Airwa Inc 8-K/A, filed Feb 6, 2025
Airwa Inc. (YYAI)
About this 8-K/A
Airwa Inc filed this 8-K/A on February 6, 2025, reporting on events of November 21, 2024.
Items reported
- Item 2.01: Completed an acquisition or sale of assets
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
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Item 2.01 Completion of Acquisition or Disposition of Assets.
This amendment No. 1 to Form 8-K amends our Form 8-K dated November 25, 2024, originally filed with the Securities Exchange Commission on November 25, 2024 (the “Original Report”). We filed the Original Report to report, among other disclosures, the completion, on November 21, 2024, of the acquisition of a majority of Yuanyu Enterprise Management Co., Limited (“YYEM”), whereby, among other things, Connexa Sports Technologies Inc., a Delaware corporation (the “Company”) acquired 70% of YYEM in exchange for the issuance of shares of the Company’s common stock, and YYEM became the majority-owned subsidiary of the Company (the “Transaction”).
This Current Report on Form 8-K/A is being filed by the Company to amend the Original Report solely to provide the financial statement and financial information required by Item 9.01 of Form 8-K that were not filed with the Original Report.
Except as provided herein, the disclosures contained in this Current Report on Form 8-K/A have not been updated to reflect events, results or developments that have occurred since the filing of the Original Report. This Current Report on Form 8-K/A should be read in conjunction with the Original Report, which provides a more complete description of the Transaction.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
As a result of the acquisition of YYEM, as described in Item 2.01, the registrant is filing (i) the unaudited financial statements of Yuanyu Enterprise Management Co., Limited, as of and for the three months ended and nine months ended October 31, 2024 and 2023, as Exhibit 99.1 to this Current Report, and (ii) the unaudited pro forma combined financial information, as Exhibit 99.2 to this Current Report.
(d) Exhibits.
The following exhibits are filed as part of this report.
| Exhibit No. | Description | |
| 99.1 | Yuanyu Enterprise Management Co., Limited Financial Statements as of and for the Three-Month Period and Nine-Month Ended October 31, 2024 and 2023 (unaudited) | |
| 99.2 | Connexa Sports Technologies Inc. Unaudited Pro Forma Combined Financial Information | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CONNEXA sPORTS tECHNOLOGIES inc. | ||
| Dated: February 6, 2025 | By: | /s/ Thomas Tarala |
Thomas Tarala Chief Executive Officer | ||
Exhibit 99.1
YUANYU ENTERPRISE MANAGEMENT CO., LIMITED
INDEX TO UNAUDITED FINANCIAL STATEMENTS
Balance Sheet as of October 31, 2024, and January 31, 2024
Notes to the Financial Statements
YUANYU ENTERPRISE MANAGEMENT CO., LIMITED
Balance Sheet
October 31, 2024 | January 31, 2024 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 633,567 | $ | 499,678 | ||||
| Accounts Receivable | 9,818,181 | 1,681,091 | ||||||
| Other Receivables | 2,694,992 | - | ||||||
| Other assets | 3,062,595 | 4,210,385 | ||||||
| Total Current Assets | 16,209,335 | 6,391,154 | ||||||
| Non-Current Assets | ||||||||
| Intangible Assets | 11,998,096 | 14,230,789 | ||||||
| Total Assets | $ | 28,207,431 | $ | 20,621,943 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | 338,147 | 16,025 | ||||||
| Income tax payables | 1,447,545 | 249,090 | ||||||
| Total Current Liabilities | 1,785,692 | 265,115 | ||||||
| Stockholders’ Equity | ||||||||
| Common stock | 1,282 | 1,282 | ||||||
| Additional paid in capital | 19,095,000 | 19,095,000 | ||||||
| Accumulated Reserve | 7,325,457 | 1,260,546 | ||||||
| Total Members Equity | 26,421,739 | 20,356,828 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 28,207,431 | $ | 20,621,943 | ||||
The accompanying notes are an integral part of these financial statements.
