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Connexa Sports Technologies Inc.(YYAI) - 2022 Q4 - Annual Report

Financial Performance and Losses - Connexa Sports Technologies Inc. reported an impairment loss of $3,486,599 related to Foundation Sports as of April 30, 2022[14]. - The company has an accumulated deficit and anticipates further losses, raising substantial doubt about its ability to continue as a going concern[101][102]. - The company divested PlaySight and 75% of Foundation Sports to improve cash flow and reduce operational losses amid rising inflation and manufacturing costs[104]. - Management plans to finance operations over the next twelve months through existing cash, loans from related parties, and/or private placements[102]. - The company anticipates seasonal fluctuations in sales, with higher revenues expected in the first and fourth fiscal quarters[85]. - The Company faced potential delisting from Nasdaq due to non-compliance with filing requirements and bid price rules, with a grace period until April 10, 2023[35]. - Uncertainty regarding the availability of financing on acceptable terms, which could limit operational continuity[105]. - Failure to secure timely financing may lead to material adverse effects on financial performance and stock price[105]. - Potential need to curtail or cease operations if additional funding is not secured[105]. Corporate Changes and Governance - The company changed its domicile from Nevada to Delaware and rebranded from Slinger Bag Inc. to Connexa Sports Technologies Inc. in April 2022[15]. - The Company is required to address Corporate Governance Deficiencies following the resignation of two board members on November 17, 2022[38]. - The company is required to file a registration statement with the SEC covering the resale of unregistered shares by December 20, 2022[30]. - The company has engaged Stride-Innovation for quality control and vendor management, ensuring compliance with production standards[92][95]. - The company has identified no direct competitors for its Slinger Bag Launcher, highlighting its unique affordability and functionality in the market[78]. Sales and Marketing Strategy - Approximately 70% of Slinger Bag Tennis Launcher revenues are generated through a direct-to-consumer strategy in North America[50]. - The marketing budget is primarily determined by distributor partners linked to their purchase objectives, supporting local grassroots programs[68]. - The company relies on digital advertising primarily on Facebook and Google platforms, following a period of advertising testing[60]. - Slinger Bag has engaged several brand ambassadors, including Tommy Haas and Robert Bryan, to promote its products[62]. - The company is actively identifying ambassadors for pickleball and padel to enhance its marketing strategy[63]. - Slinger Bag has appointed Tommy Haas as Chief Ambassador to enhance brand visibility in key markets including Japan, Europe, Australia, China, Brazil, and India[70]. Product Development and Technology - Connexa's acquisition strategy included the purchase of Gameface, which became a wholly owned subsidiary, enhancing its technology offerings[12]. - Gameface AI is focused on delivering performance insights in tennis and plans to enhance its technology for cricket and baseball analytics in 2023[56]. - Gameface is working on a performance and analytics app, with a focus on tennis-specific analysis, and is collaborating with a design agency for user experience[89]. - Gameface is field testing new data visualization techniques for tennis, cricket, and football, expected to launch late 2023 or early 2024[90]. - Slinger Bag is developing new ball launchers for Pickleball, Padel, and Baseball/Softball, with a market launch expected in 2024 and a development timeline of 18 months[87][88]. - The pickleball product was introduced to the market in March 2023, followed by the Padel tennis product in June 2023[46]. Strategic Partnerships and Agreements - Connexa aims to provide individual and match analytics for racquet sports through a future cooperation agreement with PlaySight, without upfront costs[26]. - An exclusive distribution agreement for Padel Tennis was signed on March 7, 2023, projected to generate approximately $20 million in revenue over five years[34]. - Slinger Bag has entered a strategic partnership with Dunlop for co-branded Slinger-Dunlop tennis balls globally[75]. - The company has established strategic partnerships with Dunlop for co-branded tennis balls and with Peter Burwash International for promoting Slinger products at luxury resorts[75][76]. Financial Transactions and Funding - The Company raised approximately $5.0 million through a private placement on September 28, 2022, issuing 1,018,510 shares of common stock and prefunded warrants for 11,802,002 shares at a combined price of $0.39 per share[29]. - The Company entered into a loan agreement on January 6, 2023, for up to $2,000,000, with an initial advance of $1,400,000, and warrants exercisable for up to 18,099,548 shares at an exercise price of $0.221 per share[31]. - Additional equity financing may dilute existing common stock holders[105]. - Debt financing, if available, may involve restrictive covenants[105]. - Strategic relationships may require relinquishing valuable rights to raise additional funds[105]. Manufacturing and Production - The Company has a manufacturing capacity of approximately 5,000 units monthly, shared across its tennis, pickleball, and padel products[46]. - The Company has engaged a vendor management company to oversee production activities and quality control processes[47]. - The company has not experienced significant supply chain issues despite reliance on China-based vendors, thanks to proactive overproduction strategies[98]. - Quality control processes have been established in partnership with Stride-Innovation, ensuring rigorous testing before product release[93]. Market Insights and Trends - The Company is focusing on global tennis, padel tennis, and pickleball markets, with the ITF citing 80 million active tennis participants and over 5 million regular pickleball players in the U.S.[44]. - The United States market has 17.4 million tennis players and over 5 million pickleball players, making it a key market for growth[52]. - 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[44]. - Seasonal fluctuations in sales are expected, with revenues typically exceeding in the first and fourth fiscal quarters[85].