Part I Item 1. Business Connexa's operations now focus on licensing AI-powered matchmaking and metaverse technology, generating $12.8 million in FY2025 royalties, after acquiring YYEM and divesting its legacy business - The company completed the acquisition of a 70% stake in Yuanyu Enterprise Management Co., Limited (YYEM) for a combined $56 million, making YYEM its sole operating subsidiary. Concurrently, it sold its legacy "Slinger Bag" business for $1.001617 - The core business is licensing its portfolio of six metaverse-related technologies and five AI matchmaking patents to partners worldwide. The AI technology is designed to integrate with major Big Data models like those from Huawei, Baidu, and Alibaba1820 Fiscal Year 2025 Revenue | Metric | Value (USD) | | :--- | :--- | | Royalties Generated | $12.8 million | - A new social networking vertical was launched via a Multi-Channel Network (MCN) agreement with TikTok in February 2025 to create and sell content for users in the Middle East and North Africa (MENA) region27 - The company has three main licensees for its technology, covering Japan/South Korea, UK/Europe, and Sub-Saharan Africa35 - On July 9, 2025, the company received a notice of non-compliance from Nasdaq regarding the composition of its Board and Audit Committee, and has a cure period to regain compliance545556 Item 1A. Risk Factors The company faces significant business, Hong Kong, and stock ownership risks, including licensee dependence, regulatory uncertainties, and potential Nasdaq delisting - A substantial portion of revenue is dependent on intellectual property licensing agreements with third parties, and the failure of these licensees to perform could significantly impact financial results6162 - The love and marriage market is highly competitive with low switching costs. Competitors, including large social media companies like Facebook, could leverage their existing user bases to gain an advantage6870 - The company faces risks related to doing business in Hong Kong, including potential oversight from the Chinese government, uncertainty regarding PRC laws on data security and overseas listings, and the impact of the Hong Kong National Security Law142147156 - The company is not currently in compliance with Nasdaq Listing Rule 5605 for board and audit committee independence, which could lead to delisting if not cured within the provided timeframe162164 - A single shareholder, Hongyu Zhou, beneficially owns approximately 55.8% of the company's outstanding common stock, giving him significant influence over corporate matters161175 - The company's former independent auditor, Olayinka Oyebola & Co. (OOC), has been charged by the SEC, which could impact the credibility of past financial statements for both the company and its subsidiary YYEM125127 Item 1B. Unresolved Staff Comments This section is not applicable as the company is a smaller reporting company - Not applicable to smaller reporting companies178 Item 1C. Cybersecurity The company maintains an internally managed cybersecurity risk framework with Board oversight, reporting no material incidents in FY2025 - The company has an internally managed cybersecurity risk management framework integrated into its overall enterprise risk management system180 - The Board of Directors oversees the cybersecurity risk profile and receives timely information regarding any significant incidents184 - There were no cybersecurity incidents during the fiscal year ended April 30, 2025, that resulted in a material impact on the company's business, financial condition, or results of operations183 Item 2. Properties The company leases its principal office in Hong Kong for approximately $5,400 monthly, with the lease expiring in August 2026 - The company's principal office is located at Rm. 3212, Tower 1, The Gateway, Harbour City, 25 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong186 - The company leases approximately 800 square feet for HKD42,000 (approx. $5,400) per month, with the lease expiring on August 3, 2026186 Item 3. Legal Proceedings The company is not currently involved in any material pending or threatened legal proceedings - There were no pending or threatened legal proceedings that could reasonably be expected to have a material effect on the Company's results of operations187 Item 4. Mine Safety Disclosures This section is not applicable to the company - Not applicable189 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on Nasdaq under 'YYAI', with no cash dividends paid or planned, and maintains an equity incentive plan - The company's common stock is listed on Nasdaq under the symbol "YYAI". As of August 7, 2025, there were 14,563,019 shares outstanding6192 - The company has never declared or paid cash dividends and does not plan to in the near future194 - On November 21, 2024, the Company issued 8,127,572 shares of common stock to complete the acquisition of a 70% ownership stake in YYEM198 Item 6. Selected Financial Data This section is not applicable as the company is a smaller reporting company - Not applicable to smaller reporting companies200 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation FY2025 saw significant revenue and gross profit growth driven by licensing, though increased G&A expenses led to a net cash outflow from operations Results of Operations (Year Ended April 30) | | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $12,818,182 | $5,195,804 | $7,622,378 | 147% | | Gross Profit | $9,841,259 | $4,018,881 | $5,822,378 | 145% | | Operating Income | $6,659,857 | $3,854,505 | $2,725,352 | 71% | - Revenue growth was driven by royalty income from new licensees following agreements made in January 2024213 - General and administrative expenses increased significantly by $3.1 million (1,884%) due to business growth and costs related to YYEM becoming a Nasdaq-listed company's operating subsidiary, including audit fees, legal fees, and D&O compensation215 Cash Flow Summary (Year Ended April 30) | | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in)/provided by Operating Activities | $(379,388) | $2,486,255 | | Net cash (used in)/provided by Financing Activities | $394,781 | $(2,446,904) | - Working capital increased by 93% to $16.0 million as of April 30, 2025, largely due to a $10.0 million increase in accounts receivable216 Item 