company. The Company does not expect this ASU will have a material impact on its consolidated financial statements.
In October 2021, the FASB issued ASU 2021-08, “Business Combinations - Accounting for Contract Assets and Contract Liabilities (Topic 805)”. The amendments in this Update address diversity and inconsistency related to the recognition and measurement of contract assets and contract liabilities acquired in a business combination. The amendments in this Update require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company does not expect the adoption of this ASU to have a material impact on the Company’s financial statements.
The FASB has issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). ASU 2021-04 provides guidance that an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument. The standard also provides guidance on how an entity should measure and recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified. The amendments in this ASU are effective for the Company for fiscal years beginning after December 15, 2021. Early adoption is permitted for all entities, including adoption in an interim period. The adoption of the new standard did not have a material effect on the Company’s consolidated financial statements.
Other recently issued accounting pronouncements did not, or are not believed by management to, have a material effect on the Company’s present or future consolidated financial statements.
| F-16 |
Note 4: CONCENTRATION OF CREDIT RISK AND OTHER RISKS AND UNCERTAINTIES
Accounts Receivable Concentration
As
of April 30, 2023 and 2022, the Company had two customers that accounted for
Accounts Payable Concentration
As
of April 30, 2023 and 2022, the Company had four significant suppliers that accounted for
Note 5: ACQUISITIONS AND BUSINESS COMBINATIONS
In the year ended April 30, 2022, the Company acquired three entities in accordance with ASC 805. A full description of those transactions are reflected in the audited financial statements contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 17, 2023.
The Company has elected to apply pushdown accounting to each of the entities acquired.
For
Foundation Sports as referred to in Note 16, the Company disposed of
For
PlaySight as referred to in Note 16, the Company sold back to the original shareholders
Pro Forma Results
The following pro forma financial information presents the results of operations of the Company as of the year ended April 30, 2022, respectively, as if the acquisitions of Gameface had occurred as of the beginning of the first period presented instead of February 2022.
| Revenues | $ | |||
| Net loss | $ | ( | ) | |
| Basic and diluted earnings (loss) per share | $ | ) |
Note 6: INTANGIBLE ASSETS
Intangible assets reflect only those intangible assets of our continuing operations, and consist of the following:
| Weighted | ||||||||||||||||||||
| Average Period | April 30, 2023 | |||||||||||||||||||
| Amortization (in years) | Carrying Value | Accumulated Amortization | Impairment Loss | Net Carrying Value | ||||||||||||||||
| Tradenames and patents | $ | $ | $ | |||||||||||||||||
| Customer relationships | ||||||||||||||||||||
| Internally developed software | ||||||||||||||||||||
| Total intangible assets | $ | $ | $ | $ | ||||||||||||||||
| F-17 |
| Weighted | ||||||||||||||||||||
| Average Period | April 30, 2022 | |||||||||||||||||||
| Amortization (in years) | Carrying Value | Accumulated Amortization | Impairment Loss | Net Carrying Value | ||||||||||||||||
| Tradenames | $ | $ | $ | |||||||||||||||||
| Customer relationships | ||||||||||||||||||||
| Internally developed software | ||||||||||||||||||||
| Total intangible assets | $ | $ | $ | $ | ||||||||||||||||
Amortization
expense for the years ended April 30, 2023 and 2022 was approximately $
As of April 30, 2023, the estimated future amortization expense associated with the Company’s intangible assets for each of the five succeeding fiscal years is as follows:
| For the Periods Ended April 30, | Amortization Expense | ||||
| 2024 | $ | ||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| Thereafter | |||||
| Total | $ | ||||
Note 7: ACCRUED EXPENSES
The composition of accrued expenses is summarized below:
| April 30, 2023 | April 30, 2022 | |||||||
| Accrued payroll | $ | $ | ||||||
| Accrued bonus | ||||||||
| Accrued professional fees | ||||||||
| Other accrued expenses | ||||||||
| Total | $ | $ | ||||||
Note 8: NOTE PAYABLE - RELATED PARTY
The discussion of note payable – related party only includes those that existed as of April 30, 2022. For a discussion of all prior note payable – related party we refer you to the Annual Report on Form 10-K filed May 17, 2023 for the fiscal year end April 30, 2022.
