SLINGER BAG INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

The following discussion of our financial condition and results of operations
should be read in conjunction with the financial statements and related notes
included elsewhere in this report and our Annual Report on Form 10-K for the
year ended April 30, 2021. Certain statements in this discussion and elsewhere
in this report constitute forward-looking statements. See "Cautionary Statement
Regarding Forward Looking Information'' elsewhere in this report. Because this
discussion involves risks and uncertainties, our actual results may differ
materially from those anticipated in these forward-looking statements.



Overview and description of the activity

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 100% owned by Slinger Bag Ltd. ("SBL"), an
Israeli company. In connection with the Stock Purchase Agreement, Slinger Bag
Americas acquired 20,000,000 shares of common stock of Lazex for $332,239. On
September 16, 2019, SBL transferred its ownership of Slinger Bag Americas to
Lazex in exchange for the 20,000,000 shares of Lazex acquired on August 23,
2019. As a result of these transactions, Lazex owned 100% of Slinger Bag
Americas and the sole shareholder of SBL owned 20,000,000 shares of common stock
(approximately 82%) of Lazex. Effective September 13, 2019, Lazex changed its
name to Slinger Bag Inc.



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 at that time.



At February 10, 2020Slinger Bag Americas became the 100% owner of SBL, with the wholly owned subsidiary of SBL Slinger Bag International (UK) Limited
(“Shoulder Bag UK“), which was formed on April 3, 2019. The owner of SBL brought it to Slinger Bag Americas for no consideration.

At June 21, 2021Slinger Bag Americas has entered into a Membership Interest Purchase Agreement with Charles Ruddy to acquire a 100% interest in
Sports Systems Foundation, LLC (“Basic Sports“).



The operations of Slinger Bag Inc., Slinger Bag Americas, Slinger Bag Canada,
Slinger Bag UK, SBL and Foundation Sports are collectively referred to as the
"Company" or "Slinger."



The Company operates in the sporting and athletic goods business. The Company is
the owner of the Slinger Launcher, a highly portable and affordable ball
launcher built into an easy to transport wheeled trolley bag. The Slinger
Launcher allows anyone to simply and easily control the speed, frequency and
elevation of balls that are launched for practice, training or fitness purposes.



The company initially focused all of its energies on the global tennis market, but is in the early stages of developing ball launchers for other ball sports.



For the regular tennis player, the Slinger Launcher is much more than a tennis
ball launcher. It also functions as a complete tennis bag with ample room for
racquets, shoes, towels, water bottles and other accessories and can charge
mobile phones and other devices.



Tennis ball machines have been around since the 1950's when they were introduced
by Renne Lacoste. Improvements to performance were made in the 1970's when
Prince started its tennis business on the back of its first product - Little
Prince - which was a vacuum operated ball machine. In the 1990's the first
battery operated machines came to the market and since that time very little, if
anything, has changed in the structure of ball machine products outside of added
computerization. Typically, the machines being marketed by traditional ball
machine brands are large, cumbersome and awkward to operate. They are also very
expensive - often well above U.S. $1,000. Up until today the vast majority of
all tennis ball machines have sold to tennis facilities, with only a few being
sold directly to tennis playing consumers.



According to the Tennis Industry Association (www.tia.org) the single largest
challenge facing tennis participation is the fact that 34% of lapsed players
cited a "lack of playing partner" as the reason for them stopping to play
tennis. The Slinger Launcher goes a long way to solving this issue.



The global tennis market is regarded by industry experts, governing
organizations, tennis brands and tennis-specific market research companies as
having 100 million active players globally, with as many consumers again being
avid fans of the sport. Of this 100 million tennis player market, 20 million
players are regarded as frequent or avid players - players who play regularly -
at least 1 time per month. These avid players drive the total tennis industry
and account for 80% of all tennis revenues worldwide.



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It is this market of avid players that the company aims to penetrate with its Slinger Launcher and associated tennis accessories.

The Company intends to disrupt this traditional tennis market by creating a new
ball machine category - called Slinger Launcher - and marketing portable and
affordable Slinger Launchers directly to avid, regular tennis players.
Constructed within a wheeled trolley tennis bag, a Slinger Launcher weighs
around 15kgs / 34lbs when empty. If stored with 72 balls inside the weight
increases to 19kgs / 42lbs. It can easily be stored in a car trunk, wheeled to
the court and set up within minutes to use. The Slinger Launcher is powered by a
6.6Ah Lithium battery that can last up to 3.5 hours of play depending on the
settings being used and frequency of use. The Slinger Launcher's convenience as
a tennis bag combined with its ease of operation and overall performance as a
tennis ball launcher is the basis that the Company will target direct sales
to
these avid players.



While the initial brand focus is clearly on tennis, the Company is developing
similar launchers to address other forms of tennis around the globe that are
either rapidly gaining new participants or are already well-established sports
in their own right. These include, but are not limited to, Pickleball (U.S.),
Soft Tennis (Japan), and Paddle Tennis (International markets), all of which are
currently in either development or testing and are planned for introduction
in
calendar 2022.