YUANYU ENTERPRISE MANAGEMENT CO., LIMITED
Statements of Operations
For the three-month period ended October 31, | For the nine-month period ended October 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | $ | 3,272,727 | $ | 480,770 | $ | 9,818,181 | $ | 1,442,309 | ||||||||
| Cost of revenue | 744,231 | 144,231 | 2,232,693 | 432,693 | ||||||||||||
| Gross profit | 2,528,496 | 336,539 | 7,585,488 | 1,009,616 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| General and Administrative | 249,482 | 2,091 | 322,122 | 8,351 | ||||||||||||
| Total operating expenses | 249,482 | 2,091 | 322,122 | 8,351 | ||||||||||||
| Profit from Operations | 2,279,014 | 334,448 | 7,263,366 | 1,001,265 | ||||||||||||
| Other Income / (Expense): | ||||||||||||||||
| Total Other Income / (Expense) | - | - | - | |||||||||||||
| Provisions for income taxes | 376,037 | 55,183 | 1,198,455 | 165,207 | ||||||||||||
| Net income | $ | 1,902,977 | $ | 279,265 | $ | 6,064,911 | $ | 836,057 | ||||||||
The accompanying notes are an integral part of these financial statements.
YUANYU ENTERPRISE MANAGEMENT CO., LIMITED.
Notes to the Financial Statements
October 31, 2024
NOTE 1. DESCRIPTION OF BUSINESS
YUANYU ENTERPRISE MANAGEMENT CO., LIMITED. (the “Company”) was registered in Hong Kong on November 11, 2021.
The business purpose of the Company is to provide technology services.
The Company’s registered office is located at Rm 4, 16/F, Ho King Comm Ctr, 2-16 Fayuen St, Mongkok, Kowloon, Hong Kong.
The Company’s founder and director is Hongyu Zhou.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”), and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).
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 revenues 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 and adversely 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.
Cash and Cash Equivalents
For financial accounting purposes, cash and cash equivalents are considered to be all highly liquid investments with a maturity of three months or less at the time of purchase.
Accounts Receivable
Management reviews accounts receivable periodically to determine if any receivables will potentially be uncollectible. Management’s evaluation includes several factors including the aging of the accounts receivable balances, a review of significant past due accounts, economic conditions, and our historical write-off experience, net of recoveries. The Company includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve, in its allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance.
Income taxes
No recognition of federal or state income taxes for the Company has been provided for the nine months ended October 31, 2024 and 2023.
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.
Revenue Recognition
The Company follows ASC 606, Revenue from Contracts with Customers, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as the Company satisfies a performance obligation.
The Company recognizes revenue in an amount that reflects the consideration it expects to receive in exchange for these products and services. Accounts receivables are recorded when the right to consideration becomes unconditional. The Company’s terms and conditions vary by customers and typically provide net 30- to 90-day terms.
| S/N | Type of services | Nature and timing of satisfaction of performance obligations and significant payment terms |
Revenue Recognition | |||
| 1 | Royalty Income | The company receives royalty income 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 royalty agreement. | Revenue is recognized by the company not only upon delivery when an invoice has been signed and confirmed by the customer, but also at the end of each month over the 12-month period after service has been delivered to the customers. |
Cost of Revenue
The cost of revenue consists primarily of amortization charge of intangible assets – technology rights, which are directly attributable to the revenues.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
| ● | Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. | |
| ● | Level 3 — inputs to the valuation methodology are unobservable. |
Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, and prepaid expenses, short-term borrowings, accounts payable, amounts due to related parties, and other payables and other current liabilities, approximate the fair value of the respective assets and liabilities as of October 31, 2024 based upon the short-term nature of the assets and liabilities.
Income Taxes
The Company has adopted ASC Topic 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 Topic 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.
Recent accounting pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.
NOTE 4. OTHER ASSETS
This represents a quoted investment with Brightstar Technology Group Co., Ltd. as of October 31, 2024.
NOTE 5. Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in an additional paid-in capital is the fair value at the date of acquisition. Intangible assets with finite lives are subsequently amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at each financial year end.