On
January 14, 2022, the Company entered into two loan agreements with related party lenders, each for $
| F-18 |
There
was $
Note 9: CONVERTIBLE NOTES PAYABLE
The discussion of convertible notes payable only includes those that existed as of April 30, 2022. For a discussion of all prior convertible notes payable we refer you to the Annual Report on Form 10-K filed May 17, 2023 for the fiscal year end April 30, 2022.
On
August 6, 2021, the Company consummated the closing (the “Closing”) of a private placement offering (the “Offering”)
pursuant to the terms and conditions of that certain Securities Purchase Agreement, dated as of August 6, 2021 (the “Purchase Agreement”),
between the Company and certain accredited investors (the “Purchasers”). At the Closing, the Company sold to the Purchasers
(i)
The
Convertible Notes were to mature on
The
Warrants are exercisable for
The Company evaluated the Warrants and the conversion options under the guidance in ASC 815 and determined they represent derivative liabilities given the variability in the exercise and conversion prices upon the event of an up list to the NASDAQ. The Company also evaluated the other embedded features in the agreement and determined the interest make-whole provision and the subsequent financing redemption represent put features that are also accounted for as derivative liabilities. The derivative liabilities are marked to market at the end of each reporting period with the non-cash gain or loss recorded in the period as a gain or loss on derivative (see Note 3).
The
Warrants were valued at $
| F-19 |
As
part of the issuance of the Convertible Notes, the Company incurred and capitalized debt issuance costs of $
The Purchase Agreement was amended to, among other things, (i) delete Exhibit A and replace it in its entirety with the 8% Senior Convertible Note (the “Replacement Note”) filed as Exhibit 10.2 to the Company’s current report on Form 8-K dated January 5, 2021, (ii) add a new definition of “Inventory Financing”, (iii) amend Section 4.18 to add at the end of Section 4.18 before the final period “, it being agreed that the provisions of this Section 4.18 shall not apply to the Qualified Subsequent Financing expected to occur after the date hereof”, (iv) delete Section 4.20 and replace it in its entirety with substantially the same text, including the following after the period, replacing the period with a semicolon: “; provided that the provisions of this Section 4.20 shall not apply to (i) in respect of any Holder to the extent that such Holder is an investor or a purchaser of the securities offered pursuant such Subsequent Financing, and (ii) with respect to an Inventory Financing.”, and (v) add a new Section 4.21. Most-Favored Nation provision.
The Registration Rights Agreement was amended to, among other things, (i) delete the definition “Effectiveness Date” in Section 1 and replace it in its entirety with substantially the same text but revise the definition of “Effectiveness Date” causing the Initial Registration Statement required to be filed by January 31, 2022, and (ii) delete Section 2(d) and replace it in its entirety with substantially the same text but revised to delete the following “(2) no liquidated damages shall accrue or be payable hereunder with respect to any day on which the high price of the Common Stock on the Trading Market on which the Common Stock is then listed or traded is less than the then-applicable Conversion Price,” resulting in renumbering the text that follows as (2) instead of (3).
As
consideration for entering into the Omnibus Agreement, the outstanding principal balance of the Existing Note held by each Purchaser
was increased by twenty percent (
On
June 17, 2022, the Company issued shares of common stock in conversion of the $
Total
outstanding borrowings related to the Convertible Notes as of April 30, 2023 and 2022 were $
Note 10: NOTES PAYABLE
The discussion of notes payable only includes those that existed as of April 30, 2022. For a discussion of all prior notes payable we refer you to the Annual Report on Form 10-K filed May 17, 2023 for the fiscal year end April 30, 2022.
On
June 30, 2020, the Company entered into a loan agreement with Mont-Saic to borrow $
| F-20 |
On
December 24, 2020, the Company entered into a promissory note with a third-party to borrow $
On
April 11, 2021, the Company and the lender entered into an agreement whereby the lender converted the promissory note into shares
of Company stock, which were issued to the lender at a
The Company evaluated the conversion option of the note payable to shares under the guidance in ASC 815-40, Derivatives and Hedging, and determined the conversion option qualified for equity classification. The Company also evaluated the profit guarantee under ASC 815, Derivatives and Hedging, and determined it to be a make-whole provision, which is an embedded derivative within the host instrument. As the economic characteristics are dissimilar to the host instrument, the profit guarantee was bifurcated from the host instrument and stated as a separate derivative liability, which is marked to market at the end of each reporting period with the non-cash gain or loss recorded in the period as a gain or loss on derivative.
