Introduction
The following discussion contains forward-looking statements. The words
"anticipate," "believe," "expect," "plan," "intend," "estimate," "project,"
"will," "could," "may" and similar expressions are intended to identify
forward-looking statements. Such statements reflect our Company's current views
with respect to future events and financial performance and involve risks and
uncertainties. Should one or more risks or uncertainties occur, or should
underlying assumptions prove incorrect, actual results may vary materially and
adversely from those anticipated, believed, expected, planned, intended,
estimated, projected, or otherwise indicated. Readers should not place undue
reliance on these forward-looking statements.
The following discussion is qualified by reference to and should be read in
conjunction with our Company's financial statements and the notes thereto.
21
Table of Contents
Plan of Operation
The Company is seeking to establish, develop and operate MLFB as a professional
spring/summer football league. We intend to establish franchises in cities
overlooked by existing professional sports leagues and provide fans with
professional football in the NFL off-seasons, which will enable us to take a
totally non-adversarial approach towards the NFL. We have commenced the process
of leasing playing venues and acquiring football equipment. We have obtained
required workers compensation insurance for certain states where we will play
games. Our spring and early summer schedule ensures no direct competition with
autumn/winter football, including the 32 NFL, 9 Canadian Football League, 627
NCAA, 91 NAIA, 142 JUCO's, 27 Canadian Universities, and thousands of high
school and collegiate institution teams.
The AAF, whose equipment we acquired, has ceased operations and the XFL, which
played five games in 2020 before filing for bankruptcy re-organization, has
announced plans to restart in 2023. The Spring League is not considered a
football league, but rather a football development structure, as the players pay
its ownership to play in it, hoping for NFL or other teams' recognition. We
believe because the Spring League has no player payroll costs, quality players
will jump at a chance to be paid a salary in MLFB. The USFL returned in 2022
after a 37-year hiatus with an eight-team two division league structure. The
top two teams from each division played in the semifinals on the weekend of June
25, with the USFL Championship Game taking place on Sunday, July 3.
MLFB has recently hired several well-known and experienced employees, coaches,
scouts, and trainers as well as individuals looking to improve their skills in
these areas. We believe this will provide MLFB with the recognition and
credibility to demonstrate the viability of our economic model as well as the
market's desire for spring/summer football. The Company recently announced the
cities of Mobile, Alabama, Little Rock, Arkansas, Canton, Ohio and Virginia
Beach, Virginia as home markets for its inaugural season which will begin August
9, 2022. Additionally, the Company has executed leases with these cities. The
Company plans to have several games this summer that allow the Company to build
towards a full football season in the spring of 2023, providing MLFB as
America's home for professional spring football.
The AAF, XFL and USFL have proven the concept of fan interest for spring/summer
football. We believe that the AAF and XFL lack of financial success was in their
financial model, expense structure, venue selection and rents. The XFL, which
played five games in 2020 before filing for bankruptcy re-organization, has
announced plans to restart in 2023. We believe that there are thousands of
quality football players available to MLFB and the NFL releases over 1,000
players every September. We believe that the lack of financial success by the
AAF and perhaps the XFL is directly attributable to excessive payroll, stadium,
and other overhead related expenses and not the concept itself. MLFB will serve
as a pipeline to further develop players skills, on and off the field, as well
as a training ground for young coaches, officials and all associated with the
industry. NFL Europe did just this during its existence.
MLFB will serve as a pipeline to develop players on and off the field, coaches,
officials, scouts, trainers, and all other areas of the game that the NFL needs
today. We will also give NFL representatives the opportunity to view our team
practices, game footage, practice tapes and confer with league coaches, team
officials and staff. We believe this will provide our league with recognition
and demonstrate our economic model and the market's desire for spring football.
We require short-term financing as well as financing over the next 12 months and
we have been pursuing, and will continue to pursue, short-term financing, with
the intention of securing larger, more permanent financing facilities.
Effective February 8, 2022, the Company's Form 1-A Regulation A Offering
Statement was qualified by the SEC for the sale of up to 125,000,000 shares of
our $0.001 par value common stock at $0.021 per share or up to $2,625,000 of
gross proceeds. There is no minimum number of shares of common stock that must
be sold in the offering and the net proceeds from this offering are being
utilized to assist in funding our planned summer 2022 football season including
equipment purchases and stadium deposits, general and administrative expenses
and provide working capital for the Company. Effective July 18, 2022, the
Company reduced the offering price for a portion of the shares offered going
forward from $0.021 per share to $0.0168 per share.
22
Table of Contents
Through the date of this Form 10-K, the Company had received $1,747,300 of gross
proceeds from the sale of 86,180,949 shares of our $0.001 par value common
stock. Included in the above amount are $40,000 of gross proceeds from the sale
of 1,904,761 shares of our common stock that have not been processed by the
transfer agent due to technical document issues.
