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Connexa(CNXA) - 2025 Q3 - Quarterly Report
ConnexaConnexa(US:CNXA)2025-03-24 21:29

Acquisition and Ownership - 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[87]. - Following the acquisition, the Company completed a share exchange transaction on November 21, 2024, acquiring an additional 50% of YYEM for 8,127,572 newly issued shares, resulting in a total ownership of 70%[88]. - The historical operating results of the Company are now those of YYEM, as the legacy business operations are no longer part of the Company's operations following the acquisition[105]. - The Company accounted for the acquisition as a reverse merger, impacting the financial reporting and operational structure moving forward[88]. - The Company’s directors and officers resigned on November 21, 2024, following the completion of the acquisition, and a new board was appointed[88]. Financial Performance - Net revenue increased by $8.4 million, or 581%, for the nine-month period ended January 31, 2025, driven by royalty income from new licensees[113]. - Cost of revenue increased by $1.8 million, or 416%, for the nine-month period ended January 31, 2025, primarily due to increased amortization costs of new intellectual property[114]. - Gross profit increased by $6.6 million, or 651%, for the nine-month period ended January 31, 2025, attributed to higher royalty income[114]. - General and administrative expenses rose by $2,280,120 for the nine-month period ended January 31, 2025, mainly due to increased personnel costs and professional fees[115][116]. - Net income from operations increased by $4.3 million for the nine-month period ended January 31, 2025, primarily from royalty income generated by new licensees[117]. - Net current assets increased to $15.3 million as of January 31, 2025, up from $9.0 million as of April 30, 2024[118]. - Accounts receivable increased by $9.1 million, reflecting recognized royalty revenue in accordance with the company's revenue recognition policy[118]. - The company reported no outstanding indebtedness as of the reporting date[120]. Strategic Initiatives - YYEM generated approximately $1.9 million in royalties for the fiscal year ended January 31, 2024, and has potential cumulative revenue exceeding $70 million from agreements in Japan, South Korea, Europe, and Sub-Saharan Africa over the next three years[104]. - The Company has entered into a Multi-Channel Network (MCN) agency services agreement with TikTok to create and sell content, focusing on live-streaming and user-generated content in the Middle East and North Africa[109]. - The Company has not yet built a network of influencers for the TikTok agreement, and fees generated will depend on user conversion rates[109]. Management and Governance - The new executive team includes Thomas Tarala as CEO and Guibao Ji as CFO, with a focus on leveraging their extensive experience in corporate finance and accounting[90][94]. - The Company dismissed its previous auditor, Olayinka Oyebola & Co, due to SEC charges against them, and engaged Bush & Associates CPA as the new independent registered public accounting firm[106]. Economic Environment - The company does not believe inflation and changes in prices will materially affect its operations[122]. - As a smaller reporting company, the company is not required to provide disclosure about market risk[124].