|1||We are tackling one of society's greatest challenges - childhood (and adult) obesity; by getting kids active every day, while having fun.|
|2||The global gaming market is worth $152 billion (2019), with 45% of that, $68.5 billion, coming directly from mobile games.|
|3||The global toy market stands at $90.4 billion. Our Starter Kit and Accessories provide multiple revenue streams, like personalized jerseys.|
|4||Youth Sports is a rapidly growing $22 billion industry; but more kids are also quitting. Research shows the need for more unstructured play.|
This is a 40-year Vision, of a little kid, who is now a big kid - and has finally put all of the pieces together to bring to life for others what made his childhood magical.
Some dangerous trends are afoot in the U.S. and globally, which is the subject of a real, long-term health epidemic - Childhood Obesity, Diabetes and other negative health indicators, which have carried on into adulthood as well.
Further, aside from the 'cream of the crop', many kids are starting to quit hyper-competitive youth sports, due to a number of factors, which leading Think Tanks, like the Aspen Institute, with the support of role models like Kobe Bryant, expose well in their initiative Project Play.
Basement Sports is an answer to that need and gap in the lives of our children.
While things have gotten worse health-wise for kids, and the advancements of technology have in some ways made it harder for them to 'get off the couch', the confluence of mobile technology, widespread bandwidth accessibility and stay at home scenarios (ie. Work from Home, Home Schooling, Quarantining for Pandemics like COVID-19, and Weather elements) have made it clear to us that we need to take action of some kind. Our Founder, Arman Rousta, helped his friends launch a 501c(3) Non-Profit Organization called Sips & Kicks several years back, which is doing very good things to help kids get a healthier start in school through Fitness & Nutrition options that they didn't have before.
Back in July 2019, when Arman headed up a successful sale of a company - Ajustco - he decided to make good on a vow that he had made to himself over 15 years back: that when he sold his next company, he would finally start Basement Sports. The day after the Ajustco sale, he gathered up his core team and began charting their course. They used some of the proceeds from the exit to get the App and Product development started.
In October 2019, the Blueliner Office League began to test drive the alpha version of the App, as well as the actual toy products. Here's a short video highlight reel from the first ever Basement Sports corporate league, which we hosted at our Lab in Jersey City. It was loads of fun for the Big Kids!
In June 2020, we're bringing this concept to the world, and planning a phased roll-out that starts with America's Pastime, Baseball. After that, Basketball and Soccer are next up.
June 2020 - Basement Baseball enters the market with it's IOS and Android Apps.
August 2020 - Basement Baseball Starter Kit will be available for purchase.
Our parent company - b.labs Ventures - has already invested over $100,000 in getting Basement Baseball ready for its introduction to the market. And they are standing behind us to support the launch marketing as well.
Our team is all-in on this game-changing idea, and we love the idea of having our fans and customers as co-owners at the early stage, where the greatest opportunity for growth and a sense of meaningful contribution lies.
Basement Sports has financial statements ending December 31 2019. Our cash in hand is $0, as of May 2020. Over the three months prior, revenues averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $10,000/month.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Basement Sports is the world’s first mixed reality sports gaming platform, where users can set up or join various sports leagues, one-day tournaments or one-off games with friends or ranked competitors. 'Mixed' means old school (physical game play with indoor toys) meets new school (IOS and Android App for all of the interactive score keeping). Baseball is the first sport and sub-venture.
In five years, we hope to be a major player in a cross-section of several multi-billion dollar industries (app games, toys, fantasy sports and youth sports) with 15-20 sports, in every country, plus editions for non-sports games as well. These projections cannot be guaranteed.
Given the Company’s limited operating history, the Company cannot reliably estimate how much revenue it will receive in the future, if any.
Basement Sports, Inc. was incorporated in the State of Delaware in October 2019.
Since then, we have:
Historical Results of Operations
Our company was organized in October 2019 and has limited operations upon which prospective investors may base an evaluation of its performance.
Related Party Transaction
Refer to Question 26 of this Form C for disclosure of all related party transactions.
Liquidity & Capital Resources
To date, the Company has been financed with $50,000 in debt.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 12 months before we need to raise further capital.
We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.
We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 9 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.
Runway & Short/Mid Term Expenses
Basement Sports, Inc. cash in hand is $0, as of May 2020. Over the last three months, revenues have averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $10,000/month, for an average burn rate of $10,000 per month. Our intent is to be profitable in 18 months.
Since the date of our financials, not much has changed as we are still in a predictable 'expenses only' product development, pre-revenue stage.
Our revenues and expenses 6 months from now largely depends on the amount of capital raised, as that will impact how many additional sports - beyond the flagship Baseball game/toy/app - we develop in 2020. Our goal is to get to at least 6 total sports by end of 2020, each sport naturally costing some development and marketing expenses. In our base case, Expenses are projected to be $800,000 in Q3 (this includes COGS for Product Sales), with Revenues at $474,000 across 4 sports. Q4 brings us up to 6 sports and $1.6 million in Revenues with $1.75 million in Expenses. These projections cannot be guaranteed.
We're already in market with our apps in IOS and Android, and for Production to move actively and consistently in support of a true supply chain for the Baseball Starter Kit & Accessories, that $70,000 'threshold' will get us there, with physical inventory and items in market by September or October 2020 (depending on timing of funding); b.labs is already pre-funding some of this through the credit facility.
We can rely on addition capital from Basement Sports' parent company, b.labs Ventures, having recently (in July 2019) exited from its position in a DIY/Hardware industry venture named Ajustco (for $2.6 million), it is committing up to $1 million in investment, as and when needed, into Basement Sports. The structure has yet to be determined, and may work as a Credit Line, or a Convertible Note. Shared management between the companies makes it seamless in terms of decision making and deployment of capital. Rest assured, that the Founder of both companies is heavily invested and committed to Basement Sports as his and b.labs #1 focus.
The biggest risk is the entrance into this market by major players who already have established customer bases in the e-gaming, mobile app games, sports toys and overall sports industry. EA Sports, ESPN, Franklin Sports, Hasbro, Microsoft/Xbox to name a few.
The Company may never receive a future equity financing or elect to convert the Securities upon such future financing. In addition, the Company may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Securities nor a liquidity event occurs, the Purchasers could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company’s assets or profits and have no voting rights or ability to direct the Company or its actions.
Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
The Founder of Basement Sports is also the majority owner of the parent company, b.labs Ventures, which owns and operates several other startups; putting excessive demands on his time and energy.
Right now, in absence of major capital, our app development team is not that deep. We have a major dependency on 2 particular developers, that post-capital, we will look to support with more senior and mid-level developers.
While our business and product ideas are unique, we don't believe that any of them are truly patentable; therefore, speed to market and brand development will be key, which for consumer goods in this space, typically requires significant capital.
Our assumptions on CAC (Customer Acquisition Cost), mostly in terms of Cost Per Install (via App Stores) is based on our experience in App marketing for other industries - not specifically sports games. If costs prove to be greater than our estimates, or acquired users not as deeply engaged as we anticipate, then our revenue models will fall short of expectations, causing excessive strains on cash flow.
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