UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

For the transition period from ________ to ________

Commission File Number: 01-41423

CONNEXA SPORTS TECHNOLOGIES INC.

(Exact name of registrant as specified in its charter)

74 E. Glenwood Ave., #320

Smyrna, DE 19977

(Address of principal executive offices, including Zip Code)

(646) 453-0678

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934: None

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934 Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

The number of shares outstanding of the registrant’s Common Stock, $0.001 par value per share, as of September 12, 2025, was 14,563,019.

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may,” “should,” “could,” “will,” “plan,” “future,” “continue,” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. A wide variety of factors could cause or contribute to such differences and could adversely impact revenue, profitability, cash flows, and capital needs. There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be accurate. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” that may cause our or our industry’s actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by any forward-looking statements.

Important factors that may cause the actual results to differ from the forward-looking statements, projections or other expectations include, but are not limited to, the following:

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Except as required by law, we do not undertake to update or revise any of the forward-looking statements to conform these statements to actual results, whether as a result of new information, future events, or otherwise.

As used in this report, the terms “Connexa,” “Company,” “we,” “us,” and “our” refer to Connexa Sports Technologies Inc., unless otherwise indicated.

TABLE OF CONTENTS

PART I

ITEM 1. FINANCIAL STATEMENTS

CONNEXA SPORTS TECHNOLOGIES INC.

CONSOLIDATED BALANCE SHEETS

(Amounts in U.S. dollars, except for numbers of shares or as otherwise noted)

The accompanying notes are an integral part of these consolidated financial statements.

CONNEXA SPORTS TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE-MONTH PERIODS ENDED JULY 31, 2025 AND 2024

(Amounts in U.S. dollars, except for numbers of shares or as otherwise noted)

The accompanying notes are an integral part of these consolidated financial statements.

CONNEXA SPORTS TECHNOLOGIES INC.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE THREE-MONTH PERIODS ENDED JULY 31, 2025 AND 2024

(Amounts in U.S. dollars, except for numbers of shares or as otherwise noted)

The accompanying notes are an integral part of these consolidated financial statements.

CONNEXA SPORTS TECHNOLOGIES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE-MONTH PERIODS ENDED JULY 31, 2025 AND 2024

(Amounts in U.S. dollars, except for numbers of shares or as otherwise noted)

The accompanying notes are an integral part of these consolidated financial statements.

CONNEXA SPORTS TECHNOLOGIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1. ORGANIZATION AND NATURE OF BUSINESS

Lazex Inc. (“Lazex”) was incorporated under the laws of the State of Nevada on July 12, 2015. From 2019 through 2021, Lazex acquired various entities related to the manufacture and distribution of the Slinger Bag Launcher, a portable tennis ball, padel tennis ball, and pickleball launcher. In 2019, Lazex changed its name to Slinger Bag Inc., and in 2022 Slinger Bag Inc. changed its name to Connexa Sports Technologies Inc.

In 2021 and 2022, Connexa acquired three companies: Foundation Sports Systems, LLC, Flixsense Pty, Ltd. (known as Gameface), and PlaySight Interactive Ltd. Over the course of 2022 and 2023, the Company disposed of and fully impaired the goodwill and intangible assets related to all of these.

On January 19, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with three investors (the “January 2024 Investors”) for the issuance and sale to each investor of (i) 116,510 shares of common stock (the “January Shares”) and (ii) pre-funded warrants to purchase an aggregate of 1,258,490 shares of common stock (the “Pre-Funded Warrants”) at a combined purchase price of $4 per share of common stock for an aggregate amount of approximately $16.5 million. The Pre-Funded Warrants had an exercise price of $0.0002 per share of common stock and became exercisable beginning on May 15, 2024, the date stockholder approval was received and effective, allowing exercisability of the Pre-Funded Warrants under Nasdaq rules until they were exercised in full. The aggregate number of shares issued to the January 2024 Investors was 349,530 and the aggregate number of Pre-Funded Warrants was 3,775,470.

