Slinger Announces Second Quarter Fiscal 2021 Financial Results

Baltimore, Maryland, UNITED STATES


Revenue increased 106% YoY to a record $5.4 million

BALTIMORE, Dec. 22, 2021 (GLOBE NEWSWIRE) -- Slinger (OTCQB: SLBG), a leading connected sports technology company, today announced financial results for its Q2 2021 fiscal quarter, ended October 31 2021.

“This was a momentous quarter for Slinger as we announced two transformational acquisitions that will enable the development of our Watch, Play, Learn connected technology platform strategy, while also reporting our first $5 million quarter for revenue, driven by strong Slinger Bag sales,” said Mike Ballardie, Slinger CEO.

Second Quarter Fiscal 2021 Financial Highlights (versus Fiscal 2020):

  • Revenue of $5.4 million versus $2.6 million;
  • Gross profit of $2.1 million versus $1.0 million;
  • GAAP net loss and loss per share of ($38.8) million and ($0.95) versus ($2.5) million and ($0.10), respectively;
  • Non-GAAP net loss and loss per share of ($1.1) million and ($0.03) versus ($0.2) million and ($0.01), respectively.

Second Quarter Fiscal 2021 Business Highlights:

  • Announced the Watch, Play, Learn strategy driven by transformational deals to acquire PlaySight Interactive, a pioneer and leader across sports video technology, data capture, high-performance analytics and automated video production; and GAMEFACE.AI, a leading athletic performance AI company that is also building the analysis engine for the Slinger App;
  • Foundation Tennis announced its partnership with Square;
  • Expanded distribution into China and Brazil tennis markets;
  • Partnered with the world-renowned Mouratoglou Academy and their locations in Nice, Dubai and Greece.  
Select Financial Metrics: Q2 Fiscal 2021 versus Fiscal 2020 as of 10/31/21*
 (in $Ms)2Q212Q20ChangeYTD FY21YTD FY20Change
Net sales$5.4$2.6106.1%$7.9$3.2149.2%
Gross income$2.1$1.0 100.4%$2.9$0.7 329.4%
Gross margin38.6%39.7% 36.2%21.0% 
GAAP operating loss($35.1)($0.2)nm($37.6)($1.7)nm
Non-GAAP operating loss($0.8)($0.1)nm($2.5)($1.6)nm
GAAP net loss($38.8)($2.5)nm($42.3)($3.9)nm
Non-GAAP net loss($1.1)($0.2)nm($2.8)($2.0)-40.0%
GAAP loss per share($0.95)($0.10)nm($1.20)($0.15)nm
Non-GAAP loss per share($0.03)($0.01)nm($0.08)($0.07)-14.3%
 
nm = not measurable/meaningful
*numbers may not add due to rounding 

We define non-GAAP operating income (loss) as the respective GAAP measure, excluding expenses related to share-based compensation, shares and warrants issued in connection of services, amortization of acquired intangible assets, and acquisition-related expenses.

We define non-GAAP net income (loss) as GAAP net income (loss), excluding items used to calculate non-GAAP operating income (loss), as well as other non-cash items, including gains/losses related to:
The extinguishment of debt; the amortization of debt discounts; inducement of conversions of equity; the change in the value of derivatives that are marked-to-market quarterly; the issuance of convertible notes.

Please see reconciliations of all non-GAAP financial measures after the financial statements.

Fiscal 2021 Commentary

“As we look to the second half of the fiscal year, we have several catalysts that will bring all the pieces together to enable our Watch, Play, Learn strategy. First, we expect to close our two transformational acquisitions in the weeks to come. Next, in early Spring, we anticipate introducing both the Slinger app with its AI-driven performance analytics and our unified, connected sports platform for tennis. Finally, we will bring our Watch, Play, Learn capabilities to new market segments, led by introducing Slinger Bag ball launchers for Pickleball and Padel Tennis after these product releases.

“Turning to our expected financial performance for fiscal year 2021, we expect revenue (not including revenue from pending acquisitions) to be $17 - $18 million, or an increase of 57% - 67% over the prior year’s revenue of $10.8 million. We anticipate our adjusted EBITDA run rate to be near break-even as we exit the year. Once the GAMEFACE.AI and PlaySight deals are closed, we will update our consolidated guidance.

