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Connexa(CNXA) - 2025 Q2 - Quarterly Report
ConnexaConnexa(US:CNXA)2024-12-13 21:55

Acquisition and Business Operations - The Company acquired 70% of Yuanyu Enterprise Management Co., Limited (YYEM) for a total of $56 million, with $16.5 million paid in cash for 20% on March 20, 2024[181]. - On November 21, 2024, the Company completed the purchase of 50% of YYEM for 8,127,572 newly issued shares, representing 55.8% of the outstanding shares of Common Stock[182]. - Following the Acquisition, the Company sold its legacy business to J&M Sports LLC for $1.00, transferring all related assets and liabilities[198]. - The Company has separated from its legacy operations, with YYEM now serving as its primary operating subsidiary[202]. - The new executive team includes Thomas Tarala as CEO and Guibao Ji as CFO, with extensive experience in corporate finance and accounting[184][188]. Financial Performance - Net sales decreased by $1.93 million, or -84%, for the three months ended October 31, 2024, compared to the same period in 2023, primarily due to ongoing inventory availability issues[216]. - Cost of sales decreased by $1.21 million, or -74%, during the three months ended October 31, 2024, resulting in a gross profit decrease of $0.72 million, or -111%[217]. - Selling and marketing expenses decreased by $0.71 million, or -56%, during the three months ended October 31, 2024, reflecting a reduction in marketing activities related to Tennis and Pickleball products[218]. - General and administrative expenses decreased by $0.45 million, or -28%, during the three months ended October 31, 2024, driven by annual insurance policy renewals and ongoing legal fees[220]. - Loss from operations increased by $0.9 million, or 7%, in the three months ended October 31, 2024, due to a decrease in gross profit offset by reduced operating expenses[221]. - Net sales decreased by $4.35 million, or -80%, for the six months ended October 31, 2024, compared to the same period in 2023, attributed to limited inventory availability[225]. - Cost of sales decreased by $3.01 million, or -78%, during the six months ended October 31, 2024, leading to a gross income decrease of $1.34 million, or -87%[226]. - Selling and marketing expenses decreased by $0.28 million, or -49%, during the six months ended October 31, 2024, due to the cessation of marketing activities[227]. - General and administrative expenses increased by $0.42 million, or 10%, during the six months ended October 31, 2024, primarily due to debt settlement and legal fees related to acquisitions[229]. - Loss from operations increased by $1.45 million, or 48%, in the six months ended October 31, 2024, driven by increased operating expenses and reduced gross profit[230]. Cash Flow and Financial Position - As of October 31, 2024, the company had an accumulated deficit of $(172,973,917) and cash and cash equivalents of $1,642,969, compared to $229,705 as of April 30, 2024[232]. - Net cash used in operating activities was $2,726 for the six months ended October 31, 2024, a significant improvement from $(648,056) during the same period in 2023[233]. - The net loss for the period ended October 31, 2024 was $(5,586,889), with net non-cash expenses totaling $2,496,748[233]. - Net cash used in financing activities was $1,546,328 for the six months ended October 31, 2024, compared to net cash provided of $654,479 in the same period in 2023[236]. - Proceeds from the exercise of warrants amounted to $1,618,996 during the six months ended October 31, 2024[236]. - The company has outstanding borrowings of $1,169,291 under related-party loan agreements as of October 31, 2024[238]. - Accrued interest due to related parties was $917,957 as of October 31, 2024[238]. - The repayment deadline for related-party loans has been extended to July 31, 2025[237]. - The company has no off-balance sheet arrangements[240]. Concerns and Future Outlook - There is substantial doubt about the company's ability to continue as a going concern, as noted by the former independent auditors[242]. - YYEM collected approximately $1.9 million in royalties for the fiscal year ended January 31, 2024, and has potential revenues exceeding $70 million from agreements in multiple regions over the next three years[201]. - The Company has a licensee partner in China operating 200 retail stores across 40 cities, charging up to $1,500 for matchmaking services[200]. - YYEM's AI matchmaker application integrates with Big Data models, enhancing its service offerings in the love and marriage market[199]. - The aggregate number of warrants increased from 1,709,097 to 9,426,952 due to adjustments from the reverse stock split[205]. - The Company held a special meeting on September 13, 2023, approving a reverse stock split of 1-for-40, effective September 25, 2023[204].