From April 2024 through May 2024, the Company acknowledged and agreed to the entry into certain warrant purchase agreements by the January 2024 Investors and 10 purchasers (the “Pre-Funded Warrant Purchasers”) pursuant to which the January 2024 Investors sold all of the 3,775,470 Pre-Funded Warrants to Pre-Funded Warrant Purchasers for an aggregate amount of $18,877,350 in cash.

On May 28, 2024, the Company filed a registration statement in respect of 1,925,000 shares of its common stock consisting of (a) 349,530 January Shares and (b) 1,575,470 shares of common stock issuable upon the exercise of the Pre-Funded Warrants and on August 21, 2024 the registration statement became effective.

On June 27, 2024, the Company (i) increased the number of authorized shares of common stock from 300,000,000 to 1,000,000,000 and (ii) effected a 1-for-20 reverse stock split (the “Reverse Stock Split”), where the Company’s common stock began to trade on a reverse split adjusted basis. No fractional shares were issued in connection with the reverse stock split; all such fractional interests were rounded up to the nearest whole number of shares of common stock. Unless otherwise stated, all share and per share information in these financial statements has been adjusted to reflect the Reverse Stock Split.

CONNEXA SPORTS TECHNOLOGIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1. ORGANIZATION AND NATURE OF BUSINESS (cont.)

Prior to this, on March 18, 2024, the Company had entered into a share purchase agreement (the “Purchase Agreement”) and a share exchange agreement (the “Exchange Agreement”) to acquire 70% of Yuanyu Enterprise Management Co., Limited (“YYEM”) from Mr. Hongyu Zhou, the sole shareholder of YYEM (the “YYEM Seller”) for a combined $56 million (the “Acquisition”). $16.5 million of this amount was paid in cash pursuant to the Purchase Agreement, and the balance was required to be paid in shares pursuant to the Exchange Agreement following approval by shareholders and by Nasdaq. The Exchange Agreement also called for an inducement payment to the Company of $5 million by YYEM.

Nasdaq approved the transaction on November 18, 2024, and the closing of the Acquisition took place on November 21. As a result of this transaction, a change of control was effected. The shareholders of YYEM became the owners of approximately 75.3% of the issued and outstanding shares of common stock, and five directors were appointed by the YYEM Seller to replace the prior directors who had resigned. Slinger Bag Americas Inc., the Company’s wholly owned subsidiary prior to the closing, was sold to a newly established Florida limited liability company called J&M Sports LLC (“J&M”), owned by several former directors and officers of the Company, as required by the Exchange Agreement. In receiving substantially all of the then-existing assets of the Company at the closing, J&M also became responsible for all past and future liabilities related to the Slinger Bag business.

The transactions were accounted for as a “reverse acquisition” since they occurred immediately following the consummation of the transaction through which the shareholders and management of YYEM gained effective control of the combined company. The former shareholders of the Company, whose shares were acquired by the YYEM Seller, own and control approximately 24.7% of the shares and votes in the Company. The management of the Company is drawn predominantly from YYEM.

For accounting purposes, YYEM was deemed to be the accounting acquirer in the transaction, and the Company, the legal acquirer, was deemed to be the accounting acquiree.

The consolidated financial statements represent a continuation of the consolidated financial statements of YYEM and reflect the following:

CONNEXA SPORTS TECHNOLOGIES INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1. ORGANIZATION AND NATURE OF BUSINESS (cont.)

Since the closing of the Acquisition and the disposal of the Slinger Bag business, YYEM has been the sole operating subsidiary of the Company. Established in November 2021, YYEM is based in Hong Kong and operates in the emerging love and marriage market sector. YYEM’s mission is to empower global connections through innovative matchmaking technology. YYEM owns advanced patents and other proprietary technology which it licenses out, and it is using this intellectual property to develop an AI-powered matchmaking platform to license to partners worldwide, enabling them to create localized matchmaking experiences tailored to their specific markets and cultures. The Company believes YYEM’s pioneering technology has the power to transform the matchmaking industry, leading to greater success for YYEM’s licensees and their clients, and ultimately leading to more people finding successful life partnerships.