On December 3, 2020, Slinger signed an exclusive agreement with Flixsense Pty
Limited d/b/a Gameface for the development of a tennis specific artificial
intelligence (AI) application. The Company intends to introduce a market
disrupting tennis app for players of all ages and abilities. This app will
provide a wide range of analytics and other services and include practice and
tennis fitness drills and activities, coaching tips and advice and a full suite
of AI analytics. The Company will offer some services free of charge and will
build a tiered subscription model for others. The app is expected to be ready to
launch to the market in calendar 2022.



In the coming years, the company plans to enter new ball sports markets such as baseball, softball and cricket, which are currently scheduled to be introduced on the 2023 calendar.



The Company delivers Slinger Launchers directly from the final assembly facility
in Xiamen, China to customers either by direct shipment from the port in China,
or to third party logistics facilities in Columbia, SC (U.S.) to support our
U.S. business, Belleville, Ontario, Canada, Rotterdam, The Netherlands to
support 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 supplier) in Thailand to the United States and Belgium for onward
distribution.



The Company has contracted with exclusive distributors globally. These include
Japan, UK, Ireland, Switzerland, Scandinavian markets (covering 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 are in various stages of negotiation with other potential market
distribution companies across the globe.



Strategic brand partnerships



The Company is actively working on securing a number of highly visible
ground-breaking strategic partnerships across tennis. These partnerships will
both provide the Company with co-branded products to supplement the core product
offering and, at the same time, are expected to drive mutually beneficial
marketing campaigns aimed at reaching avid tennis players globally. Details of
such partners announced and active today include:



? Wilson Sporting Goods: North America: The Company has entered into a strategic partnership with the world leader in tennis, Wilson, for the supply of co-branded products Trinity tennis balls in the we and Canada markets.

? Professional Tennis Registry (PTR): PTR is the most prestigious professional teaching organization in the world with over 40,000 members. The company has partnered with PTR to supply Slinger launchers to its members.

? Peter Burwash International (PBI): A high profile organization providing
coaching and tennis services to high level, high quality hotels, resorts and
tennis facilities across the globe. The Company is the official supplier of
Slinger Launchers to PBI, which will be used at each location and PBI will offer
an affiliate marketing program promoting sales to its list of global clients.



? DSV Logistics USA and OSL Logistics: DSV is one of the world's leading
suppliers of warehousing, freight forwarding and logistics. The Company will use
DSV warehousing services in the U.S. to optimize logistical activities. OSL are
currently providing all freight forwarding for the U.S. markets and Europe as
well as 3rd party warehousing logistics in Rotterdam for Europe.



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Competition



There are currently no competitors with products that are similar to the Slinger
Launcher, based on its portability, affordability and tennis bag functionality.
There are, however, other companies that make tennis ball machines, including
the following:



  ? Spinshot
  ? Lobster Sports
  ? Spinfire Pro 2
  ? Match Mate Rookie
  ? Sports Tutor
  ? Silent Partner




Raw Materials


All materials used in the Slinger Launder are available 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
parts are produced using an injection mold using poly propylene mixed with 30%
glass fibers. The electronic motors, PCB boards and remote-control parts are all
standard off-the-shelf items.



Intellectual Property


As at the date hereof, the Company has applied for international design and
utility patent protection for its main 3 products: Slinger Launcher, Slinger
Oscillator and Slinger Telescopic Ball Tube. Patents have been applied for in
all key markets including the U.S., China, Taiwan, India, Israel and EU markets
and granted in China and Israel. Trademarks have been applied for in all major
markets around the globe. Trademark protection has been applied for and/or
received in the following countries:



  ? U.S.
  ? Chile
  ? Taiwan
  ? Mexico
  ? EU
  ? Russia
  ? Poland
  ? Czech Republic
  ? Australia
  ? New Zealand
  ? China
  ? South Korea




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  ? 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 more trademarks on a growing list of products, services and applications, which are at various stages of the registration process.

Slinger Bag Inc. owns the rights to its Slingerbag.com domain.


Strategy



The Company has an opportunity to disrupt the traditional tennis market
globally. The Company expects to drive 80% of its global revenues through its
direct-to-consumer go-to-market strategy, whether that be through its on-line
e-commerce platform at www.slingerbag.com or through associated e-commerce
platforms established and managed by its distribution network. The balance of
revenues will be driven through partnerships with leading wholesalers,
federations and teaching pro organizations and other transactions across various
markets. The Company will operate a third-party distributor structure in all
markets with the exception of the United States, the largest tennis market
globally, Canada and its founder's home market of Israel. Distributor partners
will have exclusive territories and will have a recognized background within the
tennis industry for their market as well as having the financial capacity and
service infrastructure to aggressively grow the Slinger brand. Uniquely in the
sports industry, all consumer orders received into Slingerbag.com from markets
outside the United States will be routed back to our local distribution partners
to fulfill and to service their local customers. All distributor partners will
purchase with advanced orders, either based on a vendor-direct FOB Asia direct
ship or through 1 of our 3 global 3rd party distribution facilities on a duty
paid basis and at premium cost price. Currently, the Company has signed a number
of exclusive distribution agreements in key markets and has on-going discussions
with other key potential distributor partners in other markets around the globe.