Additionally, Effective May 6, 2022, the Company signed an Equity Line Purchase
Agreement ("Agreement") whereby subject to the terms and conditions set forth in
this Agreement, the Company will sell to the Investor up to Ten Million Dollars
($10,000,000) or Four Hundred Million (400,000,000) shares of registered common
stock, $0.001 par value per share.
Subject to the satisfaction of all of the conditions set forth in the Agreement,
the Company shall have the right, but not the obligation, to direct the
Investor, by its delivery to the Investor of a Purchase Notice from time to
time, to purchase a minimum of twenty thousand dollars ($20,000) and up to a
maximum of; (i) two hundred fifty thousand dollars ($250,000), or (ii) one
hundred and fifty percent (150%) of the average daily volume traded for the
Company's common stock during the relevant Valuation Period (subject to
adjustments for stock splits, dividends, and similar occurrences), subject to
the Available Amount. The Valuation Period is the ten (10) consecutive Business
Days immediately preceding, but not including the date a Purchase Notice is
delivered. The maturity date of the Agreement is November 6, 2022.
The Purchase Price is 75% of the lowest traded price of the Common Stock during
the Valuation Period. Following an up-list of the Common Stock on The Nasdaq
Stock Market or an equivalent national exchange, the Purchase Price shall be set
at eighty percent (80%) of the lowest traded price of the Company's Common Stock
during the Valuation Period, subject to a floor of $0.01, per share (subject to
adjustments for stock splits, dividends, and similar occurrences). The right of
the Company to commence sales of the common stock is subject to the satisfaction
that a Registration Statement shall have been declared and remain effective by
and with the SEC, and no stop order with respect to the Registration Statement
shall be pending or threatened by the SEC.
Through the date of this Form 10-K, the Registration Statement had not been
declared effective and as such, no sales of stock have occurred. The Company is
in the process of increasing its authorized shares with the State of Delaware to
reflect the shares to be sold under the Equity Line Purchase Agreement.
Financial Condition
As reflected in the accompanying financial statements, the Company had a net
loss of $1,669,699 and $185,381 for the years ended April 30, 2022 and 2021,
respectively. Additionally, the Company had net cash used in operating
activities of $780,693 and $213,518 for the years ended April 30, 2022 and 2021,
respectively. At April 30, 2022, the Company has a working capital deficit of
$4,186,155, an accumulated deficit of $30,662,481 and a stockholders' deficit of
$3,658,915, which could have a material impact on the Company's financial
condition and operations.
At April 30, 2022, the Company does not have sufficient cash resources or
current assets to pay all of its obligations. This is a significant risk to our
business and stockholders and results in: (i) making it more difficult for us to
satisfy our obligations; (ii) impeding us from obtaining additional financing in
the future for working capital, capital expenditures and general corporate
purposes; and (iii) making us more vulnerable to a downturn in our business and
limits our flexibility to plan for, or react to, changes in our business.
The time required for us to become profitable under our MLFB business structure
is highly uncertain, and we cannot assure you that we will achieve or sustain
profitability or generate sufficient cash flow from operations to meet our
planned capital expenditures, working capital and debt service requirements. If
required, our ability to obtain additional financing from other sources also
depends on many factors beyond our control, including the state of the capital
markets and the prospects for our business. The necessary additional financing
may not be available to us or may be available only on terms that would result
in further dilution to the current owners of our common stock.
23
Table of Contents
Our Company intends on seeking interim short-term financing to continue full
legal compliance with its SEC filings, and to bring on the necessary personnel
to begin its future development activities. Its working capital needs will be
met largely from the sale of debt and public equity securities, until such time
that funds provided by operations, if ever, are sufficient to fund working
capital requirements. The accompanying financial statements do not include any
adjustments relating to the recoverability or classification of recorded assets
and liabilities that might result should the Company be unable to continue as a
going concern.
Results of Operations
Year ended April 30, 2022 compared to the year ended April 30, 2021
For the years ended April 30, 2022 and 2021, we had no revenue, respectively.
The Company is working through its business plan to establish, develop and
operate MLFB as a professional spring football league.
Total operating expenses for the year ended April 30, 2022 were $1,175,849 as
compared to total operating expenses for the year ended April 30, 2021 of
$386,186 or an increase of $789,663. The increase from 2021 to 2022 was
primarily from a $290,031 increase in stock compensation expense, a $280,929
increase in compensation and a $166,984 increase in professional fees. The
increase in stock compensation expense was related to (1) the issuance of
15,300,000 restricted $0.001 par value common shares and (2) 8,150,000 warrants
to 13 key consultants, all of whom had made significant contributions to the
Company over an extended period of time. All of the common shares and warrants
were vested fully on the grant date. The 15,300,000 vested shares of common
stock were valued at $0.0125 per share, the quoted market price on the date of
grant and the Company recorded $191,250 of stock compensation expense in the
accompanying Statement of Operations on the grant date of May 19, 2021. The
Company evaluated the issuance of the issued warrants in accordance with ASC
505-50, Equity Based Payments to Non-Employees, using the Black Scholes Pricing
Model to determine the fair value. The fair value for the stock warrants was
$98,781, which was recorded to stock compensation expense on the grant date of
May 19, 2021.