“In conclusion, I am excited about Slinger's transformation into a sports tech business, driven by recurring SaaS, subscription and content revenue. I believe the connected sports vision we are implementing will bring our platform's unique value proposition to consumers and drive value for our shareholders in the years ahead,” Ballardie concluded.

The Slinger Bag is available to order or to find out more about Slinger Bag, visit https://slingerbag.com.

Webcast Information
The Company will be hosting a webcast and Q&A at 10:00 a.m. Eastern Time on Wednesday, December 22, 2021. The webcast will be available at https://viavid.webcasts.com/starthere.jsp?ei=1521010&tp_key=c8920e3fe9.

It is recommended to submit questions ahead of time to investors@slingerbag.com, but investors will also be able to submit questions through the live webcast.

About Slinger

Slinger is a new sports brand focused on delivering innovative, game improvement technologies and equipment across all ball sports categories. With the vision to become a leading connected sports company, Slinger enhances the skill and enjoyment levels of players of all ages and abilities. Slinger is initially focused on building its brand within the global tennis market through its Slinger Bag Tennis Ball Launcher and Accessories. Slinger Bag has underpinned its proof of concept with over $250M of retail value in global distribution agreements since the Spring of 2020. Slinger is primed to disrupt traditional global markets with its patented, highly transportable, and affordable Slinger Bag Launcher and its suite of connected app and SaaS services.

Forward-Looking Statements: This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and Private Securities Litigation Reform Act, as amended, including those relating to the Company's product development, clinical and regulatory timelines, market opportunity, competitive position, possible or assumed future results of operations, business strategies, potential growth opportunities and other statements that are predictive in nature. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate and management's current beliefs and assumptions.

These statements may be identified by the use of forward-looking expressions, including, but not limited to, "expect," "anticipate," "intend," "plan," "believe," "estimate," "potential, "predict," "project," "should," "would" and similar expressions and the negatives of those terms. These statements relate to future events or our financial performance and involve known and unknown risks, uncertainties, and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include those set forth in the Company's filings with the Securities and Exchange Commission. Prospective investors are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

Contacts:

For Slinger Investor Relations inquiries, please visit www.slingerbagir.com, or contact investors@slingerbag.com or 443-407-7564

For Slinger media inquiries, please contact the press office at press@slingerbag.com 443-407-7564

SLINGER BAG INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

  October 31, 2021  April 30, 2021 
   (Unaudited)     
Assets        
         
Current assets        
Cash and cash equivalents $1,747,661  $928,796 
Accounts receivable, net  846,529   762,487 
Inventories, net  8,578,431   3,693,216 
Prepaid inventory  475,913   140,047 
Loan and interest receivable  1,435,219   - 
Prepaid expenses and other current assets  110,970   60,113 
Total current assets  13,194,723   5,584,659 
         
Goodwill  1,240,000   - 
Other intangible assets, net  2,290,895   112,853 
Total assets $16,725,618  $5,697,512 
         
Liabilities and Shareholders’ Deficit        
         
Current liabilities        
Accounts payable and accrued expenses $5,306,355  $2,050,476 
Accrued payroll and bonuses  1,210,805   1,283,464 
Deferred revenue  71,242   99,531 
Accrued interest - related party  821,925   747,636 
Notes payable - related party, net  -   6,143,223 
Convertible notes payable, net  2,627,778   - 
Derivative liabilities  14,870,050   13,813,449 
Total current liabilities  24,908,155   24,137,779 
         
Long-term liabilities        
Note payable, net  -   10,477 
Total liabilities  24,908,155   24,148,256 
         
Commitments and contingencies (Note 11)        
         