The United States market will remain a direct to consumer market for Slinger. As
the largest tennis market in the world with 17.4 million players of which 10.5
million are regular / avid players, the United States is a key market both to
establish the Slinger brand and to drive demonstrable growth. Recently the
industry reported a significant increase in U.S. tennis participation and
overall number of tennis play occasions, something that has been replicated in
other key tennis markets around the globe. Direct to consumer sales will be
supplemented by one or more leading tennis wholesalers who manage large
databases of coach, player, college, high school and club clients. This market
will be serviced out of a third-party logistics facility in West Columbia, SC
and operated by one of Slinger's preferred global logistics partners, DSV, one
of the world's leading suppliers of freight-forwarding, logistics and
warehousing.



Brand Marketing



As a direct-to-consumer e-commerce brand, all marketing activity and advertising
media will be centered around pushing consumers to www.slingerbag.com and
converting them to purchases. Slinger has engaged a number of leading agencies
to support its global marketing efforts:



Brand Nation is a world class influencer marketing agency based in London. Brand
Nation will lead all influencer programming globally. Slinger has seeded about
50% of its planned 1,000 global influencers to date. Influencers targeted are
wide ranging and include leading sports, tennis, film, TV, music and blogger
celebrities all known for the fact that they play tennis regularly and have a
fan base in excess of 10,000 followers. All influencer activity is rolled back
up to the Slinger social media platforms as a means of generating significant
brand awareness and product interest.



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Ad Venture Media Group is a New York based leading PPC (pay-per-click) agency
whose work is grounded in sophisticated scientific analysis of consumer data and
consumer trends and they are recognized globally as leaders in paid search and
paid social media campaigns. Ad Venture Media will lead all Slinger PPC activity
on a performance-based fee structure and is briefed to drive consumer
engagement, through bespoke advertising campaigns that are aligned to our
product profitability objectives.



In the United States market, we have partnered with an organization called Team
HQS who will manage an affiliate marketing program across U.S. based teaching
professionals, players, juniors and events. These affiliates will be provided
with unique affiliate marketing codes to share with their social media followers
and other such communities that they are connected to and each will receive an
affiliate marketing fee based on revenues generated by consumers purchasing
Slinger products attributable to their unique code.



We continue to evaluate each support agency on a monthly basis and, at the same time, we continually explore new avenues to expand our reach to our core customers.



Each of our distributor partners around the world are establishing their Slinger
distribution business as Slinger itself would do if it was establishing a
Slinger subsidiary in each market. As such, each distributor will also adopt all
forms of Slinger brand marketing programs as well as initiating new local
concepts of their own - all aimed at reaching the avid/regular tennis player
directly and ensuring that the Slinger brand message is consistent around the
globe. Slinger has agreed a local marketing budget structure with each
distributor as part of its distribution agreement. This marketing budget will be
primarily funded by the distributor partner with an additional contribution
coming from Slinger with the contribution being linked to the distributor's
purchase objectives. Each distributor will execute local grassroots programs
including demonstration days, local teaching pro partnerships, specialist tennis
network communications, seeding of Slinger product locally as necessary to local
key market tennis influencers to further increase the intensity of the
influencer effort. Marketing dollars will also be allocated to Google, Facebook,
YouTube and other social media advertising spend and, where appropriate,
approved and overseen by Ad Venture Media Group.



Distribution Agreements


Slinger Bag Americas has entered into exclusive distribution agreements for
Slinger's line of products, including, but not limited to, tennis ball launcher
devices, tennis ball launcher accessories, sports bags, tennis balls, tennis
court accessories and other tennis related products in the following markets and
with the following distributors:



