Question 1

Why is the company raising outside capital and what will it be used for?

Accepted Answer

The goal of the capital raise will be to use funds for: - Staying in stock of inventory! Missed out on over $350,000 in revenue this summer by being out of stock - Expanding retail door count to 6000+ stores (Costco, Ace, Kohls, Canadian Tire) - Expanding into soccer, pickleball, and SKU count growing to 15+ - International expansion into new markets - Expanding CROSSNET into 20,000+ schools

Question 2

What is your outlook for the next 12mo? What are you specifically focused on executing?

Accepted Answer

The next 12 months will be massive for CROSSNET. We are gearing up to expand to over 1000 new retail locations, expand distribution to new door counts in stores we are already in, and now globally to 44 new countries via Europe & Australia. We will also be releasing pickeball & soccer, two sports that we know CROSSNET can become a household name in.

Question 3

Is there an exit strategy in place with the capital raise? I understand the need for funds to expand inventory, distribution, etc. Say 2-3 years down the line, who are the acquirers of a business like this? Would it be a company like Hasbro?

Accepted Answer

We intend to sell the business in the mid to long-term. In the short term, we will begin new distribution opportunities (COSTCO), launch new products (Pickleball) and use our existing retail connections to scale our multi-SKU portfolio. Potential acquirers for a full exit include Hasbro, Wilson Sporting Goods, Franklin Sporting Goods, EastPoint Sports, Escalade Sports, and many of the other private and public companies in the sporting good space.

Question 4

Why give away equity now? It seems like you have sufficient sales traction to raise non-dilutive funding, and your CAC + margins seem sufficient to pay it back without much risk.

Accepted Answer

We feel it is the best way to manage our capital needs and allow us to grow without taking on high interest debt and the least stress.

Question 5

Could you outline revenue growth through the past 2-3 years? You mention $6M TTM but there is no revenue data prior to that. Additionally, looks like there was a failed Kickstarter for Crossnet Soccer (only $10k raised) last year. What happened there, and why is Crossnet Socce...

Accepted Answer

Hi Curt - Thanks for the question, below you'll find some revenue metrics. As you can see the leap from 2019 to 2020 was massive for our company and simply staying in stock was our largest challenge. We simply couldn't create product fast enough. Our goal like the majority of the brands in the space was to simply maintain revenue levels and keep demand the space, while the COVID shock slowed down. 2019 - $2.25M 2020 - $9M (COVID SPIKE) 2021 - $8M CROSSNET Soccer has actually been selling exce...

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