Shareholders’ deficit        
Common stock, $0.001 par value, 300,000,000 shares authorized, 41,869,622 and 27,642,828 shares issued and outstanding as of October 31, 2021 (unaudited) and April 30, 2021, respectively; 0 and 6,921,299 shares issuable as of October 31, 2021 (unaudited) and April 30, 2021, respectively  41,870   27,643 
Additional paid-in capital  62,871,881   10,365,056 
Accumulated other comprehensive loss  (12,346)  (20,170)
Accumulated deficit  (71,083,942)  (28,823,273)
Total shareholders’ deficit  (8,182,537)  (18,450,744)
Total liabilities and shareholders’ deficit $16,725,618  $5,697,512 


SLINGER BAG INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS

  For the Three Months Ended  For the Six Months Ended 
  October 31,  October 31,  October 31,  October 31, 
  2021  2020  2021  2020 
  (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited) 
             
Net sales $5,400,542  $2,620,068  $7,938,115  $3,185,053 
Cost of sales  3,315,605   1,579,750   5,067,956   2,516,650 
Gross income  2,084,937   1,040,318   2,870,159   668,403 
                 
Operating expenses:                
Selling and marketing expenses  887,809   397,922   1,594,906   699,940 
General and administrative expenses  36,197,888   829,510   38,592,687   1,588,778 
Research and development costs  103,318   15,439   277,366   43,549 
Total operating expenses  37,189,015   1,242,871   40,464,959   2,332,267 
Loss from operations  (35,104,078)  (202,553)  (37,594,800)  (1,663,864)
                 
Other expense (income):                
Amortization of debt discounts  2,629,069   52,543   2,650,285   286,251 
Loss on extinguishment of debt  1,978,295   1,999,487   7,096,730   1,432,820 
Induced conversion loss  -   51,412   -   51,412 
Gain on change in fair value of derivatives  (4,803,569)  -   (9,130,913)  - 
Loss on issuance of convertible notes  3,689,369   -   3,689,369   - 
Interest expense - related party  22,495   144,085   78,728   316,549 
Interest expense, net  205,620   74,046   281,670   147,256 
Total other expense  3,721,279   2,321,573   4,665,869   2,234,288 
Loss before income taxes  (38,825,357)  (2,524,126)  (42,260,669)  (3,898,152)
Provision for income taxes  -   -   -   - 
Net loss  (38,825,357)  (2,524,126)  (42,260,669)  (3,898,152)
                 
Other comprehensive gain (loss), net of tax                
Foreign currency translation adjustments  20,852   (1,544)  7,824   (2,937)
Total other comprehensive gain (loss), net of tax  20,852   (1,544)  7,824   (2,937)
Comprehensive loss $(38,804,505) $(2,525,670) $(42,252,845) $(3,901,089)
                 
Net loss per share, basic and diluted $(0.95) $(0.10) $(1.20) $(0.15)
Weighted average number of common shares outstanding, basic and diluted  41,080,733   26,420,584   35,104,580   26,255,603 


SLINGER BAG INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

  For the Six Months Ended 
  October 31,  October 31, 
  2021  2020 
  (Unaudited)  (Unaudited) 
Cash flows from operating activities        
Net loss $(42,260,669) $(3,898,152)
Adjustments to reconcile net loss to net cash used in operating activities:        
Amortization expense  131,958   - 
Gain on change in fair value of derivatives  (9,130,913)  - 
Shares and warrants issued in connection with services  1,417,728   183,845 
Share-based compensation  32,569,112   - 
Loss on extinguishment of debt  7,096,730   1,432,820 
Induced conversion loss  -   51,412 
Amortization of debt discounts  2,650,285   286,251 
Loss on issuance of convertible notes  3,689,369   - 
         
Changes in operating assets and liabilities:        
Accounts receivable, net  (84,262)  (353,505)
Inventories, net  (4,886,227)  (993,049)
Prepaid expenses and other current assets  (422,119)  110,455 
Accounts payable and accrued expenses  3,256,234   327,579 
Accrued payroll and bonuses  (72,659)  361,608 
Deferred revenue  (28,289)  630,148 
Accrued interest - related party  74,289   316,549 
Net cash used in operating activities  (5,999,433)  (1,544,039)
         
Cash flows from investing activities        
Note receivable issuance  (1,400,000)  - 
Net cash used in investing activities  (1,400,000)  - 
         