                                                               Minimum Purchase
                                                                Requirement of
                                                                 Slinger Bag
                                                                 Tennis Ball
Territory                             Distributor                 Launchers
                                                             32,500 through the
Japan                                 Globeride Inc.         end of January 2025
                                      Framework Sports &     9,000 through the
United Kingdom and Ireland            Marketing Ltd          end of May 2025
                                                             3,000 through the
Switzerland                           Ace Distribution       end of May 2025
                                      Frihavnskompagniet     6,500 through the
Denmark, Finland, Norway and Sweden   ApS                    end of December 2025
                                                             1,000 through the
Morocco                               Planet Sport Sarl      end of December 2025
                                      Sportsman Warehouse    2,500 through the
Australia                             t/a Tennis Only        end of 2025
                                      Sporting Goods         100 through the end
New Zealand                           Specialists            of 2025
                                                             950 through the end
Bulgaria                              Ark Dream EOOD         of 2025
                                                             165 through the end
Chile                                 Sporting Brands Ltda   of 2025
                                                             380 through the end
Croatia, Hungary and Slovenia         Go 4 d.o.o.            of 2025
Austria, Belgium, France, Germany,
Italy, Luxembourg, Portugal, Spain    Dunlop International   120,000 through the
and The Netherlands                   Europe Ltd             end of 2025
                                                             950 through the end
Singapore                             Tennis Bot Pte Ltd     of 2025
                                                             10,000 through the
India                                 Racquets4U             end of 2025
                                                             2,050 through the
Israel                                Eran Shine             end of 2025
Bahrain, Bangladesh, Egypt, Kuwait,
Maldives, Oman, Pakistan, Qatar,
Saudi Arabia, Sri Lanka, Tunisia                             3,000 through
the
and United Arab Emirates              Color Sports Inc       end of 2025
                                                             380 through the end
Greece                                Elsol                  of 2025
                                                             50 through the end
Panama                                Orange Pro             of 2021
                                                             1,900 through the
Russia                                Neva Sport             end of 2025
                                                             500 through the end
Malaysia                              Tennis Bot             of 2025
                                                             3,000 through the
Czech and Slovak Republics            RaketSport s.r.o       end of 2025
                                                             5,000 through the
South Africa                          Golf Racket Pty Ltd    end of 2025
                                                             750 through the end
Hong Kong and Macau                   Tennis Bot             of 2025
                                                             650 through the end
Indonesia and Philippines             Tennis Bot             of 2026
                                      Xiamen Powerway        17,500 through the
China                                 Sports Co. Ltd         end of 2026
                                      Frameworks Sports      1,850 through the
Poland                                Poland                 end of 2026
                                      Brandsinc SA / Siati   240 through the end
Ecuador                               Express                of 2026
Total                                                        223,915




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Brand Endorsements


We have entered into agreements with several world-renowned tennis players and coaches to become brand ambassadors.

Tommy Haas (former ATP #2 Player) has been appointed the Slinger Bag Chief
Ambassador. In this role Tommy will support Slinger in building out its global
ambassador team focused on identifying ambassadors in our key global business
markets of the U.S., Japan, Europe, Australia, China, Brazil and India. Tommy
will also be very active supporting and promoting Slinger across the globe with
personal appearances at Slinger events and via online training and drill videos.



Mike and Bob Bryan (aka the Bryan Brothers - the foremost doubles team in the
tennis world) have extended their ambassador agreements and will continue to
feature prominently in our marketing activities and messaging.



Additionally, we have brand endorsements with the following 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 either a world-ranked
singles or doubles tennis player or, in the case of Nick Bollettieri and Patrick
Mouratoglou, the coach of a number of world-ranked tennis players, has a large
following of fans and supporters and is active across many aspects of tennis
today.



The Professional Tennis Registry (PTR) - a United States-based teaching teacher
association with approximately 40,000 members will become a non-exclusive
strategic partner for Slinger with all their members able to access an affiliate
member part of our website.



Peter Burwash International (PBI) - a United States-based, highly respected,
global tennis services company set up by Peter Burwash some 35 years ago. PBI
provides tennis programs and other tennis services to as many as 56 of the
globes leading hotels and resorts. Slinger Launchers will be available to use at
each resort and the PBI team will be actively promoting Slinger as part of
our
affiliate marketing activity.


PTCA Central Europe – a leading European professional coach coach organization and they, like others, will undertake an affiliate marketing approach.



Tie Break 10s - a global organization that owns and operates Tie Break 10 events
both independently and in partnership with major global tour events, e.g.,
Indian Wells. These events involve top players playing 'tie-break' matches with
the event fully completed in one evening and with a significant cash prize for
the winner. Slinger will be promoted at each of these events and will be
available for fans to test out as well as the Slinger brand name being
prominently used on Tie Break 10s social media.



Tennis One App - a United States-based company that has developed and
successfully marketed an all-inclusive tennis app for players across the globe.
Slinger has engaged with Tennis One to support its coaches corner segment - a
weekly podcast series and in doing so benefits from the brand exposure available
through the reach of the consumers using the app on a regular basis.



Functional tennis – one Ireland social media tennis blog site with over 250,000 followers. Slinger is engaged with Functional Tennis in various ways and is the title sponsor of its weekly tennis podcast.

We are currently in discussions with other top organisations, events, coaches and players and have to date distributed Slinger products to 12 of the ATP Top 20 Male Players, 5 of the WTA Top 20 Female Players, as well as many other high-level tours and teaching. professionals.

Throughout 2020 we sponsored several top tennis events eg Battle of the Brits, Tie Break 10s (all broadcast live across the globe).


