Connexa Sports Technologies Inc.(YYAI) - 2025 Q1 - Quarterly Report

Financial Performance - Net sales decreased by $2.42 million, or -77%, for the three months ended July 31, 2024, compared to the same period in 2023, primarily due to ongoing inventory availability issues[180]. - Cost of sales decreased by $1.79 million, or -81%, during the same period, directly correlating with the decrease in net sales[182]. - Gross income decreased by $0.62 million, or -70%, with a gross margin of 41% on actual sales made[182]. - Selling and marketing expenses decreased by $0.96 million, or -40%, due to the reduction in net sales and cessation of Tennis product-related marketing activities[183]. - General and administrative expenses increased by $0.88 million, or 35%, driven by debt settlement and ongoing legal fees related to the acquisition of YYEM[184]. - Research and development costs remained at $0, reflecting inactivity due to limited cash flow linked to reduced net sales[185]. - Loss from operations increased by $1.4 million, or 76%, due to higher operating expenses and reduced gross profit[186]. - Total other expense decreased by $2.00 million or 196% for the three months ended July 31, 2024, compared to the same period in 2023[187]. Cash Flow and Financing - Net cash used in operating activities was $(72,646) for the three months ended July 31, 2024, a significant improvement from $(803,363) in the same period in 2023[191]. - Cash and cash equivalents increased to $1,711,283 as of July 31, 2024, up from $229,705 as of April 30, 2024[190]. - Net cash used in financing activities was $1,614,958 for the three months ended July 31, 2024, compared to net cash provided of $601,002 in the same period in 2023[193]. - The company has outstanding borrowings from related parties amounting to $1,169,291 as of July 31, 2024[196]. - The company intends to finance operating costs over the next twelve months with existing cash, loans from related parties, and/or private placements[189]. Impairments and Losses - The company recorded an impairment loss of $11,421,817 related to Gameface as of April 30, 2023, due to higher than anticipated financial resource requirements and time to market[150]. - The company impaired all goodwill as of April 30, 2024, following the deconsolidation of Foundation Sports and the sale of PlaySight[150]. - The company reported an accumulated deficit of $171,607,773 as of July 31, 2024, indicating substantial doubt about its ability to continue as a going concern[188]. - The independent auditors expressed substantial doubt about the company's ability to continue as a going concern in their report[200]. Acquisitions and Sales - The company completed the sale of PlaySight in November 2022, resulting in a total loss on disposal of Foundation Sports and PlaySight amounting to $0 for the year ended April 30, 2024[149]. - The company entered into a share purchase agreement to acquire 70% of Yuanyu Enterprise Management Co., Limited for a combined $56 million, with $16.5 million paid in cash[159]. - The company expects the acquisition of YYEM to close following Nasdaq's approval, which will result in a change of control with YYEM shareholders owning approximately 75.3% of the company[160]. - The company will transfer all legacy business assets related to the "Slinger Bag" to a newly established entity, J&M Sports LLC, post-acquisition[173]. - An aggregate payment of $4.5 million has been agreed upon as an inducement for the acquisition, with $2 million already transferred[172]. Stock and Shareholder Actions - The company increased the number of authorized shares of common stock from 300,000,000 to 1,000,000,000 and executed a 1-for-20 reverse stock split[157]. - The company held a special meeting on September 13, 2023, approving a reverse stock split of 1-for-40, effective September 25, 2023[154]. - The company issued 116,510 shares of common stock and pre-funded warrants to purchase an aggregate of 1,258,490 shares for a combined purchase price of $4 per share, totaling approximately $16.5 million[155]. - The company has a promissory note of $2 million due by December 31, 2023, related to the sale of PlaySight, with potential conversion into ordinary shares if not paid in full[146]. Financial Reporting and Controls - There have been no changes in the company's control over financial reporting since April 30, 2024[203]. - The company has no off-balance sheet arrangements[198]. - The company has a promissory note of $2 million due by December 31, 2023, related to the sale of PlaySight, with potential conversion into ordinary shares if not paid in full[146].