YYEM is also developing a social networking vertical to produce content for live-streaming or for serving as videos to TikTok users in the Middle East and North Africa (the “MENA region”), which the Company anticipates will provide an independent revenue stream capitalizing on TikTok’s strength in the MENA region relative to the uncertainty the app faces in the United States. The fees generated by the arrangement with TikTok will depend on the rate of conversion by TikTok end-users.

YYEM’s, and thus the Company’s, revenue model is currently based on licensing fees with its partners, which the Company intends to bolster through the development or acquisition of additional patents. Through YYEM, the Company generated royalties of $12.8 million for its financial year ended April 30, 2025.

YYEM was registered in Hong Kong on November 11, 2021. Its business purpose is to provide technology services. YYEM’s registered office is located at Rm 4, 16/F, Ho King Comm Ctr, 2-16 Fayuen St, Mongkok, Kowloon, Hong Kong.

For details of all prior operations of Slinger Bag Inc., Slinger Bag Americas, Slinger Bag Canada, Slinger Bag UK, Slinger Bag Limited, and Flixsense Pty, Ltd. please see the Company’s previous filing on Form 10-K for the year ended April 30, 2024, filed July 25, 2024.

On June 30, 2025, the Company entered into a securities purchase agreement with certain investors, providing for the private placement of 20,000,000 units (“Units”), each Unit consisting of one share of common stock, par value $0.001 per share, and two warrants (“Warrants”), both of such Warrants with identical terms (the “Private Placement”). Each Unit was offered at a price of $0.23, and each Warrant has a five5-year exercise period, with an exercise price of $0.89. The total gross proceeds from the Private Placement without taking into account any exercise of the Warrants will be $4,600,000.

CONNEXA SPORTS TECHNOLOGIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONNEXA SPORTS TECHNOLOGIES INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited financial statements and the related notes appearing in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks, uncertainties, and assumptions. You should read the “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” sections of our Form 10-K for the period ended April 30, 2025 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. All dollar figures expressed in terms of millions are rounded to one decimal place. All percentages are calculated using the unrounded underlying figures and rounded to the nearest whole number.

Overview

The Company operates through Yuanyu Enterprise Management Co., Limited (“YYEM”), a Hong Kong-based subsidiary established in November 2021 that is engaged in the emerging love and marriage market sector.

YYEM’s mission is to empower global connections through innovative matchmaking technology. We own advanced patents and other proprietary technology which we license out, and we are using this intellectual property to develop an AI-powered matchmaking platform to license to partners worldwide, enabling them to create localized matchmaking experiences tailored to their specific markets and cultures. We believe our pioneering technology has the power to transform the matchmaking industry, leading to greater success for our licensees and their clients, and ultimately leading to more people finding successful life partnerships.

We have license agreements in place with various entities to use the IP in numerous countries across Asia, Europe, and Africa, generating royalties of $3.0 million in our three months ended July 31, 2025.

In February 2025, YYEM entered into an agency agreement to develop content for TikTok across the MENA region, leveraging Twitch-hosted live-streaming in sports, gaming, and lifestyle categories. While no upfront payments were received, the agreement positions us to monetize end-user engagement once our influencer network is developed. Revenue under this agreement will depend on performance-based conversion metrics, and as of July 31, 2025, influencer network capabilities were still nascent. We consider this development a positive step toward the diversification of our revenue streams.

Fundraising

Private Placement

On June 30, 2025, we executed a securities purchase agreement to issue 20,000,000 units (each unit comprising one share of common stock and two five-year warrants with an exercise price of $0.89), targeting gross proceeds of $4.6 million (the “Private Placement”). Closing was contingent on Nasdaq listing compliance and shareholder approval. The warrants allow for cashless exercise if no effective registration is in place. This financing, when consummated, is anticipated to improve liquidity and capital resources through 2025 and beyond. On August 19, 2025, the Company closed the Private Placement, generating gross proceeds of $4,600,000 (without taking into account any exercise of the warrants included in the Private Placement).