Research and Development



The Company is involved in additional research and development of transportable,
affordable and player-enhancing ball launching machines and associated game
improvement products for all ball sports. Following a successful launch of its
tennis ball launcher, Slinger is currently field testing its new pickleball,
paddle and soft tennis launchers, which are expected to be introduced to the
market in calendar 2022. Slinger plans to introduce similar transportable,
versatile and affordable ball launchers for baseball, softball, cricket,
badminton and other high participation ball sports over the course of the next 3
years. In this connection, on September 10, 2020, Slinger entered into an
agreement with Igloo Design, which is the same company that designed the Slinger
Launcher for tennis, for a Slinger ball launcher for baseball and softball. This
development commenced in the second half of 2020 and initial design ideas and
further direction have been provided.



We retain outside consultants to provide research and product design services
and each consultant has a specific expertise (e.g., molding technology,
electronics, product design, bag design, as examples). We also are working with
a select group of highly qualified and resourceful third-party suppliers in
Asia. We are continually striving to identify product enhancements, new concepts
and improvement to the production process on an on-going daily basis. In respect
of any new project, management provides detailed briefs, market data, product
cost targets, competitive analysis, timelines and project cost goals to either
the product consultants or vendors and manages them to agreed upon key
performance indicators ("KPIs"). These KPI's include, but are not limited to:
(i) manufacturing to target costs; (ii) agreed development timelines; (iii)
established quality criteria; and (iv) defined performance criteria.



We also retain trademark and patent lawyers and work with these lawyers on projects as needed.


Government Regulation


Slinger Launcher and Slinger Oscillator meet all requirements we government requirements for electrical, radio wave, and battery standards, and all necessary and required certifications to facilitate the worldwide marketing and sales of these products.


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Results of Operations for the Three Months Ended January 31, 2022 and 2021

Here are the results of our operations for the three months ended
January 31, 2022 compared to 2021:


                                          For the Three Months Ended
                                        January 31,        January 31,
                                            2022              2021             Change
                                        (Unaudited)        (Unaudited)

Net sales                              $    4,201,745     $   4,123,648     $      78,097
Cost of sales                               3,234,430         3,245,493           (11,063 )
Gross income                                  967,315           878,155            89,160

Operating expenses:
Selling and marketing expenses                920,161           351,845    

568,316

General and administrative expenses 2,942,501 1,385,626

1,556,875

Research and development costs                275,908           137,156    
      138,752
Total operating expenses                    4,138,570         1,874,627         2,263,943
Loss from operations                       (3,171,255 )        (996,472 )      (2,174,783 )

Other expense (income):
Amortization of debt discounts              2,750,000            39,175    

2,710,825

Loss on extinguishment of debt                      -            95,760           (95,760 )
Induced conversion loss                             -                 -                 -
Gain on change in fair value of
derivatives                                (5,943,967 )               -        (5,943,967 )
Loss on issuance of convertible
notes                                       2,200,000                 -    

2,200,000

Interest expense - related party               28,167           137,480    
     (109,313 )
Interest expense, net                         164,669            22,199           142,470
Total other expense (income)                 (801,131 )         294,614        (1,095,745 )
Loss before income taxes                   (2,370,124 )      (1,291,086 )      (1,079,038 )
Provision for income taxes                          -                 -                 -
Net loss                               $   (2,370,124 )   $  (1,291,086 )   $  (1,079,038 )




Net sales



Net sales increased $78,097, or 2%, during the three months ended January 31,
2022 as compared to the three months ended January 31, 2021. The increase is due
to an increase in the number of new orders placed on the Company's website and
from its international distributors and fulfilled during the three months ended
January 31, 2022 as compared to the three months ended January 31, 2021 when the
product was still relatively new to the market. As of January 31, 2022, we had
deferred revenue of $18,508 representing amounts received for units that have
not been shipped to customers. We expect these orders to be fulfilled and the
sales to be recognized in the Company's next fiscal quarter.



Cost of sales and gross income



Cost of sales decreased $11,063 during the three months ended January 31, 2022
as compared to the three months ended January 31, 2021, which is primarily due
to increased shipping costs in the prior year. Gross income increased $89,160,
or 10%, during the three months ended January 31, 2022 as compared to the three
months ended January 31, 2021 due to the increased sales and lower cost of
sales.



7





Sales and marketing expenses



Selling and marketing expenses increased $568,316, or 162%, during the three
months ended January 31, 2022 as compared to the three months ended January 31,
2021. This increase is largely driven by an increase in social media
advertising, sponsorships, and other investments in our public relations
presence in the current year in order to drive sales and build brand awareness.



