Business Context and Reporting Period
Company: Slinger Bag Inc. (Note: Input metadata referenced "AIRWA INC.", but the filing text identifies the registrant as Slinger Bag Inc.)
Filing Type: Form 8-K (Current Report)
Date of Report: October 6, 2021
Event: Entry into a Material Definitive Agreement (Merger Agreement) with PlaySight Interactive Ltd. ("PlaySight").
Key Financial Metrics and Transaction Terms
This filing details a proposed merger rather than standard periodic financial results. Key transaction metrics include:
- Consideration: 28,333,333 shares of Slinger Bag common stock (subject to adjustment).
- Earn-out: Up to 5,142,858 additional shares contingent on milestones.
- Debt Assumption: Up to $5,000,000 in aggregate principal amount of PlaySight convertible notes plus accrued interest.
- Bridge Loan Commitment: Slinger Bag agreed to lend PlaySight additional funds totaling $500,000 per draw, starting December 27, 2021, and continuing every six weeks until closing or termination.
- Transaction Costs: Slinger Bag to pay PlaySight transaction costs and professional adviser expenses.
- Insurance: Slinger Bag intends to secure up to $10,000,000 in insurance for warranty breaches (not guaranteed).
Note: The filing text does not provide specific revenue, profit, cash flow, or margin figures for either company.
Material Changes and Conditions
The merger is subject to satisfaction or waiver of closing conditions by February 28, 2022, including:
- SEC clearance of the Information Statement (including audited PlaySight financials).
- Shareholder approval from PlaySight.
- Obtaining Israeli tax rulings and governmental consents.
- Retention of key PlaySight executives.
- Payment of outstanding PlaySight loans and convertible notes.
Amendment to Convertible Loan Agreement: Amounts owed by PlaySight under the July 21, 2021 Convertible Loan Agreement will be deemed repaid by reducing the merger share consideration. The reduction is calculated by dividing the owed amount by $2.625 per share.
Outlook, Risks, and Management Commentary
Outlook: Management anticipates the merger will result in PlaySight becoming a wholly-owned subsidiary. The company intends to file an Information Statement on Schedule 14C for shareholder approval.
Risks and Contingencies:
- Termination Rights: Either party may terminate the agreement upon material adverse changes, material breaches of warranties, or failure to satisfy funding obligations.
- Forward-Looking Statements: Risks include failure to realize synergies, integration difficulties, inability to obtain regulatory approvals, and competitive pressures in the sports and AI sectors.
- Warranty Cap: PlaySight's liability under warranties is capped at $1, though insurance is being sought.
Investor Verification Checklist
- Verify the final approval status of the merger by PlaySight and Slinger Bag shareholders.
- Confirm the receipt of required Israeli tax rulings and governmental clearances.
- Review the upcoming Information Statement (Schedule 14C) for audited financials of PlaySight.
- Monitor the execution of the bridge loan advances and the repayment of PlaySight's convertible notes.
- Assess the success of securing the $10,000,000 warranty insurance.