Cash flows from financing activities        
Proceeds from convertible notes payable  11,000,000   - 
Debt issuance costs related to convertible notes payable  (800,251)  - 
Proceeds from notes payable – related party  1,000,000   2,000,000 
Repayments of notes payable – related party  (1,000,000)  - 
Repayment of note payable  (2,000,000)  - 
Proceeds from note payable  -   120,000 
Other financing activities  9,671   - 
Net cash provided by financing activities  8,209,420   2,120,000 
         
Effect of exchange rate fluctuations on cash and cash equivalents  8,878   (2,937)
         
Net change in cash and cash equivalents  818,865   573,024 
Cash and cash equivalents, beginning of the period  928,796   79,847 
Cash and cash equivalents, end of the period $1,747,661  $652,871 
         
Supplemental disclosure of cash flow information        
Interest paid $111,105  $140,180 
Income taxes paid  3,896   - 
         
Supplemental disclosure of non-cash investing and financing activities        
Shares issued for conversion of notes payable – related party $6,220,003  $- 
Shares issued in connection with acquisition  3,550,000   - 
Elimination of related party derivative liabilities  8,754,538   - 
Derivative liabilities recorded as debt discounts of convertible notes  10,199,749   - 
Conversion of note payable and accrued interest into common stock  -   187,037 
Warrants issued with note payable  -   70,130 

Non-GAAP Financial Measures

In addition to our financial information presented in accordance with GAAP, we believe the following non-GAAP financial measures are useful in evaluating our operating performance. We use the following non-GAAP financial measures, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance. We believe that non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, may be helpful to investors because they provide consistency and comparability with past financial performance and meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. The non-GAAP financial measures are presented for supplemental informational purposes only, have limitations as analytical tools, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP and may be different from similarly-titled non-GAAP financial measures used by other companies. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business, which it includes in press releases announcing quarterly financial results, including this press release.

We define non-GAAP operating income (loss) as the respective GAAP measure, excluding expenses related to share-based compensation, shares and warrants issued in connection of services, amortization of acquired intangible assets, and acquisition-related expenses.

We define non-GAAP net income (loss) as GAAP net income (loss), excluding items used to calculate non-GAAP operating income (loss), as well as other non-cash items, including gains/losses related to:

  • The extinguishment of debt; the amortization of debt discounts; inducement of conversions of equity; the change in the value of derivatives that are marked-to-market quarterly; the issuance of convertible notes. 
Reconciliation of GAAP to Non-GAAP Operating Loss2Q212Q20YTD FY21YTD FY20
GAAP Operating Loss($35.1)($0.2)($37.6)($1.7)
Excluding:    
Share-based compensation$32.4 -$32.6 -
Shares and warrants issued in connection with services$0.8 $0.1 $1.4 $0.1
Amortization of acquired intangible assets$0.1 -$0.1 -
Acquisition-related expenses$1.0 -$1.0 -
Non-GAAP Operating Loss($0.8)($0.1)($2.5)($1.6)



Reconciliation of GAAP to Non-GAAP Net Loss and Loss Per Share2Q212Q20YTD FY21YTD FY20
GAAP Net Loss($38.8)($2.5)($42.3)($3.9)
Excluding the Following Other Expenses (Income):    
Amortization of debt discounts$2.6 $0.1 $2.7 $0.3
Loss on extinguishment of debt$2.0 $2.0 $7.1 $1.4
Induced conversion loss-$0.1 -$0.1
Gain on change in fair value of derivatives($4.8)-($9.1)-
Loss on issuance of convertible notes$3.7 -$3.7 -
     
Excluding the Following Operating Expenses:    
Share-based compensation$32.4 -$32.6 -
Shares and warrants issued in connection with services$0.8 $0.1 $1.4 $0.1
Amortization of acquired intangible assets$0.1 -$0.1 -
Acquisition-related expenses$1.0 -$1.0 -
Non-GAAP net loss($1.1)($0.2)($2.8)($2.0)
Non-GAAP loss per share($0.03)($0.01)($0.08)($0.07)