General and administrative expenses



General and administrative expenses, which primarily consist of compensation
(including share-based compensation) and other employee-related costs, as well
as legal fees and fees for professional services, increased $1,556,875 during
the three months ended January 31, 2022 as compared to the three months ended
January 31, 2021. This increase is primarily driven by a $504,093 increase in
legal fees related to closing costs incurred as part of the acquisitions of
PlaySight Interactive Ltd. and Flixsense Pty Ltd. d/b/a Gameface during the
three months ended January 31, 2022 and filing fees related to our S-1 that was
filed in January 2022 and other SEC filings. The remainder of the increase is
largely due to an increase in compensation expense due to increased headcount to
support the continued growth of the business as well as the acquisition of
Foundation Sports in 2021.



Research and development costs



Research and development costs increased $138,752 during the three months ended
January 31, 2022 as compared to the three months ended January 31, 2021. This
increase is primarily driven by our investment in a new platform and app that
will integrate artificial intelligence (AI) technology to offer more value to
our customers, as well as the continued development and testing of launchers for
new ball sports that are expected to be brought to market in the future.



8






Other expense



Total other expense decreased $1,095,745 during the three months ended January
31, 2022 as compared to the three months ended January 31, 2021. The decrease in
expense was primarily due to the increased gain on the change in fair value of
derivatives as well as a decrease in the loss on extinguishment of debt and
related party interest expense as a result of lower related party debt balances
year over year. These decreases were partially offset by the loss on the
issuance of the Convertible Notes as well as an increase in amortization of debt
discounts and interest expense, net due to the issuance of the Convertible
Notes
during the current year.


Results of operations for the nine months ended January 31, 2022 and 2021

Here are the results of our operations for the nine months ended
January 31, 2022 compared to 2021:


                                          For the Nine Months Ended
                                        January 31,       January 31,
                                           2022              2021             Change
                                        (Unaudited)       (Unaudited)

Net sales                              $  12,139,860     $   7,308,701     $   4,831,159
Cost of sales                              8,302,386         5,762,143         2,540,243
Gross income                               3,837,474         1,546,558         2,290,916

Operating expenses:
Selling and marketing expenses             2,515,067         1,051,785     

1,463,282

General and administrative expenses 41,535,188 2,974,404

38,560,784

Research and development costs               553,274           180,705     
     372,569
Total operating expenses                  44,603,529         4,206,894        40,396,635
Loss from operations                     (40,766,055 )      (2,660,336 )     (38,105,719 )

Other expense (income):
Amortization of debt discounts             5,400,285           325,426     

5,074,859

Loss on extinguishment of debt             7,096,730         1,528,580     

5,568,150

Induced conversion loss                            -            51,412           (51,412 )
Gain on change in fair value of
derivatives                              (15,074,880 )               -       (15,074,880 )
Loss on issuance of convertible
notes                                      5,889,369                 -     

5,889,369

Interest expense - related party             106,895           454,029     
    (347,134 )
Interest expense, net                        446,339           169,455           276,884
Total other expense                        3,864,738         2,528,902         1,335,836
Loss before income taxes                 (44,630,793 )      (5,189,238 )     (39,441,555 )
Provision for income taxes                         -                 -                 -
Net loss                               $ (44,630,793 )   $  (5,189,238 )   $ (39,441,555 )




Net sales



Net sales increased $4,831,159, or 66%, during the nine months ended January 31,
2022 as compared to the nine months ended January 31, 2021. The increase is due
to an increase in the number of new orders placed on the Company's website and
from its international distributors and fulfilled during the nine months ended
January 31, 2022 as compared to the nine months ended January 31, 2021 when a
large portion of the orders during the first three months of the year were
related to the Kickstarter and Indiegogo crowdfunding campaigns initiated in
fiscal year 2019.


Cost of sales and gross income



Cost of sales increased $2,540,243, or 44%, during the nine months ended January
31, 2022 as compared to the nine months ended January 31, 2021, which was
primarily due to the increase in net sales. Gross income increased $2,290,916,
or 148%, during the nine months ended January 31, 2022 as compared to the nine
months ended January 31, 2021.



9






The increase in gross margin is largely due to the first quarter of the prior
year resulting in a gross loss on net sales due to (1) discounted pricing on the
initial crowdfunding orders, (2) as fulfillment was later than initially
scheduled we fulfilled orders with the "deluxe" version of launcher (including
all features), as well as tennis balls, both of which increased cost of sales,
and (3) due to sanctions by the U.S. against Chinese sourced products, the
import duty was raised on all launchers brought into the U.S. increasing our
cost of sales. As a result, our cost of sales exceeded initial sales values
raised in our crowdfunding campaigns. As of the beginning of the third quarter
in the prior year, substantially all of the initial crowdfunding orders had
been
fulfilled.


Sales and marketing expenses



Selling and marketing expenses increased $1,463,282, or 139%, during the nine
months ended January 31, 2022 as compared to the nine months ended January 31,
2021. This increase is largely driven by an increase in social media
advertising, sponsorships, and other investments in our public relations
presence in the current year in order to drive sales and build brand awareness.