On
the date of conversion, the Company recognized a $
The
fair value of the derivative liability was $
On
February 15, 2022, for and in consideration of $
On
April 1, 2022, the Company entered into a $
Cash Advance Agreements
On July 29, 2022, the Company entered into two merchant cash advance agreements. The details of the merchant cash advance agreements are as follows:
UFS Agreement
The
Company entered into an agreement (the “UFS Agreement”) with Unique Funding Solutions LLC (“UFS”) pursuant to
which the Company sold $
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.
| F-21 |
Cedar Agreement
The
Company entered into an agreement (the “Cedar Agreement”) with Cedar Advance LLC (“Cedar”) pursuant to which
the Company sold $
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 accounts, including without limitation, all deposit accounts, accounts receivable and other receivables, chattel paper, documents, equipment, instruments and inventory as those terms are 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.
On
January 6, 2023, the Company entered into a loan and security agreement (the “Loan and Security Agreement”) with one or more
institutional investors (the “Lenders”) and Armistice Capital Master Fund Ltd. as agent for the Lenders (the “Agent”)
for the issuance and sale of (i) a note in an aggregate principal amount of up to $
Note 11: RELATED PARTY TRANSACTIONS
In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attain adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by officers, directors, or shareholders. Amounts represent advances, amounts paid in satisfaction of liabilities, or accrued compensation that has been deferred. The advances are considered temporary in nature and have not been formalized by a promissory note.
The
Company has outstanding notes payable of $
The
Company recognized net sales of $
| F-22 |
Note 12: SHAREHOLDERS’ EQUITY (DEFICIT)
Common Stock
The Company has shares of common stock authorized with a par value of $ per share. As of April 30, 2023 and 2022, the Company had and shares of common stock issued and outstanding, respectively.
Equity Transactions During the Year Ended April 30, 2023
Since May 1, 2022, the Company has issued an aggregate of shares of its common stock consisting of the following:
| On June 15, 2022, the Company issued shares of common stock to the Convertible Noteholders upon conversion of convertible notes. | ||
| On June 15, 2022, the Company issued shares to investors who participated in the Company’s Nasdaq uplist round. | ||
| On June 27, 2022, the Company issued shares of common stock to Gabriel Goldman for consulting services performed in the first quarter of calendar 2022. Gabriel Goldman became a director of the Company on June 15, 2022. | ||
| On June 27, 2022, the Company issued shares of common stock to the former Gameface shareholders in connection with the purchase of Gameface. | ||
On August 25, 2022, the Company issued shares of common stock to Midcity Capital Ltd (“Midcity”) pursuant to a cashless conversion of warrants Midcity received from its warrant agreement with the Company dated March 2020.
On
September 28, 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with
a single institutional investor (the “Investor”) for the issuance and sale of (i) shares of common stock and
(ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase an aggregate of
On October 12, 2022, the Company issued shares of common stock, on November 21, 2022 issued shares of common stock and January 26, 2023 issued shares of common stock in connection with the acquisition of PlaySight.
On January 26, 2023, the Company issued shares of common stock for services rendered to their ambassadors. |
| F-23 |
Equity Transactions During the Year Ended April 30, 2022
On
May 26, 2021, the Company issued shares of its common stock for the conversion of related party notes payable (see Note 8). The
fair value of the common stock was $
On
June 23, 2021, the Company issued shares of its common stock as partial consideration for the acquisition of Foundation Sports
(see Note 5). The fair value of the total shares of common stock to be issued related to the acquisition was $
On July 6, 2021, the Company issued shares of its common stock to two employees as compensation for services rendered in lieu of cash, which resulted in $ in share-based compensation expense for the year ended April 30, 2022.
On July 11, 2021, the Company issued shares of its common stock to a vendor as compensation for marketing and other services rendered, which resulted in $ of operating expenses for the year ended April 30, 2022.
During the three months ended July 31, 2021, the Company granted an aggregate total of shares of its common stock and equity options to purchase up to shares (which are now expired) to six new brand ambassadors as compensation for services. The expense related to the issuance of the shares and equity options is being recognized over the service agreements, similar to the warrants and equity options issued to the four other brand ambassadors in the prior year. During the year ended April 30, 2022, the Company recognized $ of operating expenses related to the shares, warrants and equity options granted to brand ambassadors.