Technology rights are stated at cost less accumulated amortization and impairment losses. Amortization is calculated on a straight-line basis over their estimated useful lives of five years.
| Acquisition of Intangible Asset – Technology Right | ||||||
| Date | Note | Amount | ||||
| 01/02/2022 | Hey Yuan Universe Scene Marriage and Love social platform | 384,515 | ||||
| 01/02/2023 | Flash Enough Oversee Shopping | 1,200,000 | ||||
| 01/02/2023 | Xinjudi Creative Base System | 1,300,000 | ||||
| 31/01/2024 | Safe Transaction method of payment with QR code | 1,500,000 | ||||
| 31/01/2024 | Multifunctional network information security server | 1,500,000 | ||||
| 31/01/2024 | Internet of things trade follow up method | 1,500,000 | ||||
| 31/01/2024 | Retail information management control | 1,500,000 | ||||
| 31/01/2024 | Live scene video automatic production system | 1,500,000 | ||||
| 31/01/2024 | Video Chat method and other storage media | 1,500,000 | ||||
| 31/01/2024 | Speech recognition and other methods | 1,500,000 | ||||
| 31/01/2024 | Data processing method and other storage media | 1,500,000 | ||||
| TOTAL | 14,884,615 | |||||
| Amortization of Intangible Asset – Technology Right | ||||||
| Date | Note | Amount | ||||
| 31/01/2024 | Cost | 14,884,615 | ||||
| 31/01/2024 | Accumulated Amortization | (653,826 | ) | |||
| Net value of Intangible Asset - Technology Right as of January 31 2024 | 14,230,789 | |||||
| Amortization of Intangible Asset – Technology Right | ||||||
| Date | Note | Amount | ||||
| 31/10/2024 | Cost | 14,884,615 | ||||
| 31/10/2024 | Accumulated Amortization | (2,886,519 | ) | |||
| Net value of Intangible Asset - Technology Right as of October 31 2024 | 11,998,096 | |||||
NOTE 6. REVENUES
| Location | Amount | |||
| Southeast Asia | 4,090,908 | |||
| United States of America | 3,272,727 | |||
| United Kingdom | 2,454,546 | |||
| 9,818,181 | ||||
NOTE 7. SUBSEQUENT EVENTS
In accordance with ASC 855-10 the Company has analyzed its operations subsequent to October 31 2024, and to the date these financial statements were issued, and has determined that it does not have any subsequent event to disclose in these financial statements.
Exhibit 99.2
CONNEXA SPORTS TECHNOLOGIES INC.
Unaudited Pro Forma Combined Financial Information
On November 21, 2024, Connexa Sports Technologies Inc., a Delaware corporation (the “Company”), completed its acquisition of a majority of Yuanyu Enterprise Management Co., Limited (“YYEM”), whereby, among other things, the Company acquired 70% of YYEM in exchange for the issuance of shares of the Company’s common stock, and YYEM became the majority-owned subsidiary of the Company (the “Transaction”).
On March 18, 2024, the Company entered into a share purchase agreement (the “Share Purchase Agreement”) and a share exchange agreement (the “Share Exchange Agreement,” and together with the Share Purchase Agreement, the “Agreements”) to acquire a total of 70% of the issued and outstanding ordinary shares of YYEM from the sole shareholder of YYEM, Mr. Hongyu Zhou (the “Seller”), for a combined $56 million. $16.5 million of this amount was paid in cash on March 20, 2024 pursuant to the Share Purchase Agreement to acquire 20% of YYEM.
On November 18, 2024, The Nasdaq Stock Market LLC approved the Transaction. Following the approval, on November 21, 2024, pursuant to the Share Exchange Agreement, the Company issued 8,127,572 shares of common stock of the Company, par value $0.001 per share (the “Common Stock”) to the Seller (the “Exchange Shares”), in consideration for 5,000 ordinary shares of YYEM, representing 50% of the issued and outstanding ordinary shares of YYEM. The shares were issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemption provided by Section 4(a)(2) of the Securities Act as a transaction not involving a public offering.
The Transaction contemplated by the Agreements was closed on the same day. In connection with the completion of the Transaction, pursuant to the Agreements, YYEM was required to pay approximately $3,000,000 to NewCo (as defined below), approximately $400,000 of which was paid by October 31, 2024 and approximately $2,100,000 of which was paid after that date (leaving a balance of approximately $500,000 plus fees).
