Connexa Sports Technologies Inc.(YYAI) - 2025 Q2 - Quarterly Report

Acquisitions and Business Transactions - The company acquired 70% of Yuanyu Enterprise Management Co., Limited (YYEM) for a combined $56 million, with $16.5 million paid in cash for 20% of YYEM[181] - The company completed the purchase of 50% of YYEM's ordinary shares for 8,127,572 newly issued shares of Common Stock, representing 55.8% of the issued and outstanding shares[182] - The company sold its legacy "Slinger Bag" business to J&M Sports LLC for $1.00, transferring all related assets and liabilities[182][198] YYEM Operations and Market Performance - YYEM collected royalties of approximately $1.9 million in its fiscal year ended January 31, 2024, and has term sheets with potential cumulative revenues exceeding $70 million over the next three years[201] - YYEM operates in the love and marriage market sector with proprietary intellectual property and an AI matchmaker application integrated with Big Data models[199] - YYEM's licensee partner in China operates 200 retail stores across 40 cities, with one-time subscriber matchmaker fees reaching up to $1,500[200] Stock and Financial Instruments - The company effected a 1-for-40 reverse stock split of its common stock on September 25, 2023, increasing the aggregate number of warrants from 1,709,097 to 9,426,952[204][205] - The company filed a registration statement for 1,925,000 shares of its common stock, which became effective on August 21, 2024[207] - Proceeds from the exercise of warrants for the six months ended October 31, 2024, were $1,618,996[236] Financial Performance and Expenses - Net sales decreased by $1.93 million (-84%) for the three months ended October 31, 2024, compared to the same period in 2023, due to inventory availability issues[216] - Gross income decreased by $0.72 million (-111%) for the three months ended October 31, 2024, compared to the same period in 2023, driven by reduced net sales[217] - Selling and marketing expenses decreased by $0.71 million (-56%) for the three months ended October 31, 2024, compared to the same period in 2023, due to reduced marketing activities[218] - General and administrative expenses decreased by $0.45 million (-28%) for the three months ended October 31, 2024, compared to the same period in 2023, primarily due to insurance policy renewals and legal fees[220] - Loss from operations increased by $0.9 million (7%) for the three months ended October 31, 2024, compared to the same period in 2023, driven by reduced gross profit and operating expenses[221] - Net sales decreased by $4.35 million (-80%) for the six months ended October 31, 2024, compared to the same period in 2023, due to ongoing inventory issues[225] - Gross income decreased by $1.34 million (-87%) for the six months ended October 31, 2024, compared to the same period in 2023, driven by reduced net sales[226] - Selling and marketing expenses decreased by $0.28 million (-49%) for the six months ended October 31, 2024, compared to the same period in 2023, due to reduced marketing activities[227] - General and administrative expenses increased by $0.42 million (10%) for the six months ended October 31, 2024, compared to the same period in 2023, driven by debt settlement and legal fees[229] - Loss from operations increased by $1.45 million (48%) for the six months ended October 31, 2024, compared to the same period in 2023, due to increased operating expenses and reduced gross profit[230] - Net loss for the six months ended October 31, 2024, was $(5,586,889), with net non-cash expenses of $2,496,748[233] Cash Flow and Financial Position - Accumulated deficit as of October 31, 2024, was $(172,973,917)[232] - Net cash provided by operating activities for the six months ended October 31, 2024, was $2,726, compared to $(648,056) for the same period in 2023[232][233] - Net cash provided by financing activities for the six months ended October 31, 2024, was $1,546,328, compared to $654,479 for the same period in 2023[232][236] - Cash and cash equivalents as of October 31, 2024, were $1,642,969, compared to $229,705 as of April 30, 2024[232] - No investing activities were incurred in the six-month periods ended October 31, 2024, and 2023[234] Related-Party Transactions and Loans - Outstanding borrowings under related-party loan agreements as of October 31, 2024, were $1,169,291[238] - Accrued interest due to related parties as of October 31, 2024, was $917,957[238] - The company extended the repayment deadline for related-party loans to July 31, 2025[237]