Business Context and Reporting Period
Company: Slinger Bag Inc. (Nevada corporation, Commission File No. 333-214463)
Filing Type: Form 8-K (Current Report)
Report Date: June 21, 2021 (Event Date); Signed June 23, 2021
Primary Event: Acquisition of 100% ownership of Foundation Sports Systems, LLC ("Foundation Sports"), a provider of B2B cloud-based software and services for the tennis industry, including booking, payments, and digital platform management.
Key Financial Metrics and Transaction Details
Acquisition Consideration: 1,000,000 shares of Company common stock issued in three tranches:
- Tranche 1: 600,000 shares (60,000 held back for 12 months; 540,000 issued on June 23, 2021).
- Tranche 2: 200,000 shares (20,000 held back) on the first anniversary of the Closing Date.
- Tranche 3: 200,000 shares (20,000 held back) on the second anniversary of the Closing Date.
Compensation Commitments (Annualized):
- Charles Ruddy (President): $250,000 base salary + 5% pension contribution + 30% annual incentive eligibility + potential equity/warrants equal to 50% of base salary.
- Jaana Gilbert (Principal Engineer): $150,000 base salary + 5% pension contribution + 15% annual incentive eligibility.
- George Kustas (Consultant): $7,500 monthly fee ($90,000 annualized).
Financial Statements: The filing text does not provide revenue, profit, cash flow, margins, debt, or liquidity metrics for the Company or the acquired entity.
Material Changes
Asset Acquisition: The Company expanded its operations by acquiring Foundation Sports, adding B2B software capabilities for the tennis sector.
Equity Issuance: 540,000 shares of unregistered common stock were issued to the seller on June 23, 2021, representing the initial portion of the purchase price.
Operational Changes: New executive and technical leadership roles were established within the acquired subsidiary.
Outlook, Risks, and Contingencies
Lock-Up Provisions: All shares issued to the seller are subject to a 12-month lock-up period from the date of delivery, restricting sales without written consent.
Hold-Back Mechanism: 10% of shares in each tranche are withheld for 12 months post-issuance.
Employment Terms: Key personnel agreements (Ruddy and Gilbert) allow for termination at any time, subject to specific compensation rights. Gilbert's engagement is initially for a 12-month term.
Contingent Compensation: Additional equity or warrant awards for the President are subject to confirmation from the Company.
Investor Verification Checklist
- Verify the fair market value of the 1,000,000 shares issued as consideration against the valuation of Foundation Sports.
- Confirm the dilution impact of the 540,000 shares issued on June 23, 2021, and the future issuance of 460,000 shares.
- Review the full text of Exhibits 10.1 through 10.4 for specific termination clauses and clawback provisions.
- Assess the financial health and revenue run-rate of Foundation Sports, as no financial data was included in this 8-K.
- Monitor the status of the contingent equity award (50% of base salary) for the President.