As a result of the closing of the Transaction, a change of control of the Company occurred as the Seller became the owner of approximately 55.8% of the issued and outstanding shares of Common Stock and the board of directors of the Company comprised individuals designated by the Seller.
As part of the Transaction, the Company agreed to sell its wholly owned subsidiary, Slinger Bag Americas Inc., to a newly established entity. In connection of the closing of the Transaction, on November 21, 2024, the Company entered into a separation and assignment agreement (the “Separation Agreement”) with J&M Sports LLC, a Florida limited liability company (“NewCo”), to sell, transfer and assign all or substantially all of its legacy business, assets and liabilities related to or necessary for the operations of its “Slinger Bag” business or products (the “Legacy Business”) to NewCo, in consideration for $1.00. Pursuant to the Separation Agreement, NewCo has obtained the sole right to and assumed all the obligations of the Legacy Business and is liable to the Company for any losses arising from third-party claims against the Company that arise from liabilities related to the Legacy Business.
The accompanying unaudited pro forma condensed combined financial statements (“pro forma financial information”) has been prepared based on the historical financial statements of the Company and YYEM after giving effect to the Transaction. The pro forma financial information is intended to provide information about how the acquisition of YYEM may have affected the Company’s historical financial statements. The unaudited pro forma condensed combined financial statements for the twelve months ended April 30, 2024 and 2023, combines the historical audited financial information of the Company for these periods, derived from the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on July 25, 2024, with the respective historical audited financial statements of YYEM as if the acquisition of YYEM had occurred on May 1, 2022.
The historical unaudited pro forma condensed financial statements for the six months ended October 31, 2024 combine the Company’s historical unaudited financial information for the six months ended October 31, 2024, derived from the Company’s Quarterly Report on Form 10-Q filed with the SEC on December 13, 2024, with the respective historical audited financial statements of YYEM as if the acquisition of YYEM had occurred on May 1, 2022.
The fiscal year end of the Company is April 30. The fiscal year end of YYEM is January 31.
The unaudited pro forma condensed combined financial information should be read in conjunction with the accompanying notes to the unaudited pro forma financial information and:
● the historical unaudited condensed financial statements of the Company for the six months ended October 31, 2024 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on December 13, 2024;
● the historical audited consolidated financial statements of the Company for the year ended April 30, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on July 25, 2024.
● the historical unaudited condensed consolidated financial statements of YYEM for the nine months ended October 31, 2024 as filed in this Current Report on Form 8-K/A;
● the historical audited consolidated financial statements of YYEM for the years ended January 31, 2024 and 2023, as filed in the Current Report on Form 8-K filed with the SEC on November 25, 2025.
The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and does not necessarily reflect what the combined company’s financial condition or results of operations would have been had the acquisition of YYEM occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma transaction accounting adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and additional analyses are performed.
CONTENTS
CONNEXA SPORTS TECHNOLOGIES INC.