7A. Quantitative and Qualitative Disclosures About Market Risk This section is not required as the company is a smaller reporting company - As a smaller reporting company, we are not required to provide this information250 Item 8. Financial Statements and Supplementary Data FY2025 financial statements show $32.9 million in total assets and $4.6 million net income, reflecting YYEM reverse acquisition accounting and significant customer concentration Consolidated Balance Sheet Highlights (As of April 30) | | 2025 | 2024 | | :--- | :--- | :--- | | Total Current Assets | $22,396,159 | $9,678,124 | | Total Assets | $32,905,794 | $23,164,682 | | Total Current Liabilities | $6,487,171 | $1,442,006 | | Total Shareholders' Equity | $26,418,623 | $21,722,676 | Consolidated Statement of Operations Highlights (Year Ended April 30) | | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $12,818,182 | $5,195,804 | | Net Income | $4,633,447 | $2,625,554 | | Net income per share - basic | $0.36 | $0.23 | - The acquisition of YYEM was accounted for as a "reverse acquisition," with YYEM deemed the accounting acquirer. The consolidated financial statements represent a continuation of YYEM's financial statements281282 - The company has a significant customer concentration risk. For the year ended April 30, 2025, three major customers accounted for 100% of total accounts receivable and 100% of total revenues350353 - On June 30, 2025, the company entered into a securities purchase agreement for a private placement to raise gross proceeds of $4.6 million through the sale of 20 million units at $0.23 per unit381 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company changed its independent auditor to Enrome LLP in March 2025 due to geographical challenges, reporting no disagreements with the former firm - On March 24, 2025, the company engaged Enrome LLP as its independent registered public accounting firm, dismissing Bush & Associates CPA (B&A)383 - The company stated there were no disagreements with the former auditor, B&A, on any matter of accounting principles, financial statement disclosure, or auditing scope385 Item 9A. Controls and Procedures Management concluded disclosure controls and procedures were effective as of April 30, 2025, with no material changes to internal controls during the fiscal year - Based on an evaluation as of the end of the period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of April 30, 2025387 - There were no material changes to the company's internal control over financial reporting during the year ended April 30, 2025388 Item 9B. Other Information This section is not applicable - Not applicable392 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This section is not applicable - Not applicable393 Part III Item 10. Directors, Executive Officers and Corporate Governance The company's leadership includes CEO Thomas Tarala and CFO Guibao Ji, with a five-member Board of Directors, including independent members and an Audit Committee Financial Expert - The executive officers are Thomas Tarala (CEO) and Guibao Ji (CFO). The board of directors consists of Thomas Tarala, Hongyu Zhou, Chenlong Liu, and Kong Liu396 - The Board is composed of five members, with Chenlong Liu and Kong Liu determined to be independent directors407408 - Chenlong Liu is qualified as the Audit Committee Financial Expert410 Item 11. Executive Compensation FY2025 CEO compensation totaled $1.62 million, including salary and share awards, while director compensation was set at $15,000 cash per quarter FY2025 Named Executive Officer Compensation | Name and Principal Position | Salary ($) | Share Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | | Thomas Tarala (CEO) | 320,000 | 1,300,000 | 1,620,000 | | Guibao Ji (CFO) | 111,111 | - | 111,111 | - CEO Thomas Tarala's employment agreement includes a $720,000 annual base salary, a $300,000 stock signing bonus, and a $1.0 million success fee related to the YYEM merger429 - CFO Guibao Ji's employment agreement includes an annual salary of $250,000 and a discretionary bonus436 - Director compensation was set at $15,000 cash per quarter, retroactive to each director's appointment417 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Director Hongyu Zhou beneficially owns 55.81% of the common stock, making him the largest shareholder, with 1,500,000 shares available under the incentive plan Security Ownership of Major Shareholders and Management | Name | of Shares | % of Class | | :--- | :--- | :--- | | Hongyu Zhou (Director) | 8,127,572 | 55.81% | | All current officers and directors as a group (5 persons) | 8,127,572 | 55.81% | - Percentages are based on 14,563,019 shares of Common Stock outstanding as of August 7, 2025443 - The company has 1,500,000 shares of common stock available for issuance under its 2020 Global Share Incentive Plan449 Item 13. Certain Relationships and Related Transactions and Director Independence Director Hongyu Zhou provided a $4.2 million guarantee on an investment, resulting in a $2.8 million contingent receivable and a $775,406 payable to him as of April 30, 2025 - Director Hongyu Zhou has provided a guarantee on the value of the company's investment in Brightstar Technology Group Co., Ltd., obligating him to compensate for any decline below a guaranteed amount of $4,210,385 upon sale450 - As of April 30, 2025, the company had a contingent receivable of $2,827,528 from Mr. Zhou related to the guarantee and a payable of $775,406 to Mr. Zhou for reimbursed expenses450451 Item 14. Principal Accountant Fees and Services Audit fees from independent accountants increased to $200,000 in FY2025 from $120,000 in FY2024, with no other service fees incurred Accountant Fees | | Fiscal 2025 | Fiscal 2024 | | :--- | :--- | :--- | | Audit Fees | $200,000 | $120,000 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | | Total | $200,000 | $120,000 | Part IV Item 15. Exhibit and Financial Statement Schedules This section lists all exhibits and incorporates financial statements by reference, including corporate governance documents, material contracts, and SEC certifications - This section lists the financial statements and exhibits filed with the Form 10-K, including corporate governance documents, material contracts, and SEC certifications455456
Connexa(CNXA) - 2025 Q4 - Annual Report