Revenue and Customer Base - The company generated substantial revenue from customers located in the PRC, accounting for nearly all revenue for the fiscal years ended June 30, 2025 and 2024[30]. - For the fiscal year ended June 30, 2025, three significant customers accounted for 27.5%, 25.8%, and 16.2% of total sales, indicating a reliance on a few major clients[55]. - Revenue from AI services under AI Assist contributed 99.4% of total revenue for the fiscal year ended June 30, 2025, compared to 100% in the previous year[135]. - The AI Assist product generated 100% of the company's revenue for the fiscal years ended June 30, 2024, and June 30, 2025, with AI services contributing 99.70% of revenue in the fiscal year ended June 30, 2023[177]. - The top three customers for the fiscal year ended June 30, 2025, contributed approximately 69.5% of total revenue, with Baojiang at 27.5%, Pengbosheng at 25.8%, and Blue Legend at 16.2%[191]. - The company had 28 customers in the fiscal year ended June 30, 2025, compared to nine in 2024 and five in 2023[191]. Regulatory and Legal Environment - Recent regulatory changes in China, including the Cybersecurity Review Measures, may impact the company's operations and require compliance with new data security laws[29]. - The company has not received any notices requiring cybersecurity reviews as of the report date, but future regulations may impose operational challenges[30]. - The legal environment in the PRC presents uncertainties that could limit the company's legal protections and operational stability[34]. - The evolving regulatory landscape for data privacy and security may increase compliance costs and affect business practices[69]. - Cybersecurity threats, including potential data breaches, could lead to significant financial, legal, or reputational losses for the company[75]. - Failure to comply with privacy policies or regulations could result in governmental investigations, fines, and damage to the company's reputation[71]. Financial Performance - For the fiscal year ended June 30, 2025, Helport AI reported revenue of $34.9 million, a 18.3% increase from $29.5 million in the previous fiscal year[135]. - Net income for the fiscal year ended June 30, 2025, was $1.9 million, a decrease from $7.37 million in the fiscal year ended June 30, 2024[135]. - The company relies on dividends from its Singapore subsidiary for cash requirements, which may impact its financial flexibility[97]. - Economic conditions, including inflation and potential recession, may adversely affect the company's revenue and profitability, particularly impacting demand for its AI Assist product[91][92]. - The company has been moderately impacted by the COVID-19 pandemic, with a reduction in billable contact center seats affecting revenue[93]. Operational Challenges and Growth - The company faces challenges in recruiting, training, and retaining skilled personnel, which is critical for its growth and operational efficiency[78]. - The company must effectively manage its growth and execute strategies to avoid adverse impacts on its business and financial results[79]. - Future acquisitions may pose risks related to integration and resource diversion, potentially affecting the company's financial performance[89][90]. - The company has experienced substantial growth and expects continued expansion in operations, particularly in the PRC, U.S., and Southeast Asia[77]. Research and Development - The company has two pending patent applications in Singapore and is investing significantly in research and development to keep pace with technological advances in AI products[42]. - R&D costs for the fiscal years 2023, 2024, and 2025 were US$375,410, US$4,303,490, and US$6,316,962, accounting for 18.3%, 48.6%, and 38.6% of total operating costs respectively[209]. - The company’s R&D efforts in fiscal year 2025 focused on enhancing the fine-tuning capabilities of large AI models for diverse applications[183]. - The R&D team consists of 58 members, with 36 focused on AI operations and 22 on product development, resulting in two patents currently under application review in Singapore[206]. Technology and Product Development - The company has designed effective systems to integrate AI Assist software into contact centers, enhancing its competitive position[42]. - The AI Assist software features four primary functions, including real-time speech guidance and compliance monitoring, aimed at enhancing customer engagement efficiency[131]. - The company has developed over 100 sets of dialog libraries and training tools tailored to various industry scenarios, enhancing its competitive advantage[139]. - The flagship software, AI Assist, serves enterprise clients across industries such as banking and insurance, enhancing operational efficiency[222]. Partnerships and Supplier Relationships - The company relies on third-party agents for payment processing, which introduces credit risks and potential disruptions in cash flow[39]. - The company’s reliance on Youfei Shuke as a key developer partner exposes it to risks if the partner fails to cooperate or experiences operational disruptions[43]. - The company has maintained a long-term partnership with Youfei Shuke, which has been the sole supplier for AI operation services since fiscal year 2024[186]. - The company is actively seeking to diversify its supplier base to mitigate risks associated with reliance on Youfei Shuke[59]. Market Expansion and Strategy - The company plans to expand its presence in the North American and Southeast Asian markets, focusing on sectors such as insurance sales, real estate brokerage, and mortgage lending[149][150]. - The Southeast Asia office, opened in January 2025, has driven growth primarily in the consumer financing sector, establishing a "Global Center of Excellence for AI Training and Operations"[150]. - The company aims to partner with BPO contact centers globally to enhance sales revenue and operational efficiency, targeting BPO operators with significant outbound telesales operations[152][153]. - The company has initiated online promotional campaigns for its AI software and AI+BPO solutions in 2025, utilizing search engine optimization and strategic advertising to increase product exposure[155]. Internal Controls and Governance - Helport AI has not identified any material weaknesses in its internal control over financial reporting for the fiscal year ended June 30, 2025[100]. - Helport AI's reporting obligations may place a significant strain on its management and operational resources[101]. - Helport AI's board of directors has discretion over future dividend declarations, which depend on various factors including financial condition and cash requirements[104]. - Helport AI's independent registered public accounting firm must attest to the effectiveness of its internal controls once it ceases to be an "emerging growth company"[101].
Helport AI Limited(HPAI) - 2025 Q4 - Annual Report