Pro Forma Combined Balance Sheets
April 30, 2024
(Unaudited)
| Connexa | Yuanyu | |||||||||||||||||
| Sports | Enterprise | |||||||||||||||||
| Technologies | Management | Pro Forma | ||||||||||||||||
| Inc. | Co., Limited | Eliminations | Notes | Combined | ||||||||||||||
| ASSETS | ||||||||||||||||||
| Current Assets: | ||||||||||||||||||
| Cash and cash equivalents | $ | 229,705 | $ | 499,678 | $ | (229,705 | ) | $ | 499,678 | |||||||||
| Investment, at cost | 16,500,000 | 1,681,091 | (16,500,000 | ) | 1,681,091 | |||||||||||||
| Accounts and other receivable, net | 273,874 | - | (273,874 | ) | - | |||||||||||||
| Inventories, net | 1,609,196 | - | (1,609,196 | ) | - | |||||||||||||
| Prepaid inventory | 810,978 | - | (810,978 | ) | - | |||||||||||||
| Prepaid expenses and other current assets | 197,871 | - | (197,871 | ) | - | |||||||||||||
| Other assets | - | 4,210,385 | - | 4,210,385 | ||||||||||||||
| Non-Current Assets: | - | - | ||||||||||||||||
| Note receivable - former subsidiary | 2,000,000 | - | (2,000,000 | ) | - | |||||||||||||
| Fixed assets, net of depreciation | - | - | - | - | ||||||||||||||
| Intangible assets, net of amortization | 1,000 | 14,230,789 | (1,000 | ) | 14,230,789 | |||||||||||||
| Total assets | $ | 21,622,624 | $ | 20,621,943 | $ | (21,622,624 | ) | $ | 20,621,943 | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||
| LIABILITIES | ||||||||||||||||||
| Current Liabilities: | ||||||||||||||||||
| Accounts payable | $ | 4,704,596 | $ | - | $ | (4,704,596 | ) | $ | - | |||||||||
| Accrued expenses | 3,405,372 | 16,025 | (3,405,372 | ) | 16,025 | |||||||||||||
| Accrued interest | - | - | - | - | ||||||||||||||
| Accrued interest - related party | 917,957 | - | (917,957 | ) | - | |||||||||||||
| Current portion of notes payable, net of discount | 1,564,513 | - | (1,564,513 | ) | - | |||||||||||||
| Current portion of notes payable - related parties | 1,169,291 | - | (1,169,291 | ) | - | |||||||||||||
| Derivative liabilities | 5,433 | - | (5,433 | ) | - | |||||||||||||
| Contingent consideration | - | - | - | - | ||||||||||||||
| Other current liabilities | 255,648 | - | (255,648 | ) | - | |||||||||||||
| Income tax payables | - | 249,090 | - | 249,090 | ||||||||||||||
| Long-Term Liabilities: | - | - | ||||||||||||||||
| Notes payable related parties, net of current portion | - | - | - | - | ||||||||||||||
| Total liabilities | 12,022,810 | 265,115 | (12,022,810 | ) | 265,115 | |||||||||||||
| SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||
| Common stock | 1,828 | 1,282 | (1,282 | ) | 1,828 | |||||||||||||
| Additional paid in capital | 176,801,473 | 19,095,000 | (19,095,000 | ) | 176,801,473 | |||||||||||||
| Accumulated deficit | (167,387,028 | ) | 1,260,546 | 9,680,009 | (156,446,473 | ) | ||||||||||||
| Accumulated other comprehensive income | 183,541 | - | (183,541 | ) | - | |||||||||||||
| Total stockholders’ equity (Deficit) | 9,599,814 | 20,356,828 | (9,599,814 | ) | 20,356,828 | |||||||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | 21,622,624 | $ | 20,621,943 | $ | (21,622,624 | ) | $ | 20,621,943 | |||||||||
| F-2 |
CONNEXA SPORTS TECHNOLOGIES INC.
Pro Forma Combined Balance Sheets
October 31, 2024
(Unaudited)
| Connexa | Yuanyu | |||||||||||||||||
| Sports | Enterprise | |||||||||||||||||
| Technologies | Management | Pro Forma | ||||||||||||||||
| Inc. | Co., Limited | Eliminations | Notes | Combined | ||||||||||||||
| ASSETS | ||||||||||||||||||
| Current Assets: | ||||||||||||||||||