On
August 6, 2021, the Note payable holder exercised its right to convert its
On
August 6, 2021, the Company’s related party lender exercised its right to convert its
On October 11, 2021, the Company issued shares of its common stock to a vendor as compensation for marketing and other services rendered, which resulted in $ of operating expenses during the year ended April 30, 2022.
On January 11, 2022, the Company issued shares of its common stock to a vendor as compensation for marketing and other services rendered, which resulted in $ of operating expenses during the year ended April 30, 2022.
During April 2022, the Company granted an aggregate total of shares of its common stock to 6 new brand ambassadors as compensation for services. During the year ended April 30, 2022, the Company recognized $ of operating expenses related to the shares granted to brand ambassadors.
Warrants Issued and Expensed During the Years Ended April 30, 2023 and 2022
On
October 28, 2020, the Company granted warrants to a service provider for advertising services over the next year. The warrants
have an exercise price of $
In accordance with the October 29, 2020 agreement with three members of the advisory board mentioned above, warrants were issued during the year ended April 30, 2022. The warrants were valued using a Black-Scholes option pricing model on the grant date, which resulted in operating expenses of $ and $ during the nine months ended January 31, 2023 and year ended April 30, 2022, respectively.
On August 6, 2021, in connection with the Convertible Notes issuance the Company issued warrants to purchase up to shares of common stock of the Company to the Purchasers.
On
August 6, 2021, in connection with the Convertible Notes issuance the Company also granted the lead placement agent for the Offering
| F-24 |
On
September 3, 2021, the Company granted an aggregate total of warrants to key employees and officers of the Company as compensation.
The warrants have an exercise price of $
On February 2, 2022, in connection with the Gameface acquisition the Company issued warrants to purchase up to shares of common stock of the Company.
On
September 28, 2022, the Company issued pre-funded warrants (the “Pre-Funded Warrants”) to purchase an aggregate of
On
January 6, 2023, the Company entered into a loan and security agreement (the “Loan and Security Agreement”) with one or more
institutional investors (the “Lenders”) and Armistice Capital Master Fund Ltd. as agent for the Lenders (the “Agent”)
for the issuance and sale of (i) a note in an aggregate principal amount of up to $
The following represents a summary of the warrants:
| Year Ended April 30, 2023 | Year Ended April 30, 2022 | |||||||||||||||
| Number | Weighted Price | Number | Weighted Average Exercise Price | |||||||||||||
| Beginning balance | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ||||||||||||||||
| Forfeited | ||||||||||||||||
| Expired | ( | ) | ||||||||||||||
| Ending balance | $ | $ | ||||||||||||||
| Intrinsic value of warrants | $ | $ | ||||||||||||||
| Weighted Average Remaining Contractual Life (Years) | ||||||||||||||||
As of April 30, 2023, warrants are vested.
| F-25 |
Note 13: COMMITMENTS AND CONTINGENCIES
Leases
The
Company leases office space under short-term leases with terms under a year. Total rent expense for the years ended April 30, 2023 and
2022 amounted to $
Contingencies
In
connection with the Gameface acquisition on February 2, 2022, the Company agreed to earn-out consideration of common shares of the Company’s
common stock with a fair value of $
From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. The Company is not presently a party to any legal proceedings that it currently believes would individually or taken together have a material adverse effect on the Company’s business or financial statements.
Nasdaq Compliance
On
March 21, 2023, the Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”)
indicating that the Company’s failure to file its Quarterly Report on Form 10-Q for the period ended January 31, 2023 (“Additional
Delinquency”) serves as an additional basis for delisting the Company’s securities from Nasdaq. The Company received a letter
from the Nasdaq on February 14, 2023, indicating that, due to the Company’s failure, in violation of Listing Rule 5250(c)(1), to
file its (i) Annual Report on Form 10-K with respect to the fiscal year ended April 30, 2022; and (ii) Quarterly Reports on Form 10-Q
for the periods ended July 31, 2022 and October 31, 2022 (collectively, the “Delinquent Filings”), by February 13, 2023 (the
due date for filing the Delinquent Filings pursuant to an exception to Nasdaq’s Listing Rule previously granted by Nasdaq), absent
the submission of a timely appeal by February 21, 2023, trading of the Company’s common stock would have been suspended from the
Nasdaq at the opening of business on February 23, 2023. Nasdaq would also have filed a Form 25-NSE with the Securities and Exchange Commission
(the “SEC”), which would have resulted in the removal of the Company’s securities from listing and registration on
the Nasdaq (the “Staff Determination”). Additionally, on October 10, 2022, the Company received a letter from Nasdaq indicating
that the Company’s common stock is subject to potential delisting from Nasdaq because, for a period of 30 consecutive business
days, the bid price of the Company’s common stock had closed below the minimum $
On January 12, 2023, Nasdaq notified the Company that due to the resignations from the Company’s board, audit committee and compensation committee on November 17, 2022 (“Corporate Governance Deficiencies”), the Company no longer complies with Nasdaq’s independent director, audit committee and compensation committee requirements as set forth in Listing Rule 5605. The Company timely submitted its plan of compliance with respect to the Corporate Governance Deficiencies by February 27, 2023 as required by the Nasdaq. However, pursuant to Listing Rule 5810(c)(2)(A), the Corporate Governance Deficiencies serve as an additional and separate basis for delisting and the Company.
