Business Context and Reporting Period
Company: Slinger Bag Inc. (Note: Request metadata listed "AIRWA INC.", but the filing identifies the registrant as Slinger Bag Inc.)
Filing Type: Form 8-K (Current Report)
Date: September 27, 2021
Event: Entry into a Material Definitive Agreement to acquire 100% of the share capital of Flixsense Pty Ltd. (d/b/a Gameface).
Key Financial Metrics and Transaction Terms
This filing details a strategic acquisition rather than periodic financial performance. Key transaction metrics include:
- Acquisition Consideration:
- 6,666,667 shares of Slinger Bag Inc. common stock (subject to adjustment).
- 1,000,000 earn-out shares (subject to milestone fulfillment).
- Cash Option: The majority shareholder of Gameface may elect to receive USD $500,000 in cash in lieu of 142,587 shares.
- Working Capital Commitment: USD $1,500,000 committed to Gameface for the period July 1, 2021, to December 31, 2022.
- Executive Compensation (Annualized Estimates):
- Jalaluddin Shaik (Managing Director): Base salary approx. USD $245,280 (AUD $336,000). Eligible for 30% annual incentive and equity/warrants valued at 50% of base salary.
- James Melvin Priyarajan (CTO): Base salary approx. USD $180,000 (USD $15,000/month). Eligible for 30% annual incentive and equity/warrants valued at 25% of base salary.
Financial Statements: The filing does not provide revenue, profit, cash flow, or margin data for Slinger Bag Inc. or Gameface. Closing is contingent upon Gameface providing audited financial statements for the year ended June 30, 2021.
Material Changes and Conditions
Closing Conditions: The acquisition is not yet closed. It is subject to Gameface providing an audited balance sheet as of June 30, 2021, and audited profit and loss and cash flow statements for the fiscal year ending June 30, 2021.
Registration Rights: The agreement includes provisions for the registration of shares held by Gameface selling shareholders in future public offerings, subject to underwriter cutbacks.
Outlook, Risks, and Contingencies
- Contingent Consideration: A portion of the purchase price (1,000,000 shares) is contingent on the fulfillment of certain milestones.
- Termination Rights:
- Shaik's service agreement may be terminated with 180 days' notice.
- Melvin's service agreement may be terminated with 90 days' notice.
- Regulatory Status: The registrant is an emerging growth company. The press release information is not deemed "filed" under Section 18 of the Exchange Act.
Investor Verification Checklist
- Verify the audited financial statements of Gameface for the year ended June 30, 2021, which are required for the transaction to close.
- Confirm the specific milestones required to trigger the issuance of the 1,000,000 earn-out shares.
- Monitor whether the majority shareholder elects the USD $500,000 cash option, which would alter the equity dilution profile.
- Review the full text of Exhibits 10.1 through 10.4 for detailed indemnification rights and termination compensation clauses.