ATM Facility

Under a prospectus supplement dated August 22, 2025 that amends the prospectus supplement dated June 11, 2025 and its accompanying prospectus dated June 11, 2025, filed with the Securities and Exchange Commission as part of our registration statement on Form S-3 (File No. 333-284188) (the “Registration Statement”) relating to the offer and sale of our common stock through A.G.P./Alliance Global Partners (“A.G.P.”) in “at the market offerings” (the “ATM facility”) as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, pursuant to the sales agreement with A.G.P. dated as of January 8, 2025 (the “Sales Agreement”), the amount we could raise under our ATM facility was specified to be $200 million. No shares had been sold through this facility as of July 31, 2025, but the agreement provides strategic flexibility for future capital raising.

Recent Developments

On August 25, 2025, the Company and JuCoin Capital Pte Ltd (“JuCoin”) signed an agreement (the “JV Agreement”) to jointly establish a joint venture company (the “JV”) to found and operate a new cryptocurrency exchange (the “Joint Venture”) within 120 days of the JV Agreement. At the closing of the Joint Venture, each of the Company and JuCoin will contribute $250 million in cash or cryptocurrency. In exchange, the JV will issue 51% of its share capital to the Company and 49% to JuCoin. The Company will appoint three of the five members of the board of directors of the JV, though certain material decisions will require the approval of both parties. The JV Agreement may be terminated if the closing of the JV Agreement has not occurred within six months of signing, by mutual agreement of the parties, or if the transaction becomes prohibited by applicable law.

Components of Results of Operations

Revenue

Our revenue is generated from license fees paid by customers for the use of our technology.

Expenses

Cost of revenue consists primarily of amortization charges against intangible assets (specifically, technology rights), which are directly attributable to revenue.

General and administrative expense primarily consists of salaries and benefits for employees involved in general corporate functions; professional fees for external legal, accounting, and other consulting services; traveling expenses; and other general office and administrative expenses.

Gross Profit

Gross profit is calculated as revenue less cost of revenue.

Results of Operations

Three months ended July 31, 2025, compared to the three months ended July 31, 2024

The following are the results of our operations for the three-month period ended July 31, 2025, as compared to the three-month period ended July 31, 2024:

Revenue

Our revenue decreased by $0.3 million, or 8%, from $3.3 million for the three-month period ended July 31, 2024 to $3.0 million for the three-month period ended July 31, 2025, which was attributable to a minor timing difference resulting from the dates on which the various license agreements were signed.

Cost of Revenue

Our cost of revenue did not change because it consists of the amortization of our IP intangible assets, which remained constant.

General and Administrative Expenses

General and administrative expenses, which mainly consist of salaries, professional fees, and other general office and administrative expenses, increased by $0.7 million, from $0.1 million to $0.8 million, primarily driven by higher costs relating to YYEM becoming an operating subsidiary of a Nasdaq-listed company, which occurred in November 2024. This included audit fees, legal fees, insurance premiums, and directors’ and officers’ compensation.

Liquidity and Capital Resources

We finance our operations primarily through cash generated from operations. We had working capital, or net current assets, of $17.9 million as of July 31, 2025, compared to $15.9 million as of April 30, 2025, an increase of approximately $2.0 million, or 13%. In comparison with April 30, 2025, our accounts receivable as of July 31, 2025, increased by $3.0 million as we recognized royalty revenue for the quarter in accordance with our recognition policy while the credit terms of our licensees permit payment up to 90 days after the end of our financial year. As of July 31, 2025, we had retained earnings of $7.0 million.

The following is a summary of our cash flows from operating, investing, and financing activities for the three-month periods ended July 31, 2025 and 2024:

Our cash and cash equivalents were relatively steady, at approximately $0.5 million as of July 31, 2025 and 2024.

Net cash used in operating activities was $1.08 million for the three-month period ended July 31, 2025, compared with $0.6 million for the same period in the prior year, a decline of $0.5 million in operating cash flow. This change was driven primarily by a $0.7 million increase in general and administrative expenses relating to YYEM becoming an operating subsidiary of a Nasdaq-listed company, as explained in greater detail above.