| F-26 |
On February 21, 2023, consistent with the Company’s previously announced intention to request an appeal of the Staff Determination by requesting a hearing before the Nasdaq Hearings Panel (the “Panel”) to stay the suspension of the Company’s securities and the filing of the Form 25-NSE with the SEC (the “Hearing”), the Company appealed the Staff Determination to the Panel, and requested that the stay of delisting, which otherwise would expire on March 8, 2023, pursuant to Listing Rule 5815(a)(1)(B), be extended until the Panel issued a final decision on the matter. The Nasdaq granted the Company’s request to extend the stay, pending the Hearing scheduled for March 30, 2023, and a final determination regarding the Company’s listing status. The Company is required to address the Additional Delinquency, the Delinquent Filings, and the Corporate Governance Deficiencies before the Panel. Although the Company is working diligently to file the Delinquent Filings and Additional Delinquency, there can be no assurance that they will be filed prior to the Hearing. If the Company’s appeal is denied or the Company fails to timely regain compliance with Nasdaq’s continued listing standards, the Company’s common stock will be subject to delisting on the Nasdaq.
On
March 21, 2023, the Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”)
indicating that the Company’s failure to file its Quarterly Report on Form 10-Q for the period ended January 31, 2023 (“Additional
Delinquency”) serves as an additional basis for delisting the Company’s securities from Nasdaq. The Company received a letter
from the Nasdaq on February 14, 2023, indicating that, due to the Company’s failure, in violation of Listing Rule 5250(c)(1), to
file its (i) Annual Report on Form 10-K with respect to the fiscal year ended April 30, 2022; and (ii) Quarterly Reports on Form 10-Q
for the periods ended July 31, 2022 and October 31, 2022 (collectively, the “Delinquent Filings”), by February 13, 2023 (the
due date for filing the Delinquent Filings pursuant to an exception to Nasdaq’s Listing Rule previously granted by Nasdaq), absent
the submission of a timely appeal by February 21, 2023, trading of the Company’s common stock would have been suspended from the
Nasdaq at the opening of business on February 23, 2023. Nasdaq would also have filed a Form 25-NSE with the Securities and Exchange Commission
(the “SEC”), which would have resulted in the removal of the Company’s securities from listing and registration on
the Nasdaq (the “Staff Determination”). Additionally, on October 10, 2022, the Company received a letter from Nasdaq indicating
that the Company’s common stock is subject to potential delisting from Nasdaq because, for a period of 30 consecutive business
days, the bid price of the Company’s common stock had closed below the minimum $
On March 30, 2023, the Company had its hearing with the Nasdaq.
On April 12, 2023, Nasdaq notified the Company that the Panel had granted the Company’s request for continued listing on the Nasdaq had been granted subject to the following:
1. On or before May 31, 2023, the Company shall file the delinquent Form 10-K for the year ended April 30, 2022, with the SEC;
2. On or before June 30, 2023, the Company shall file all delinquent Forms 10-Q with the SEC;
3. On or before July 15th, the Company will demonstrate compliance with Listing Rules 5605(b)(1), 5605(c)(2) and 5605(d)(2) (majority independent director, audit committee and compensation committee composition requirements).