| Cash and cash equivalents | $ | 1,642,969 | $ | 44,860 | $ | (1,642,969 | ) | $ | 44,860 | |||||||||
| Investment, at cost | 16,500,000 | 9,829,153 | (16,500,000 | ) | 9,829,153 | |||||||||||||
| Accounts and other receivable, net | 87,256 | - | (87,256 | ) | - | |||||||||||||
| Inventories, net | 1,166,996 | - | (1,166,996 | ) | - | |||||||||||||
| Prepaid inventory | - | - | - | - | ||||||||||||||
| Prepaid expenses and other current assets | 185,540 | - | (185,540 | ) | - | |||||||||||||
| Other assets | - | 3,062,595 | - | 3,062,595 | ||||||||||||||
| Non-Current Assets: | - | - | ||||||||||||||||
| Note receivable - former subsidiary | 2,000,000 | - | (2,000,000 | ) | - | |||||||||||||
| Fixed assets, net of depreciation | - | - | - | - | ||||||||||||||
| Intangible assets, net of amortization | 1,000 | 12,742,327 | (1,000 | ) | 12,742,327 | |||||||||||||
| Total assets | $ | 21,583,761 | $ | 25,678,935 | $ | (21,583,761 | ) | $ | 25,678,935 | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||
| LIABILITIES | ||||||||||||||||||
| Current Liabilities: | ||||||||||||||||||
| Accounts payable | $ | 4,597,403 | $ | - | $ | (4,597,403 | ) | $ | - | |||||||||
| Accrued expenses | 4,419,304 | 88,665 | (4,419,304 | ) | 88,665 | |||||||||||||
| Accrued interest | 643,234 | - | (643,234 | ) | - | |||||||||||||
| Accrued interest - related party | 917,957 | - | (917,957 | ) | - | |||||||||||||
| Current portion of notes payable, net of discount | 1,491,845 | - | (1,491,845 | ) | - | |||||||||||||
| Current portion of notes payable - related parties | 1,169,291 | - | (1,169,291 | ) | - | |||||||||||||
| Derivative liabilities | 365 | - | (365 | ) | - | |||||||||||||
| Contingent consideration | - | - | - | - | ||||||||||||||
| Other current liabilities | 303,581 | - | (303,581 | ) | - | |||||||||||||
| Income tax payables | - | 1,071,508 | - | 1,071,508 | ||||||||||||||
| Long-Term Liabilities: | - | - | ||||||||||||||||
| Notes payable related parties, net of current portion | - | - | - | - | ||||||||||||||
| Total liabilities | 13,542,980 | 1,160,173 | (13,542,980 | ) | 1,160,173 | |||||||||||||
| SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||
| Common stock | 6,435 | 1,282 | (1,282 | ) | 6,435 | |||||||||||||
| Additional paid in capital | 180,917,679 | 19,095,000 | (19,095,000 | ) | 180,917,679 | |||||||||||||
| Accumulated deficit | (172,973,917 | ) | 5,422,480 | 11,146,085 | (156,405,352 | ) | ||||||||||||
| Accumulated other comprehensive income | 90,584 | - | (90,584 | ) | - | |||||||||||||
| Total stockholders’ equity (Deficit) | 8,040,781 | 24,518,762 | (8,040,781 | ) | 24,518,762 | |||||||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | 21,583,761 | $ | 25,678,935 | $ | (21,583,761 | ) | $ | 25,678,935 | |||||||||
| F-3 |
CONNEXA SPORTS TECHNOLOGIES INC.
Pro Forma Combined Statement of Operations
For the Twelve Months Ended April 30, 2024
(Unaudited)
| Connexa | Yuanyu | |||||||||||||||||
| Sports | Enterprise | |||||||||||||||||
| Technologies | Management | Pro Forma | ||||||||||||||||
| Inc. | Co., Limited | Eliminations | Notes | Combined | ||||||||||||||
| NET SALES | $ | 8,398,049 | $ | 1,923,077 | - | 10,321,126 | ||||||||||||
| COST OF SALES | 5,004,375 | 576,923 | - | 5,581,298 | ||||||||||||||
| GROSS PROFIT | 3,393,674 | 1,346,154 | - | 4,739,828 | ||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||
| Selling and marketing expenses | 1,565,006 | - | - | 1,565,006 | ||||||||||||||
| General and administrative expenses | 8,271,823 | 10,256 | - | 8,282,079 | ||||||||||||||
