Connexa Sports Technologies Inc.(YYAI) - 2025 Q3 - Quarterly Report

Acquisition and Corporate Structure - 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 Company accounted for the acquisition of YYEM as a reverse merger, with historical operating results reflecting those of YYEM[88]. - Hongyu Zhou, the YYEM Seller, agreed to make an aggregate payment of $5 million to the Company as part of the acquisition inducement[89]. - The Company appointed new directors and officers following the acquisition, including Thomas Tarala as CEO and Guibao Ji as CFO[90]. - The Company engaged Bush & Associates CPA as its new independent registered public accounting firm for the fiscal year ended April 30, 2025, after dismissing Olayinka Oyebola & Co due to SEC charges against them[106]. Financial Performance - Net revenue increased by $8.4 million, or 581%, for the nine-month period ended January 31, 2025, and by $2.8 million, or 581%, for the three-month period ended January 31, 2025, compared to the same periods in 2024[113]. - Cost of revenue increased by $1.8 million, or 416%, for the nine-month period ended January 31, 2025, and by $600,000, or 416%, for the three-month period ended January 31, 2025, compared to the same periods in 2024[114]. - Gross profit increased by $6.6 million, or 651%, for the nine-month period ended January 31, 2025, and by $2.2 million, or 651%, for the three-month period ended January 31, 2025, compared to the same periods in 2024[114]. - General and administrative expenses increased by $2,280,120 for the nine-month period ended January 31, 2025, and by $1,996,300 for the three-month period ended January 31, 2025, from an immaterial amount in the corresponding periods in 2024[115]. - Net income from operations increased by $4.3 million for the nine-month period ended January 31, 2025, and by $196,000 for the three-month period ended January 31, 2025, compared to the same periods in 2024[117]. - Net current assets increased to $15.3 million as of January 31, 2025, from $9.0 million as of April 30, 2024, an increase of approximately $6.3 million[118]. - Accounts receivable increased by $9.1 million as royalty revenue was recognized over the period[118]. - Provision for income taxes increased by 655% for the nine-month period ended January 31, 2025, compared to the same period in 2024[117]. - The company has no outstanding indebtedness[120]. Market Focus and Operations - 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 reported that the results for the nine-month period ended January 31, 2025 do not include the Legacy Business operations, as YYEM is now the operating subsidiary[105]. - A Multi-Channel Network (MCN) agency services agreement was signed in February 2025 to create content for TikTok, focusing on live-streaming and user-generated content in the Middle East and North Africa[109]. - The Company has transitioned its focus to the emerging love and marriage market sector through YYEM, which operates an AI matchmaker application[103]. Economic Outlook - The company does not believe that inflation and changes in prices will have a material effect on its operations[122].