Acquisitions and Investments - The company acquired 100% ownership of Slinger Bag Canada on October 31, 2019, with no historical operational activity reported[19]. - The company agreed to acquire 70% of Yuanyu Enterprise Management Co., Limited for a total of $56 million, resulting in a change of control[41]. - The company purchased 20% of YYEM for $16,500,000 in cash, closing the transaction on March 20, 2024[42]. - The company will issue 8,127,572 newly issued shares of common stock to acquire an additional 50% of YYEM[43]. - The Company will receive aggregate cash payments of $4.5 million from YYEM, with specific payment milestones including $800,000 within two business days and $2 million at Closing[47]. - The Company approved a share exchange agreement to acquire 70% of YYEM, which will result in a change of control and the separation of the Slinger Bag business[103]. Financial Performance and Position - The company recorded an impairment loss of $3,486,599 related to Foundation Sports as of April 30, 2022, due to higher than expected costs and time to market[24]. - As of April 30, 2024, the Legacy Business' assets were approximately $5.1 million, while liabilities were $12.0 million[46]. - The Company received an investment of $16.5 million, regaining compliance with Nasdaq's minimum shareholder equity requirement[80]. - The Company issued 116,510 shares of common stock and pre-funded warrants for an aggregate amount of approximately $16.5 million on January 19, 2024[87]. - Financial statements are prepared on a going concern basis, with substantial doubt about the ability to continue without generating profitable operations or obtaining necessary financing[166]. - The company intends to raise additional funds through public or private financing to support business operations, but there are no guarantees of sufficient capital availability[170]. Sales and Revenue Generation - An exclusive distribution agreement for Padel Tennis was signed on March 7, 2023, projected to generate approximately $15 million in revenue by the end of 2028[32]. - The Company entered into an agreement to sell $693,500 in future receivables for $450,000 in cash on November 16, 2023[33]. - The Company sold $1,460,000 in future receivables to Agile Capital Funding, LLC for $1,000,000 in cash, agreeing to weekly payments of $52,142.86 until the receivable amount is paid in full[90]. - The Company entered into an agreement to sell $1,183,200 in future receivables to Cedar Advance LLC for $752,000 in cash, with weekly payments of $39,440[91]. Stock and Shareholder Matters - The company changed its name to Connexa Sports Technologies Inc. and its ticker symbol to "CNXA" on April 7, 2022[25]. - The Company completed a public offering and listed its common stock on the Nasdaq Capital Market following a reverse stock split[25]. - The Reverse Stock Split was approved at a ratio of 1-for-20, effective June 27, 2024[54]. - Following shareholder approval on May 15, 2024, the exercise price of the October and December Warrants was amended to $3.20 per share[72]. - The Company executed a 1-20 reverse stock split, raising its share price to $8.31, which helped regain compliance with the minimum bid price requirement[84]. Market and Competitive Landscape - The Company operates in the sports equipment and technology business, focusing on the Slinger Launcher, which includes portable tennis, padel, and pickleball ball launchers, along with AI technology and performance analytics through Gameface[99]. - The global tennis market has 80 million active participants, with pickleball recognized as the fastest-growing sport in the U.S. with over 5 million regular players, and an estimated 10 million padel players globally[106]. - The sports equipment and technology industry is highly competitive, with numerous companies vying for market share, which could affect the company's pricing and customer demand[215][216]. Product Development and Innovation - Gameface launched the Slinger App for tennis in April 2024, offering both freemium and subscription-based access to analytics data[118]. - The company is currently in the application process for up to 12 novel innovations related to the planned marketing introduction of a Slinger Baseball Launcher in 2025[143]. - Field testing for new Baseball/Softball launchers is ongoing, with market introduction expected in 2025, and plans for additional sports launchers over the next three years[152]. - The Slinger App for Tennis has been launched and will be fully operational with all planned features by the end of 2024[153]. Marketing and Brand Strategy - Slinger Bag has built a user base of approximately 100,000 users and has access to a database of over 500,000 avid tennis players through its acquisition of Foundation Sports[127]. - The marketing budget is primarily linked to distributor partners' annual purchase objectives, with a consistent Return On Ad Spend (ROAS) of over 10X achieved through digital advertising efforts[132]. - Slinger Bag's marketing strategy focuses on digital advertising, influencers, and brand ambassadors, primarily utilizing platforms like Facebook and Google[124]. - The company has engaged AdVenture Media Group for its paid digital and social media advertising, which is based on scientific analysis of consumer data[132]. - Slinger Bag is leveraging social media engagement from its consumers to generate brand awareness and drive sales through user-generated content[126]. Operational Challenges and Risks - Increasing costs for raw materials, labor, and freight could negatively impact gross margins and profitability, with labor costs at independent manufacturers rising and energy costs fluctuating dramatically[178]. - The company relies heavily on supply chain reliability, with disruptions from the COVID-19 pandemic, geopolitical tensions, and inflationary trends adversely affecting operations and profitability[190]. - International operations face risks including foreign laws, political unrest, and economic conditions, which could adversely impact results of operations and growth strategy[192]. - The ability to respond to changes in market trends and consumer preferences is crucial for maintaining market share and profitability, with potential risks if the company fails to innovate[198]. - Effective management of e-commerce channels and inventory is critical to prevent lost sales and maintain customer relationships, with potential negative impacts on net sales if not managed properly[200]. Corporate Governance and Compliance - The Company amended its bylaws to reduce the quorum requirement for stockholder meetings from a majority to 33.33%[77]. - The Company received a notice from Nasdaq regarding non-compliance with the minimum bid price requirement due to a closing bid price below $1.00 for 30 consecutive trading days[82]. - The company does not condone child labor in its production processes and maintains regular quality control visits to vendor facilities[159]. - The company has established quality control processes in partnership with Stride-Innovation to ensure product consistency and reliability[155]. Human Resources and Management - The company has 8 full-time employees and engages part-time employees and consultants to support operations[160]. - Retaining existing management and key employees is critical for the successful implementation of the company's growth strategy, as their loss could hinder operations[203][204].
Connexa(CNXA) - 2024 Q4 - Annual Report