Photo illustration by Lorenzo Gordon

4 years ago, Dennis Gile, a former pro football player who founded a thriving quarterback coaching service in Arizona, decided to expand into the congested college sports recruiting market. 

Signing Day Sports (SDS), a paid app to match higher college prospects with college coaches, was Gile’s large try. “The new era of recruiting is now,” the corporation proclaimed upon its launch. 

That era may perhaps quickly extend to Wall Street, as SDS filed paperwork with the Securities and Exchange Commission final week for an initial public providing that would worth the company about $one hundred million. 

But when IPOs usually mark a corporation milestone on a path of sturdy, safe development, the SDS filing—which, according to SDS’ SEC prospectus, hopes to raise $22.five million—appears to be the equivalent of a late-game desperation heave toward the finish zone.

According to its filings, SDS’s present and former accountants have “expressed substantial doubt as to the Company’s potential to continue as a going concern.”

The subscription service, which charges consumers $25/month or $250/year, permits players to upload their film, transcripts and verified crucial statistics, and connect with NCAA football, baseball and softball coaches. SDS’s core pitch is that it eliminates travel vital for little ones to get to camps, a classic way to achieve universities’ interest. Although its service is hardly a novel concept—a competitor corporation, Subsequent College Student Athlete (NCSA), has been performing anything comparable, albeit at a larger value point, for decades—SDS boldly touted itself as a game-altering technologies that would let athletes to affordably interface with schools.

And by some measures, it appears to have created a splash.

Its present shareholders incorporate Yankees third baseman Josh Donaldson sprint automobile driver Spencer Bayston and former pro basketball player and NBA Players Association executive Roger Mason Jr. (Mason also serves on SDS’ board of directors.) More than the final year, the corporation has grown from eight to 15 workers, with current hirings like two veteran Division I offensive coordinators: Jeff Hecklinski, formerly of San Diego State, and Luke Meadows, who most not too long ago coached at Troy.

Earlier this month, SDS announced a information-sharing partnership with Chicago-primarily based Zcruit, a recruiting database service that serves more than one hundred Division I schools. “I have been genuinely impressed by what they have been in a position to do,” Zcruit’s director of company improvement, Cory Nichol, told Sportico. “They have performed a excellent job of placing collectively a group of folks who genuinely comprehend the space.”

What ever indicators of results, SDS has also observed Gile sued and not too long ago excised from his company—though he remains SDS’ biggest shareholder—amid a spate of leadership turmoil. Most of its board of directors and management group have departed or shuffled titles in the previous seven months.

Absent from the company, at least lately, is a great deal in the way of dollars. As it at the moment stands, SDS does not have money on hand to spend its bills subsequent year. More than the previous two years, the business’ annual income has cratered, from $341,000 in 2021 to just $78,336 in 2022. SDS has $7.two million in lengthy-term debt and would be worth significantly less than nothing at all if liquidated.

Why then try to go to industry? Since failure to hold an IPO probably signifies a death sentence. To finance its activities and obligations, like $1.26 million in 2021 salaries for Gile and 5 other former executives, the corporation borrowed millions of dollars it will not have to repay if it goes public. 

Promissory notes that SDS should at the moment settle in money can alternatively be compensated with shares if the corporation goes public. SDS has a $1.32 million bill due in August, a further $six.three million due in 2024 and just $254,000 in money on hand.

Underwriter Boustead Securities expects interested investors to spend involving $four and $six a share at the IPO. Provided portion of Boustead’s charges are getting paid in warrants for shares in the public company, there is incentive for the underwriter to sell the IPO.

Signing Day Sports is a single of a quantity of on the internet recruiting ventures that have attempted to make a play for the $29 billion youth sports market. Some of its competitors—such as Hudl, which counts six million active athlete users—provide a no cost platform for the athletes when targeting higher college teams or college athletic departments as their paying clientele. SDS requires the reverse strategy, charging athletes a membership charge to market themselves and present verified statistics. It competes against market giant NCSA, which was founded in 2000, at the moment employs more than 1,000 staffers and was acquired final year by IMG Academy.