General and administrative expenses



General and administrative expenses, which primarily consist of compensation
(including share-based compensation) and other employee-related costs, as well
as legal fees and fees for professional services, increased $38,560,784 during
the nine months ended January 31, 2022 as compared to the nine months ended
January 31, 2021. This increase is primarily driven by an increase of
$32,569,112 of share-based compensation related to warrants granted to
employees, a $1,264,590 increase in expense related to shares and warrants
issued in connection with services the majority of which relate to the warrants
issued to the lead placement agent as part of the issuance of the Convertible
Notes and shares and warrants issued to brand ambassadors, and a $1,000,000
increase in legal fees related to closing costs incurred as part of the
acquisitions of PlaySight Interactive Ltd. and Flixsense Pty Ltd. d/b/a Gameface
during the nine months ended January 31, 2022. The remainder of the increase is
largely due to an increase in compensation expense due to increased headcount to
support the continued growth of the business as well as the acquisition of
Foundation Sports in 2021.



Research and development costs



Research and development costs increased $372,569 during the nine months ended
January 31, 2022 as compared to the nine months ended January 31, 2021. This
increase is primarily driven by our investment in a new platform and app that
will integrate artificial intelligence (AI) technology to offer more value to
our customers, which we began developing in December 2020, as well as the
continued development and testing of launchers for new ball sports that are
expected to be brought to market in the future.



Other expense



Total other expense increased $1,335,836 during the nine months ended January
31, 2022 as compared to the nine months ended January 31, 2021. The increase was
primarily due to the loss on the issuance of the Convertible Notes, an increase
in loss on extinguishment of debt as a result of the conversion of the notes
payable - related party, and increases in amortization of debt discounts and
interest expense, net due to the issuance of the Convertible Notes during the
nine months ended January 31, 2022. These increases were partially offset by an
increased gain on the change in fair value of derivatives as well as a decrease
in induced conversion loss and related party interest expense as a result of
lower related party debt balances year over year.



Cash and capital resources

Our financial statements have been prepared on a going concern basis, which
assumes we will be able to realize our assets and discharge our liabilities in
the normal course of business for the foreseeable future. We had an accumulated
deficit of $73,454,066 as of January 31, 2022, and more losses are anticipated
in the development of the business. Accordingly, there is substantial doubt
about our ability to continue as a going concern. Our financial statements do
not include any adjustments related to the recoverability and classification of
assets or the amounts and classification of liabilities that might be necessary
should we be unable to continue as a going concern.



10





The ability to continue as a going concern is dependent upon our generating
profitable operations in the future and/or being able to obtain the necessary
financing to meet our obligations and repay our 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
respect to additional financing, refer to Notes 5, 6, 7, and 12. 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. There can be no assurance that additional funds will be available on
terms acceptable to the Company, or at all.



Here is a summary of our cash flows from operating, investing and financing activities for the nine months ended January 31, 2022 and 2021:


                                              For the Nine Months Ended
                                             January 31,      January 31,
                                                2022              2021
Net cash used in operating activities       $  (7,783,098 )   $ (3,139,286 )
Net cash used in investing activities          (2,250,000 )        (30,000 )
Net cash provided by financing activities      10,209,420        3,420,000

We had cash and cash equivalents of $1,082,446 from January 31, 2022compared to $928,796 from April 30, 2021.

Net cash used in operating activities was $7,783,098 during the nine months
ended January 31, 2022, as compared to $3,139,286 during the same period in
2021. Our net cash used in operating activities during the nine months ended
January 31, 2022 was primarily the result of our net loss of $44,630,793 for the
period as well as increases in inventory, prepaid expenses and other current
assets, and accounts receivable as well as decreases in deferred revenue during
the period, which was partially offset by net non-cash expenses of $37,815,432
and increases in accounts payable and accrued expenses, accrued payroll and
bonuses and accrued interest - related party during the period. Our net cash
used in operating activities during the nine months ended January 31, 2021 was
primarily the result of our net loss of $5,189,238 for the period as well as
increases in inventory and accounts receivable as well as decreases in deferred
revenue during the period, which was partially offset by net non-cash expenses
of $2,354,195, increases in accounts payable and accrued expenses, accrued
payroll and bonuses, and accrued interest - related party as well as a decrease
in prepaid expenses and other current assets during the period.



Net cash used in investing activities was $2,250,000 and $30,000 for the nine
months ended January 31, 2022 and 2021, respectively. Our net cash used in
investing activities during the nine months ended January 31, 2022 consisted of
$2,250,000 in issuances related to a note receivable while our net cash used in
investing activities during the nine months ended January 31, 2021 related to
our purchase of the Slinger trademark



Net cash provided by financing activities was $10,209,420 for the nine months
ended January 31, 2022, as compared to $3,420,000 for the same period in 2021.
Cash provided by financing activities for the nine months ended January 31, 2022
primarily consisted of proceeds of $11,000,000 from convertible notes payable
and proceeds of $3,000,000 from notes payable with a related party, which was
partially offset by a $2,000,000 repayment of a note payable, a $1,000,000
repayment of related party notes payable and $800,251 in debt issuance costs
related to the convertible notes payable. Cash provided by financing activities
for the nine months ended January 31, 2021 consisted of proceeds of $2,300,000
from notes payable with a related party and proceeds of $1,120,000 from a note
payable.