The increase in compensation was related to the hiring of employees in 2022 with
no comparable amount in 2021. Compensation includes salaries, taxes and
benefits. The increase in professional fees was primarily from a $111,750
increase in marketing, a $30,264 increase in consulting and a $14,000 increase
in legal. The increase in marketing was for marketing material related to the
Company's planned 2022 spring/summer football league with no comparable amount
in 2021. The increase in consulting was primarily from a $20,000 payment for a
football sports management program with no comparable amount in 2021. The
increase in legal was primarily from services related to the Company's Form 1-A
SEC filing with no comparable amount in 2021. Additionally, the increase in
expenses included a $5,000 write off of a stadium lease deposit that could not
be transferred from 2019 to future MLFB planned football seasons in 2022 with no
comparable amount in 2021.
Other income (expense) for the year ended April 30, 2022 was $493,850 of expense
as compared to $200,805 of income for the year ended April 30, 2021, or an
increase in expense of $694,655. The increase in expense from 2021 to 2022 was
primarily from (1) a $394,762 decrease in gain from the change in fair value of
conversion option liability, (2) $241,592 increase in interest expense and (3)
$55,000 settlement expense with no comparable amount in 2021.
The increase in interest expense is primarily from (1) a $122,446 increase for
the amortization of debt discounts on convertible promissory notes, (2) $51,813
increase in interest expense for debt and (3) a $67,333 increase in put premium
liability expense related to convertible promissory notes.
We had a net loss of $1,669,699 and $185,381 for the years ended April 30, 2022
and 2021, respectively.
24
Table of Contents
Liquidity and Capital Resources
From inception, we have relied upon the infusion of capital through equity
transactions and the issuance of debt to obtain liquidity. We had $673,181 of
cash at April 30, 2022 and consequently, payment of operating expenses will have
to come similarly from either equity capital to be raised from investors or from
borrowed funds. There is no assurance that we will be successful in raising such
additional equity capital or additional borrowings or if we can, that we can do
so at a cost that management believes to be appropriate.
Cash Flow Activity
The following table summarizes selected items from our Statements of Cash Flows
for the years ended April 30, 2022 and 2021:
For the Years
Ended,
April 30, 2022 April 30, 2021Net cash used in operating activities $ (780,693 ) $ (213,518 )
Net cash used in investing activities
(461,410 ) -
Net cash provided by financing activities 1,895,506 229,500
Net increase in cash $ 653,403 $ 15,982
Net Cash Used in Operating Activities
Net cash used in operating activities was $780,693 during the year ended April
30, 2022, compared to $213,518 used during the year ended April 30, 2021, or an
increase in cash used of $567,175. After adjusting for non-cash expense items of
$586,267 in 2022 and ($346,305) in 2021, adjusted net cash used in operations
would be $194,426 in 2022 and 559,823 in 2021, or a decrease of $365,397. After
making these non-cash adjustments, the previously discussed Results of
Operations analysis shows that the increase in the net cash used in operating
activities was primarily from a decrease of $394,762 in the fair value of
conversion option liability from 2021 to 2022.
Net Cash Used in Investing Activities
Net cash used in investing activities was $461,410 during the year ended April
30, 2022, compared to $0 during the year ended April 30, 2021, or an increase of
$461,410. The increase was primarily from $$460,410 for the purchase of
football equipment and $500 for trademark filing fees with no comparable amount
in 2021.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was $1,895,506 of net cash during the
year ended April 30, 2022, as compared to $229,500 provided during the year
ended April 30, 2021, or an increase of $1,666,006. The increase in net cash
provided from 2021 to 2022 was primarily from an increase of (1) $874,680 of
proceeds from the issuance of convertible secured promissory notes and $57,000
of proceeds from the issuance of convertible unsecured promissory notes and (2)
an increase of $1,042,826 from the sale of common stock. This was offset by the
repayment of $277,500 of notes payable and convertible promissory notes in 2022
with no comparable amount in 2021. The increase of $1,042,826 from the sale of
common stock was related to the Company's Regulation 1-A offering.
Off-Balance Sheet Arrangements
At April 30, 2022, we did not have any off-balance sheet arrangements that we
believe have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenue or expenses,
results of operations, liquidity, capital expenditures or capital resources that
are material to investors.
Critical Accounting Policies
Our accounting policies are more fully described in Note 1 to the Financial
Statements. The preparation of financial statements in conformity with generally
accepted accounting principles in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying disclosures. Although these estimates are based on
our best knowledge of current and anticipated events, actual results could
differ from the estimates.
25
Table of Contents© Edgar Online, source Glimpses
MAJOR LEAGUE FOOTBALL, INC. 