| Research and development costs | - | - | - | - | ||||||||||||||
| Total Operating Expenses | 9,836,829 | 10,256 | - | 9,847,085 | ||||||||||||||
| OPERATING (LOSS) / PROFIT | (6,443,155 | ) | 1,335,898 | - | (5,107,257 | ) | ||||||||||||
| NON-OPERATING INCOME (EXPENSE) | ||||||||||||||||||
| Amortization of debt discounts | (1,067,806 | ) | - | - | (1,067,806 | ) | ||||||||||||
| Loss on conversion of accounts payable to common stock | (289,980 | ) | - | - | (289,980 | ) | ||||||||||||
| Change in fair value of derivative liability | 7,635,612 | - | - | 7,635,612 | ||||||||||||||
| Derivative expense | (14,119,784 | ) | - | - | (14,119,784 | ) | ||||||||||||
| Interest expense | (1,351,305 | ) | - | - | (1,351,305 | ) | ||||||||||||
| Interest expense - related party | - | - | - | - | ||||||||||||||
| Total Non-Operating Income (Expenses) | (9,193,263 | ) | - | - | (9,193,263 | ) | ||||||||||||
| NET INCOME (LOSS) FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES | (15,636,418 | ) | 1,335,898 | - | (14,300,520 | ) | ||||||||||||
| Provision for income taxes | - | 220,423 | - | 220,423 | ||||||||||||||
| NET INCOME (LOSS) | $ | (15,636,418 | ) | $ | 1,115,475 | - | (14,520,943 | ) | ||||||||||
| Net loss per share - basic and diluted | $ | (32.44 | ) | $ | 111.55 | - | (30.13 | ) | ||||||||||
| Weighted average common shares outstanding - basic and diluted | 482,005 | 10,000 | - | 482,005 | ||||||||||||||
| F-4 |
CONNEXA SPORTS TECHNOLOGIES INC.
Pro Forma Combined Statement of Operations
For the Six Months Ended October 31, 2024
(Unaudited)
| Connexa | Yuanyu | |||||||||||||||||
| Sports | Enterprise | |||||||||||||||||
| Technologies | Management | Pro Forma | ||||||||||||||||
| Inc. | Co., Limited | Eliminations | Notes | Combined | ||||||||||||||
| NET SALES | $ | 1,066,443 | $ | 6,545,454 | - | 7,611,897 | ||||||||||||
| COST OF SALES | 865,206 | 1,488,462 | - | 2,353,668 | ||||||||||||||
| GROSS PROFIT | 201,237 | 5,056,992 | - | 5,258,229 | ||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||||
| Selling and marketing expenses | 280,199 | - | - | 280,199 | ||||||||||||||
| General and administrative expenses | 4,544,129 | 72,640 | - | 4,616,769 | ||||||||||||||
| Research and development costs | - | - | - | - | ||||||||||||||
| Total Operating Expenses | 4,824,328 | 72,640 | - | 4,896,968 | ||||||||||||||
| OPERATING (LOSS) / PROFIT | (4,623,091 | ) | 4,984,352 | - | 361,261 | |||||||||||||
| NON-OPERATING INCOME (EXPENSE) | ||||||||||||||||||
| Amortization of debt discounts | - | - | - | - | ||||||||||||||
| Loss on conversion of accounts payable to common stock | - | - | - | - | ||||||||||||||
| Change in fair value of derivative liability | 5,068 | - | - | 5,068 | ||||||||||||||
| Derivative expense | - | - | - | - | ||||||||||||||
| Interest expense | (968,866 | ) | - | - | (968,866 | ) | ||||||||||||
| Interest expense - related party | - | - | - | - | ||||||||||||||
| Total Non-Operating Income (Expenses) | (963,798 | ) | - | - | (963,798 | ) | ||||||||||||
| NET INCOME (LOSS) FROM OPERATIONS BEFORE PROVISION FOR INCOME TAXES | (5,586,889 | ) | 4,984,352 | - | (602,537 | ) | ||||||||||||
| Provision for income taxes | - | 822,418 | - | 822,418 | ||||||||||||||
| NET INCOME (LOSS) | $ | (5,586,889 | ) | $ | 4,161,934 | - | (1,424,955 | ) | ||||||||||
| Net loss per share - basic and diluted | $ | (1.40 | ) | $ | 416.19 | - | (0.36 | ) | ||||||||||
| Weighted average common shares outstanding - basic and diluted | 3,992,310 | 10,000 | - | 3,992,310 | ||||||||||||||
| F-5 |
CONNEXA SPORTS TECHNOLOGIES INC.