On April 12, 2023, the Company received a letter from the Listing Qualifications Department of the Nasdaq indicating that the Company had not yet regained compliance with the Bid Price Rule, which serves as an additional basis for delisting the Company’s securities from the Nasdaq. The letter further indicated that the Panel will consider this matter in its decision regarding the Company’s continued listing on the Nasdaq Capital Market. In that regard, the Nasdaq indicated that the Company should present its views with respect to this additional delinquency to the Panel in writing no later than April 19, 2023, which it did.
On April 26, 2023, Nasdaq notified the Company that the Panel had granted the Company’s request to regain compliance with the Bid Price Rule by October 9, 2023.
On June 29, 2023, the Company received an extension until July 25, 2023 to file their delinquent 10-Q’s for the fiscal year ending April 30, 2023.
| F-27 |
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 $
The Company offers no assurance that it will regain compliance with the Bid Price Rule, the Minimum Stockholders’ Equity Requirement and/or any other delinquency in a timely manner.
Note 14: INCOME TAXES
The Company does business in the US through its subsidiaries Slinger Bag Inc. and Slinger Bag Americas. It also does business in Israel through SBL whose operations are reflected in the Company’s consolidated financial statements. The Company’s operations in Canada, Israel, and the UK were immaterial for the years ended April 30, 2023 and 2022.
Net
deferred tax assets from operations in the US, using an effective tax rate of
| 2023 | 2022 | |||||||
| Deferred tax assets: | ||||||||
| Loss carryforwards | $ | $ | ||||||
| Stock options | ||||||||
| Capital loss carryforward/Disposal | ||||||||
| Related party accruals | ||||||||
| Inventory reserve | ||||||||
| Interest deferral | ||||||||
| Start-up costs | ||||||||
| Other | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets | $ | $ | ||||||
The income tax provision differs from the amount of income tax determined by applying the applicable statutory income tax rate to pretax loss due to the following for the years ended April 30, 2023 and 2022:
| 2023 | 2022 | |||||||
| Income tax benefit based on book loss at US statutory rate | $ | ( | ) | $ | ( | ) | ||
| Share-based compensation and shares for services | ||||||||
| Debt discount amortization | ||||||||
| Related party accruals | ||||||||
| Stock options | ( | ) | ||||||
| Interest expense | ||||||||
| Depreciation | ( | ) | ||||||
| Inventory reserve | ||||||||
| Interest deferral | ( | ) | ||||||
| Acquisition costs | ||||||||
| Accrued legal | ( | ) | ||||||
| Loss on sale of capital assets | ||||||||
| Accrued payroll | ||||||||
| Change in fair value of derivatives | ( | ) | ||||||
| Other | ( | |||||||
| Valuation allowance | ||||||||
| Total income tax provision | $ | $ | ||||||
| F-28 |
The
Company had net operating loss carryforwards of $
Net
deferred tax assets from operations in Israel, using an effective tax rate of
| 2023 | 2022 | |||||||
| Deferred tax assets: | ||||||||
| Loss carryforwards | $ | $ | ||||||
| Start-up costs | ||||||||
| Research and development costs | ( | ) | ( | ) | ||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets | $ | $ | ||||||
The
income tax provision differs from the amount of income tax determined by applying the applicable Israeli statutory income tax rate of
| 2023 | 2022 | |||||||
| Income tax provision (benefit) based on book income (loss) at Israeli statutory rate | $ | ( | ) | $ | ( | ) | ||
| Valuation allowance | ||||||||
| Total income tax provision | $ | $ | ||||||
The
Company had net operating loss carryforwards of approximately $
The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. There were no interest or penalties recognized in the accompanying consolidated statements of comprehensive loss for the years ended April 30, 2023 and 2022.
Note 15: SEGMENTS
With the disposal of Foundation Sports and PlaySight in November 2022 and December 2022, the Company has ceased reporting two segments. The Company now only operates in the equipment segment. For previous segment reporting we refer you to our previously filed Annual Report on Form 10-K filed May 17, 2023.
| F-29 |
Note 16: DISCONTINUED OPERATIONS
On November 27, 2022, the Company entered into a share purchase agreement (the “Agreement”) with PlaySight, Chen Shachar and Evgeni Khazanov (together, the “Buyer”) pursuant to which the Buyer purchased % of the issued and outstanding shares of PlaySight from the Company in exchange for
On
December 5, 2022, the Company assigned
The Company accounted for these sales as a disposal of a business under ASC 205-20-50-1(a). The Company had reclassified the operations of PlaySight and Foundation Sports as discontinued operations as the disposal represents a strategic shift that will have a major effect on the Company’s operations and financial results. Under ASC 855-10-55, the Company has reflected the reclassification of assets and liabilities of these entities as held for sale and the operations as discontinued operations as of and for the year ended April 30, 2022 as well as for the period May 1, 2022 through the date of disposal for each company. As a result of this reclassification, the Company identified the following assets and liabilities that were reclassified from continuing operations to discontinued operations as they are discontinued.