Since our cash level was low in the period before payment from our licensees was due, we had no cash allocated to investing activities, neither putting cash into investments nor receiving cash from investments.

The only cash flow we recorded as financing activities was a non-cash item: a $1.1 million decline in the value of a guarantee given to the Company by our Chairman in respect of listed shares we own as the shares increased in value over this period. (As the deficit in the shares’ value declined, the size of the guarantee required to provide the Company with value equal to the shares’ value at the time of contribution also declined.)

Based on our current operating plans, we believe that our existing cash at the time of this filing will be sufficient to meet our anticipated operating needs for at least the next 12 months and that we will have sufficient financial resources available through capital markets fundraising if we should decide to incur additional capital expenditure or make other investments. Our future capital requirements will depend upon many factors, including competing technological and market developments, our R&D efforts, and decisions regarding acquisitions of further patents or companies or other assets.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditure, or capital resources that are material to investors.

Significant Accounting Policies

Our significant accounting policies are disclosed in Note 2 to the accompanying financial statements. The following is a summary of those accounting policies that involve significant estimates and judgment of management.

Use of Estimates

The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to long-lived assets and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Allowance for Credit Losses

Accounts receivable are stated at their historical carrying amount net of allowance for credit losses.

Allowance for credit loss represents management’s best estimate of probable losses inherent in the portfolio. On June 30, 2022, the Company adopted ASC 326, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This guidance replaced the “incurred loss” impairment methodology with an approach based on “expected losses” to estimate credit losses on certain types of financial instruments and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The allowance for credit losses is a valuation account that is deducted from the cost of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset.

The Company considers various factors, including the nature, historical collection experience, age of the accounts receivable balances, credit quality and specific risk characteristics of its customers, and current economic conditions to develop an estimate of credit losses. Additionally, the Company makes specific allowance for credit losses based on any specific knowledge the Company has acquired that might indicate that an account is uncollectible. The facts and circumstances of each account may require the Company to use substantial judgment in assessing its collectability. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. As of July 31, 2025 and April 30, 2025, the Company had made no reserves.

Impairment of long-lived assets

Long-lived assets are evaluated for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value may not be fully recoverable or that the useful life is shorter than the Company had originally estimated. When these events occur, the Company evaluates the impairment by comparing carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Company recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. Impairment charge recognized for the three months ended July 31, 2025 and 2024 was nil.

Fair value of financial instruments

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which it would transact, and it also considers assumptions that market participants would use when pricing the asset or liability.

Revenue Recognition

Revenue represents the amount of consideration the Company is entitled to upon the transfer of promised goods or services in the ordinary course of the Company’s activities and is recorded net of VAT. The Company has adopted the following five steps for revenue recognition: (i) identify the contracts with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

Consistent with the criteria of ASC 606, Revenue from Contracts with Customers, the Company recognizes revenue when performance obligations are satisfied by transferring control of a promised good or service to a customer. For performance obligations that are satisfied at a point in time, the Company also considers the following indicators to assess whether control of a promised good or service is transferred to the customer: (i) right to payment, (ii) legal title, (iii) physical possession, (iv) significant risks and rewards of ownership and (v) acceptance of the good or service.

The Company recognizes revenue in an amount that reflects the consideration to which it expects to be entitled for its products and services. Accounts receivable are recorded when obligations have been performed and billed to the customer. During the period after the right to payment has become unconditional but before a bill has been issued, the amount owed is recorded as accrued revenue (receivables). The Company’s terms and conditions vary by customer and typically provide net 90-day terms.

The Company receives royalty income in the form of license fees from customers for the use of the Company’s technology rights by the customers. Royalty income is recognized over time when the Company’s technology rights are used by the customers in accordance with the terms and conditions of the relevant license agreement. Revenue is recognized by the Company not only when invoices have been signed and confirmed by customers but also at the end of each year over the term of the relevant license agreements as the service is provided to the customers.

