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SHAREHOLDERS’ EQUITY (DEFICIT)
 12 Months Ended
Apr. 30, 2022
Equity [Abstract]  
SHAREHOLDERS’ EQUITY (DEFICIT)

Note 14: SHAREHOLDERS’ EQUITY (DEFICIT)

 

Common Stock

 

The Company has 300,000,000 shares of common stock authorized with a par value of $0.001 per share. As of April 30, 2022 and 2021, the Company had 4,194,836 and 2,764,282 shares of common stock issued and outstanding, respectively.

 

Equity Transactions During the Year Ended April 30, 2022

 

On May 26, 2021, the Company issued 163,684 shares of its common stock for the conversion of related party notes payable (see Note 9). The fair value of the common stock was $6,220,000.

 

On June 23, 2021, the Company issued 54,000 shares of its common stock as partial consideration for the acquisition of Foundation Sports (see Note 5). The fair value of the total shares of common stock to be issued related to the acquisition was $3,550,000.

 

On July 6, 2021, the Company issued 5,022 shares of its common stock to two employees as compensation for services rendered in lieu of cash, which resulted in $187,803 in share-based compensation expense for the year ended April 30, 2022.

 

On July 11, 2021, the Company issued 1,875 shares of its common stock to a vendor as compensation for marketing and other services rendered, which resulted in $16,875 of operating expenses for the year ended April 30, 2022.

 

During the three months ended July 31, 2021, the Company granted an aggregate total of 9,094 shares of its common stock and equity options to purchase up to 6,000 shares (which are now expired) to six new brand ambassadors as compensation for services. The expense related to the issuance of the shares and equity options is being recognized over the service agreements, similar to the warrants and equity options issued to the four other brand ambassadors in the prior year. During the year ended April 30, 2022, the Company recognized $907,042 of operating expenses related to the shares, warrants and equity options granted to brand ambassadors.

 

On August 6, 2021, the Note payable holder (see Note 11) exercised its right to convert its 220,000 outstanding warrants into 495,000 shares of common stock of the Company.

 

On August 6, 2021, the Company’s related party lender exercised its right to convert its 275,000 outstanding warrants and 692,130 common shares issuable into 967,130 shares of common stock of the Company.

 

On October 11, 2021, the Company issued 1,875 shares of its common stock to a vendor as compensation for marketing and other services rendered, which resulted in $16,875 of operating expenses during the year ended April 30, 2022.

 

On January 11, 2022, the Company issued 1,875 shares of its common stock to a vendor as compensation for marketing and other services rendered, which resulted in $16,874 of operating expenses during the year ended April 30, 2022.

 

During April 2022, the Company granted an aggregate total of 6,000 shares of its common stock to 6 new brand ambassadors as compensation for services. During the year ended April 30, 2022, the Company recognized $255,124 of operating expenses related to the shares granted to brand ambassadors.

 

Equity Transactions During Year Ended April 30, 2021

 

On May 6, 2020, the Company issued 121,656 shares of its common stock to Mont-Saic as partial satisfaction of the shares issuable under a convertible note payable agreement.

 

On May 15, 2020, the Company issued 24,380 shares of its common stock to a vendor as compensation for business advisory services performed, which resulted in $65,826 of general and administrative expenses for the year ended April 30, 2021.

 

 

CONNEXA SPORTS TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

On September 4, 2020, the Company issued 30,000 shares of its common stock for the conversion of a convertible note payable (see Note 10). The fair value of the common stock was $238,449.

 

On October 8, 2020, the Company issued 10,000 shares of its common stock to a vendor as compensation for business advisory services performed, which resulted in $114,000 of operating expenses for the year ended April 30, 2021.

 

On October 28, 2020, the Company granted 40,000 warrants to a service provider for advertising services over the next year. The warrants have an exercise price of $0.75 per share, a contractual life of 10 years from the date of issuance, and vest quarterly over a year from the grant date. The warrants were valued using a Black-Scholes option pricing model and the expense related to the issuance of the warrants is being recognized over the service agreement. The Company recognized $214,552 and $221,826 of operating expenses related to this agreement during the years ended April 30, 2022 and 2021, respectively.

 

On October 29, 2020, the Company and the three members of its advisory board entered into agreements whereby each member will receive an aggregate number of warrants each quarter equal to $7,500 divided by the average closing price of the Company’s stock for the five days prior to the Company’s most recently completed fiscal quarter. The warrants vest quarterly, have an exercise price of $0.001 per share and a contractual life of 10 years from the date of issuance. 43,107 warrants were issued under these agreements during the year ended April 30, 2021. The warrants were valued using a Black-Scholes option pricing model, which resulted in operating expenses of $48,502 during the year ended April 30, 2021.

 

On November 24, 2020 and on January 11, 2021, the Company issued 4,608 and 10,000 shares of its common stock, respectively, to two vendors as compensation for marketing and other advisory services. The Company also issued 5,595 shares of its common stock on November 24, 2020 to a third-party vendor as full settlement of payables of $30,000 related to consulting services, which resulted in a $25,278 loss on extinguishment of debt. The total fair value of the shares issued related to these transactions was $198,386, of which $39,750 was recognized in prepaids and other assets and will be recognized over the period that the related services are rendered. As of April 30, 2021, there was $26,500 in prepaids related to these transactions and the remaining $146,608 was recognized as operating expenses for the year ended April 30, 2021.