Provided the availability of no cost solutions like Hudl and the litany of scouting lists and recruiting tools college athletic departments avail themselves of, it is debatable how a great deal worth there is for particular higher college prospects (or their households) to spend out of their personal pockets for the recruiting equivalents of dating apps.

Nonetheless, SDS contends in its SEC filings, the sports recruitment market continues to see “the very best athletes in the planet get overlooked,” and its technologies can enable “bring equal opportunity” to collegiate hopefuls at all levels.

In an interview in March with Sports Small business Journal, Gile analogized his service to “LinkedIn on steroids,” citing the results story of his personal son Jordan, a best-ranked higher college quarterback, who accepted a scholarship to play at Florida. Nonetheless, earlier this month, Dennis Gile tweeted that following an “unfortunate get in touch with,” Jordan would not be going to UF and was reopening his commitment. (Presently pinned to the best of Jordan Gile’s Twitter profile is a hyperlink to his highlights on Hudl.)

Dennis Gile declined to comment for this story, citing the SEC-mandated quiet period for IPOs.

A very first-group all-star quarterback from Phoenix, Gile ended up as a starter for two years at Central Missouri, had a cup of coffee with the New England Patriots and later played in each the Canadian Football League and Arena Football League. He in the end created his name coaching pro and scholastic quarterbacks in his property state. In 2016 a reality Television series constructed about Gile and his coaching college, QB Academy, started filming by a now defunct promoting agency, although the show by no means created it to air.

Right after launching Signing Day Sports, Gile secured a $700,000 loan in April 2021 from John Dorsey, an Arizona businessman. The parties executed a safety agreement in which Gile pledged as collateral his three% interest in SDS plus any connected proceeds. The loan was due to be repaid in complete final spring. Later that year, Gile stepped down, and Dorsey became CEO.

In September, following Gile had failed to spend back all but $one hundred,000, Dorsey and his loved ones holding corporation filed a suit in Maricopa County superior court, accusing Gile of breach of contract. Gile responded with a counterclaim that accused Dorsey of failing to provide on a guarantee to facilitate $six million in startup capital, and deceiving him into relinquishing the CEO’s seat. The parties at some point settled.

Dorsey, who was paid a base salary of $240,000, resigned from the corporation final June, following which Gile reassumed the function of CEO. He lasted till November, when he resigned and became president of the board.

As portion of their settlement agreement, Dorsey agreed to waive his claims against Gile in exchange for an initial payment of $ten,000 and a promissory note of $40,000, contingent on Signing Day Sports’ initial providing effectively raising at least $1 million in proceeds just before July.

In a text message to Sportico, Dorsey referred to as the recruiting app “phenomenal” and stated that his lawsuit against Gile had “nothing to do with SDS.” Dorsey, individually, remains SDS’ second-biggest shareholder. 

The SEC prospectus filed final week inadvertently listed his cell telephone quantity as the Signing Day Sports’ key corporate quantity, an error Dorsey stated would be remedied in an amended filing. He declined additional comment, citing the confidentiality terms of the settlement.

At the finish of March, SDS paid $800,000 to Gile as portion of an agreement to repurchase 600,000 shares of frequent stock and which saw Gile resign from his position as president of the company’s board. Dorsey then received $695,000 of that dollars, to address the remaining balance and interest payments on the loan. Gile and Dorsey have given that separately signed covenants not to sue SDS.

In addition to the 88% drop in income from 2021 to 2022, there are other hints of issues in the very first draft of the prospectus. That preliminary kind, filed in November, contained a detailed declaration of users—more than 75,000 higher college students at 600 schools and 436 college athletic departments—while the present version just refers to “many.”

That is not the only supply of uncertainty ahead of going public. Though its IPO has been filed, Signing Day Sports has but to set an initial providing date.