Notes to the Pro Forma Combined Financial Statements
April 30, 2024 and October 31, 2024
(Unaudited)
Note 1 - Description of Transaction
On November 21, 2024, Connexa Sports Technologies Inc., a Delaware corporation (the “Company”), completed its acquisition of a majority of Yuanyu Enterprise Management Co., Limited (“YYEM”), whereby, among other things, the Company acquired 70% of YYEM in exchange for the issuance of shares of the Company’s common stock, and YYEM became the majority-owned subsidiary of the Company (the “Transaction”).
On March 18, 2024, the Company entered into a share purchase agreement (the “Share Purchase Agreement”) and a share exchange agreement (the “Share Exchange Agreement,” and together with the Share Purchase Agreement, the “Agreements”) to acquire a total of 70% of the issued and outstanding ordinary shares of YYEM from the sole shareholder of YYEM, Mr. Hongyu Zhou (the “Seller”), for a combined $56 million. $16.5 million of this amount was paid in cash on March 20, 2024 pursuant to the Share Purchase Agreement to acquire 20% of YYEM.
On November 18, 2024, The Nasdaq Stock Market LLC approved the Transaction. Following the approval, on November 21, 2024, pursuant to the Share Exchange Agreement, the Company issued 8,127,572 shares of common stock of the Company, par value $0.001 per share (the “Common Stock”) to the Seller (the “Exchange Shares”), in consideration for 5,000 ordinary shares of YYEM, representing 50% of the issued and outstanding ordinary shares of YYEM. The shares were issued without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemption provided by Section 4(a)(2) of the Securities Act as a transaction not involving a public offering.
The Transaction contemplated by the Agreements was closed on the same day. In connection with the completion of the Transaction, pursuant to the Agreements, YYEM was required to pay approximately $3,000,000 to NewCo (as defined below), approximately $400,000 of which was paid by October 31, 2024 and approximately $2,100,000 of which was paid after that date (leaving a balance of approximately $500,000 plus fees).
As a result of the closing of the Transaction, a change of control of the Company occurred as the Seller became the owner of approximately 55.8% of the issued and outstanding shares of Common Stock and the board of directors of the Company comprised individuals designated by the Seller.
As part of the Transaction, the Company agreed to sell its wholly owned subsidiary, Slinger Bag Americas Inc., to a newly
established entity. In connection of the closing of the Transaction, on November 21, 2024, the Company entered into a separation and
assignment agreement (the “Separation Agreement”) with J&M Sports LLC, a Florida limited liability company
(“NewCo”), to sell, transfer and assign all or substantially all of its legacy business, assets and liabilities related
to or necessary for the operations of its “Slinger Bag” business or products (the “Legacy Business”) to
NewCo, in consideration for $1.00. Pursuant to the Separation Agreement, NewCo has obtained the sole right to and assumed all the
obligations of the Legacy Business and is liable to the Company for any losses arising from third-party claims against the Company
that arise from liabilities related to the Legacy Business .
Note 2 - Basis of Pro Forma Presentation
The unaudited pro forma condensed combined financial statements give effect to the acquisition of QPhoton as if the acquisition occurred on May 1, 2022.
The acquisition accounting summarized in Note 4 was not included in the unaudited pro forma condensed combined financial statements as the purchase accounting entries are preliminary and could differ from the final acquisition accounting as estimates of purchase consideration and the fair values of identifiable intangible assets acquired are subject to review and audit. As a result, differences between the preliminary estimates in Note 4 and the final acquisition accounting could be material.
Note 3 - Accounting Policies
The accounting policies of the Company may vary materially from those of YYEM. During preparation of the unaudited pro forma condensed combined financial information, the Company has performed an analysis and is not aware of any material differences in accounting policies, and accordingly, this unaudited pro forma condensed combined financial information assumes no material differences in accounting policies between the two companies.
Note 4 - Estimated Preliminary Purchase Consideration
The table below presents the total estimated preliminary purchase consideration:
| Cash consideration paid at closing | $ | 16,500,000 | ||
| Equity consideration paid at closing: | ||||
| Common shares | 38,280,864 | |||
| Total purchase consideration | $ | 54,780,864 |
| F-6 |