 

On November 10, 2020, the Company issued 3,500 shares of common stock as partial payment for the purchase of the Slinger trademark. The common stock had a fair value of $35,351 on the date of issuance, which has been capitalized as an intangible asset on the balance sheet.

 

On December 15, 2020, the Company issued 50,000 shares of common stock as full payment of its $500,000 note payable to a third party (see Note 11). The fair value of the shares issued was $500,000.

 

On April 11, 2021, the Company issued 27,233 shares of its common stock for the conversion of a note payable (see Note 11). The fair value of the shares issued was $1,250,004.

 

On April 11, 2021 and on April 13, 2021, the Company issued 1,875 and 500 shares of its common stock to two vendors as compensation for marketing and advisory services, which resulted in an operating expense of $43,294 for the year ended April 30, 2021.

 

During the three months ended April 30, 2021, the Company granted an aggregate total of 6,000 warrants and equity options for 12,000 shares (which have all expired unexercised) to four of its brand ambassadors as compensation. The warrants have an exercise price of $0.001 per share, a contractual life of 10 years from the date of issuance and are vested immediately upon grant and the shares had a 90 day exercise period at a 50% discount on the stock price. The warrants and shares were valued using a Black-Scholes option pricing model and the expense related to the issuance of the warrants and equity options is being recognized over the service agreements. The Company recognized $59,838 and $98,457 of operating expenses related to the warrant and equity options, respectively, during the year ended April 30, 2021.

 

Warrants Issued During the Year Ended April 30, 2022

 

In accordance with the October 29, 2020 agreement with three members of the advisory board mentioned above, 46,077 warrants were issued during the year ended April 30, 2022. The warrants were valued using a Black-Scholes option pricing model on the grant date, which resulted in operating expenses of $87,656 during the year ended April 30, 2022.

 

On August 6, 2021, in connection with the Convertible Notes issuance (see Note 10) the Company issued warrants to purchase up to 733,333 shares of common stock of the Company to the Purchasers.

 

On August 6, 2021, in connection with the Convertible Notes issuance the Company also granted the lead placement agent for the Offering 26,667 warrants that are exercisable for five years from August 6, 2021, at an exercise price of $3.30 (subject to adjustment as set forth in the Convertible Notes per the terms of the agreement) and are vested immediately. The warrants were valued using a Black-Scholes option pricing model on the grant date and the Company recognized $376,000 of operating expenses related to them during the year ended April 30, 2022.

 

 

CONNEXA SPORTS TECHNOLOGIES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

On September 3, 2021, the Company granted an aggregate total of 1,010,000 warrants to key employees and officers of the Company as compensation. The warrants have an exercise price of $0.001 per share for 1,000,000 of the warrants and $3.42 for 10,000 of the warrants, a contractual life of 10 years from the date of issuance and are vested immediately upon grant. The warrants were valued using a Black-Scholes option pricing model on the grant date and the Company recognized $32,381,309 of share-based compensation expense related to them during the year ended April 30, 2022.

 

On February 2, 2022, in connection with the Gameface acquisition (see Note 5) the Company issued warrants to purchase up to 478,225 shares of common stock of the Company.

 

Common Stock Issuable

 

As discussed in Note 10, on September 16, 2019, the Company entered into a warrant assignment and conveyance agreement with Mont-Saic, pursuant to which the Company allows Mont-Saic to acquire 33% of the outstanding common stock shares of the Company on a fully-diluted basis for no consideration. The allocated value of the warrant amounted to $1,492,188 was reflected as additional paid-in capital during the year ended April 30, 2020.

 

There were 813,786 shares of common stock that were issuable under this agreement and as of April 30, 2020, none of the shares had been issued. As of April 30, 2021, 121,656 shares have been issued and the remaining 692,130 were issued as of April 30, 2022.

 

On February 2, 2022, the Company authorized the issuance of 590,327 shares of common stock as partial consideration for the acquisition of Gameface (see Note 5). The fair value of the total shares of common stock to be issued related to the acquisition was $9,700,000. As of April 30, 2022, none of the shares had been issued due to there being an issue with the transfer agent. The shares were issued in September 2022. Refer to Note 18 for more details.

 

On February 22, the Company authorized the issuance of 2,537,969 shares of common stock as partial consideration for the acquisition of PlaySight (see Note 5). The fair value of the total shares of common stock to be issued related to the acquisition was $39,950,000. As of April 30, 2022, none of the shares had been issued due to there being an issue with the transfer agent. The shares were issued in September 2022. Refer to Note 18 for more details.

 

Warrants Issued for Compensation

 

On February 9, 2021, the Company issued 600,000 warrants to key employees and officers of the Company as a performance bonus. The warrants have an exercise price of $0.001 per share for non-U.S. warrant holders (150,000 warrants) and an exercise price of $3.94, which is equal to the closing price of the Company’s common stock on the grant date, for U.S. warrant holders. The warrants were valued using a Monte Carlo simulation with the key inputs as of 4/30/20 being the executives’ three-year agreement term, the Company’s $100 million market capitalization threshold being achieved, a risk free rate of 0.76%, and a stock price volatility of 63% because the warrant grant was contingent on a market condition being achieved. The Company recognized $70,997 of share-based compensation related to these awards during the year ended April 30, 2021.