Income Taxes

The Company has adopted ASC 740, Income Taxes, which requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Prior to the acquisition by YYAI, YYEM was a limited liability company. As a limited liability company, the Company’s taxable income or loss is allocated to members in accordance with their respective percentage ownership. Therefore, no provision or liability for federal income taxes has been included in the financial statements. In the event of an examination of the Company’s tax return, the tax liability of the members could be changed if an adjustment in the Company’s income is ultimately sustained by the taxing authorities.

Share-Based Payment

The Company accounts for share-based compensation in accordance with ASC 718, Compensation—Stock Compensation. Under the fair value recognition provisions of this topic, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is the vesting period.

Recent Accounting Pronouncements

The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows, or disclosures.

In November 2024, the FASB issued ASU 2024-03, Reporting Comprehensive Income — Expense Disaggregation Disclosures, which focuses on improving the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, general and administrative expenses, and research and development). ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adopting the standard and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations and cash flows.

In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. The amendments provide guidance on accounting for induced conversions of convertible debt instruments. The amendments are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for entities that have adopted the amendments in ASU 2020-06. The Company is currently evaluating the impact of this amendment and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations, or cash flows.

In January 2025, the FASB issued ASU 2025-01, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures. The amendment in ASU 2025-01 amends the effective date of ASC 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of is permitted. The Company is currently evaluating the impact of this amendment and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations and cash flows.

In March 2025, the FASB issued ASU 2025-02, Liabilities (Topic 405): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 122. The amendments are effective immediately and must be applied on a fully retrospective basis to annual periods beginning after December 15, 2024. The Company does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations, or cash flows.

In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity. The amendments provide guidance on identifying the accounting acquirer in transactions involving a variable interest entity. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual periods. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of this amendment and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations, or cash flows.

In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer. The amendments clarify the accounting for share-based consideration payable to a customer under Topic 718 and Topic 606. The amendments are effective for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2026. Early adoption is permitted. The Company is currently evaluating the impact of this amendment and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations, or cash flows.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments provide a practical expedient and, if applicable, an accounting policy election to simplify the measurement of credit losses for certain receivables and contract assets. The amendments are effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in any interim or annual period in which financial statements have not yet been issued or made available for issuance. The Company is currently evaluating the impact of this amendment and does not expect that the adoption of this guidance will have a material impact on its financial position, results of operations, or cash flows.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Security and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer, as appropriate, to allow for timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and principal financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of July 31, 2025.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during the quarter ended July 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business. As of the date of issuance, there were no pending or threatened legal proceedings that could reasonably be expected to have a material effect on the results of the Company’s operations. There are also no proceedings in which any of the Company’s directors, officers, or affiliates is an adverse party to the Company or has a material interest adverse to the Company’s interest.

None of our executive officers or directors has (i) been involved in any bankruptcy proceedings within the last five years, (ii) been convicted in or has pending any criminal proceedings (other than traffic violations and other minor offenses), (iii) been subject to any order, judgment, or decree enjoining, barring, suspending, or otherwise limiting involvement in any type of business, securities, or banking activity, or (iv) been found to have violated any Federal, state, or provincial securities or commodities law where such finding has not been reversed, suspended, or vacated.

ITEM 1A: RISK FACTORS

For information regarding the risk factors that could affect the Company’s business, results of operations, financial condition, and liquidity, see the information under Part I, Item 1A. “Risk Factors” in the Form 10-K which is accessible on the SEC’s website at www.sec.gov. There have been no material changes to the risk factors previously disclosed in the Form 10-K.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On June 30, 2025, we executed securities purchase agreements to issue 20,000,000 units (each unit comprising one share of common stock and two five-year warrants with an exercise price of $0.89), targeting gross proceeds of $4.6 million (referred to in Item 2 of Part I as the Private Placement and described in greater detail there). The Private Placement closed on August 19, 2025.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5: OTHER INFORMATION.

Insider trading arrangements and policies.

During the quarter ended July 31, 2025, no director or officer of the Company adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each of these terms is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.