11






Description of Indebtedness



Notes Payable - Related Party



On January 14, 2022, the Company entered into two loan agreements with Yonah
Kalfa and Naftali Kalfa, each for $1,000,000, pursuant to which the Company
received a total amount of $2,000,000. The loans bear interest at a rate of 8%
per annum and are required to be repaid in full by April 30, 2022 or such other
date as may be accepted by the lenders. The Company is not permitted to make any
distribution or pay any dividends unless or until the loans are repaid in full.



There was $2,000,000 of outstanding borrowings from related parties of the Company at January 31, 2022. Accrued interest due to these related parties January 31, 2022 amounted to $850,092.

See Note 5 to the condensed consolidated financial statements for additional information.



Convertible Notes Payable



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) 8% Senior
Convertible Notes (the "Convertible Notes") in an aggregate principal amount of
$11,000,000 and (ii) warrants to purchase up to 7,333,334 shares of common stock
of the Company (the "Warrants" and together with the Convertible Notes, the
"Securities"). The Company received an aggregate of $11,000,000 in gross
proceeds from the Offering, before deducting offering expenses and commissions.



On December 31, 2021, the Purchase Agreement and Convertible Notes were amended
in an Omnibus Amendment Agreement pursuant to which the holders of the
Convertible Notes agreed to make certain changes to the terms of the Purchase
Agreement and Convertible Notes in exchange for an increase in the principal
amount of the Convertible Notes from $11,000,000 to $13,200,000 and such
increased principal balance is reflected on the replacement note issued to each
note holder. The full terms of the Omnibus Amendment Agreement were disclosed in
our current report on Form 8-K dated January 5, 2022.



Total outstanding borrowings related to Convertible Bonds as of January 31, 2022 were $13,200,000. The outstanding amount is net of total discounts of
$5,622,222 for a net book value of $7,577,778 from January 31, 2022.

See Note 6 to the condensed consolidated financial statements for additional information.



Note Payable



At April 15, 2021the Company entered into a $2,000,000 note payable (the “note”). The note matures April 14, 2023 and bears interest at fifteen percent (15%) per annum. The Company pays interest at maturity, at which time all principal and unpaid interest are due.



On August 6, 2021, the Company used the net proceeds from the issuance of the
Convertible Notes to pay 100% of the outstanding principal and accrued interest
of the Note.


See Note 7 to the condensed consolidated financial statements for additional information.

Future amounts due from January 31, 2022 are summarized as follows:


                                                                  Payments due by period
                                   Total          Less than 1 year       1-3 years       3-5 years       More than 5 years

Convertible notes payable       $ 13,200,000     $       13,200,000     $         -     $         -     $                 -
Notes payable - related party      2,000,000              2,000,000        
      -               -                       -
Total                           $ 15,200,000     $       15,200,000     $         -     $         -     $                 -



We anticipate that working capital requirements will continue to be funded by a combination of our existing funds, cash flow from operations and other debt and/or securities issuances. Our working capital requirements are expected to increase as our business grows.



Existing working capital, further advances and debt instruments, and anticipated
cash flow are expected to be adequate to fund our operations over the next
twelve months. We have no lines of credit or other bank financing arrangements.
Generally, we have financed operations to date through the proceeds of private
placement of equity and debt instruments. In connection with our business plan,
management anticipates additional increases in operating expenses and capital
expenditures relating to the (i) acquisition of inventory; (ii) developmental
expenses associated with a start-up business; and (iii) marketing expenses. We
intend to finance these expenses with further issuances of securities and debt
issuances. Thereafter, we expect we will need to raise additional capital and
generate revenues to meet long-term operating requirements. Additional issuances
of equity or convertible debt securities will result in dilution to our current
shareholders. Further, such securities might have rights, preferences or
privileges senior to our common stock. Additional financing may not be available
upon acceptable terms, or at all. If adequate funds are not available or not
available on acceptable terms, we may not be able to take advantage of
prospective new business endeavors or opportunities, which could significantly
and materially restrict our business operations.



Off-balance sheet arrangements

We have no off-balance sheet arrangements.

Effect of inflation and price changes

We do not believe that inflation and price changes will have a material effect on our business.


Going Concern



Our independent registered public accounting firm auditors' report accompanying
our April 30, 2021 financial statements contained an explanatory paragraph
expressing substantial doubt about our ability to continue as a going concern.
The financial statements have been prepared assuming that we will continue as a
going concern, which contemplates that we will realize our assets and satisfy
our liabilities and commitments in the ordinary course of business.



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