Current assets as of April 30, 2022 – Discontinued Operations:
| April 30, 2022 | ||||
| Cash and restricted cash | $ | |||
| Accounts receivable | ||||
| Inventory | ||||
| Right of use asset – operating leases | ||||
| Prepaid expenses | ||||
| $ | ||||
Non-current assets as of April 30, 2022 – Discontinued Operations:
| April 30, 2022 | ||||
| Goodwill | $ | |||
| Property and equipment, net | ||||
| Intangible assets, net | ||||
| Contract assets, net of current portion | ||||
| Finished products used in operations, net | ||||
| $ | ||||
Current liabilities as of April 30, 2022 – Discontinued Operations:
| April 30, 2022 | ||||
| Accounts payable and accrued expenses | $ | |||
| Lease liability – operating leases | ||||
| Contract liabilities | ||||
| $ | ||||
| F-30 |
Non-current liabilities as of April 30, 2022 – Discontinued Operations:
| April 30, 2022 | ||||
| Contract liabilities, net of current portion | $ | |||
| $ | ||||
The Company reclassified the following operations to discontinued operations for the years ended April 30, 2023 and 2022, respectively.
| 2023 | 2022 | |||||||
| Revenue | $ | $ | ||||||
| Operating expenses | ||||||||
| Other (income) loss | ||||||||
| Net loss from discontinued operations | $ | ( | ) | $ | ( | ) | ||
The following represents the calculation of the loss on disposal of PlaySight and Foundation Sports:
| Note receivable | $ | |||
| Cash and restricted cash | ( | ) | ||
| Accounts receivable | ( | ) | ||
| Prepaid expenses | ( | ) | ||
| Inventory | ( | ) | ||
| Finished products used in operations | ( | ) | ||
| Contract assets | ( | ) | ||
| Right of use asset | ( | ) | ||
| Goodwill | ( | ) | ||
| Property and equipment | ( | ) | ||
| Intangible assets | ( | ) | ||
| Contract liabilities | ||||
| Lease liabilities | ||||
| Accounts payable and accrued expenses | ||||
| Loss on disposal of discontinued operations | $ | ( | ) |
Note 17: SUBSEQUENT EVENTS
From
May 1, 2023 through the date hereof, the Company issued shares of common stock to ambassadors under their agreements (
Meged Agreement
On
June 8, 2023, the Company entered into a merchant cash advance agreement with Meged Funding Group (“Meged”) pursuant to which
the Company sold $
UFS Agreement
On
August 7, 2023, the Company entered into an agreement with UFS (the “UFS Agreement”) pursuant to which the Company sold $
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.
On September 13, the Company held a special meeting
of stockholders in which the following items were approved: (i) the issuance of (i) shares of the our common stock, par value
$ per share, that were issued on October 3, 2022, and, (ii) shares of our common stock issuable upon exercise of Pre-Funded
Warrants at an exercise price of $
| F-31 |
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) Financial Statements
Our financial statements as set forth in the Index to Consolidated Financial Statements under Part II, Item 8 of this Annual Report on Form 10-K are hereby incorporated by reference.
(b) Exhibits
The following exhibits, which are numbered in accordance with Item 601 of Regulation S-K, are filed as part of this Annual Report on Form 10-K or, as noted, incorporated by reference herein:
Exhibit Number |
Exhibit Description | |
| 31.1 | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13a-14(a) and15d-14(a). | |
| 31.2 | Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) and15d-14(a). | |
| 32.1 | Certification of Principal Executive Officer and Pursuant to 18 U.S.C. 1350. | |
| 32.2 | Certification of Principal Financial Officer Pursuant to 18 U.S.C. 1350. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Definition | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Connexa Sports Technologies Inc. | ||
| Dated: April 10, 2024 | By: | /s/ Mike Ballardie |
| Mike Ballardie | ||
| President and Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Dated: April 10, 2024 | By: | /s/ Mike Ballardie |
| Mike Ballardie | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) |