YYAI 10-K & 10-Q changes, risk factors and insider trading
Airwa Inc. · Nasdaq · Services-Computer Programming, Data Processing, Etc. · CIK 1674440 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “AI Services Business”
New heading “Our business depends on our ability to develop and successfully deploy artificial intelligence technologies, and our failure to do so could adversely affect our business, results of operations and financial condition.”
New heading “The use of client data to train or customize AI models creates significant security, privacy, confidentiality, and data-rights risks.”
New heading “Our efforts to provide secure, client-specific AI models may not prevent unintended disclosure or cross-client exposure of confidential information.”
New heading “Our clients’ data may not be available to us on terms sufficient to operate and improve our AI solutions, and disputes concerning data ownership and usage rights could adversely affect our business.”
New heading “AI-generated outputs may be inaccurate, biased, inappropriate, or otherwise defective, which could expose us to liability and harm our reputation.”
New heading “The legal and regulatory environment governing AI, data privacy, and the use of data for AI training is rapidly evolving, and changes in laws and regulations could increase our costs, restrict our operations, or expose us to liability.”
New heading “Our use of third-party AI models, cloud infrastructure, software, and other technologies exposes us to additional risks and dependencies.”
New heading “Our AI models and other technologies may infringe or misappropriate the intellectual property or other rights of third parties, or we may be unable to adequately protect our own intellectual property.”
New heading “Our highly competitive and rapidly changing market may make it difficult for us to maintain or increase our market share.”
New heading “Our ability to attract and retain highly skilled personnel is critical to our success.”
New heading “Our sales cycles may be lengthy and unpredictable, and our business may depend on our ability to demonstrate the value and security of our solutions to prospective clients.”
New heading “Failure to successfully implement our solutions or meet contractual requirements could result in customer disputes, loss of customers, and liability.”
New heading “Our business may be adversely affected by service interruptions, system failures or other disruptions to our operations.”
New heading “We may be subject to significant contractual, indemnification, and other liabilities arising from our use of client data and the operation of our AI solutions.”
New heading “Our international operations may expose us to additional legal, regulatory, operational, and economic risks.”
New heading “Our financial results may fluctuate, and our growth may not continue at historical or anticipated rates.”
New heading “If we fail to effectively manage our growth, our business and results of operations could be adversely affected.”
New heading “Our compliance obligations may increase as the legal and regulatory environment surrounding AI, privacy, and cybersecurity develops.”
New heading “Technology Licensing Business”
New heading “Advertising Business”
New heading “Our business depends on our ability to maintain relationships with third-party advertising agencies and other intermediaries, and the loss or deterioration of those relationships could materially adversely affect our business.”
New heading “Our limited role in the advertising process may make our business susceptible to being bypassed by advertisers and third-party intermediaries.”
New heading “Our revenue depends on the advertising expenditure of advertisers that we introduce and on the compensation arrangements we maintain with third-party intermediaries.”
New heading “The third-party intermediaries with which we work may lose or materially alter their relationships with Google, Meta, TikTok and other digital advertising platforms, which could indirectly adversely affect our business.”
New heading “We may be unable to identify and establish relationships with a sufficient number of qualified third-party intermediaries.”
New heading “We face competition from advertising agencies, digital marketing companies, and other providers that may be able to perform the intermediary function themselves or eliminate the need for our services.”
New heading “We may have limited ability to monitor transactions resulting from our introductions and to enforce our rights to receive compensation.”
New heading “Our reputation and business could be harmed by the conduct or performance of third-party advertising agencies and other intermediaries with which we work.”
New heading “Changes in the policies, technology, and business practices of digital advertising platforms could indirectly adversely affect our business.”
New heading “International Trading Business”
New heading “Our business is substantially dependent on global trade, and declines or disruptions in international commerce could materially adversely affect our business.”
New heading “Changes in tariffs, trade restrictions, and trade policies could materially adversely affect our business, and We may be unable to accurately predict changes in tariffs and other trade policies.”
New heading “Our business is exposed to geopolitical risks and international political instability.”
New heading “We depend on suppliers and manufacturers, and disruptions affecting our suppliers could adversely affect our business.”
New heading “We may be exposed to supplier quality and product-compliance risks.”
New heading “Changes in supplier relationships could adversely affect our margins.”
New heading “Our business depends on our ability to maintain and expand our relationships with the online platforms, retail stores, and other distribution channels that we use.”
New heading “We may be unable to accurately forecast demand, resulting in excess or insufficient inventory.”
New heading “Inventory losses, theft, or damage could adversely affect us.”
New heading “Inventory requires substantial working capital.”
New heading “Disruptions to transportation and logistics, or increases in related costs, could adversely affect our business.”
New heading “Fluctuations in foreign currency exchange rates, or currency controls, could adversely affect our results.”
New heading “Failure to comply with government regulations, including customs laws, export-control laws, and economic sanctions, could result in significant liability.”
New heading “We are subject to anti-corruption laws in overseas jurisdictions.”
New heading “Our business may require substantial working capital.”
New heading “We depend on key personnel with specialized international trading expertise.”
New heading “We face significant competition.”
New heading “We may face product liability claims or contractual disputes”
New heading “General Business-Related Risks”
Removed heading “If we develop our own offerings for end users, our growth and profitability will rely, in significant part, on our ability to attract and retain users through cost-effective marketing efforts. Any failure in those efforts could adversely affect our business, financial condition, and results of operations.”
Removed heading “As the distribution of our online services through app stores increases, in order to maintain our profit margins, we may need to take steps to offset increasing app store fees by decreasing traditional marketing expenditure, increasing user volume or monetization per user, or consolidating back-office and technical functions, or by engaging in other efforts to increase revenue or decrease costs generally.”
Removed heading “Our success may depend, in part, on the integrity of our systems and infrastructure and on our ability to enhance, expand, and adapt these in a timely and cost-effective manner.”
Removed heading “Our success will depend, in part, on the integrity of third-party systems and infrastructure.”
Removed heading “If the security of personal and confidential or sensitive user information that we maintain and store is breached or otherwise accessed by unauthorized persons, it may be costly to mitigate the impact of such an event and our reputation could be harmed.”
Removed heading “If we develop our own offerings for end users, we will be subject to a number of risks related to credit card payments, including data security breaches and fraud that we or third parties experience, any of which could adversely affect our business, financial condition, and results of operations.”
Removed heading “If we develop our own offerings for end users, inappropriate actions by certain of our users could be attributed to us and damage our reputation, which in turn could adversely affect our business.”
Removed heading “The SEC’s charges against our former independent auditor, Olayinka Oyebola & Co., could impact the credibility of our financial statements and those of YYEM, potentially leading to restatements and other adverse effects.”
Removed heading “We are subject to the periodic reporting requirements of the Exchange Act, requiring us to incur audit fees and legal fees in connection with the preparation of such reports. These additional costs could reduce or eliminate our ability to earn a profit.”
Removed heading “Due to the Acquisition, our stockholders have a significantly lower ownership and voting interest in us than they had in Connexa prior thereto and exercise less influence over management and policies of Connexa.”
Removed heading “Although we expect that our Common Stock will remain listed on Nasdaq, there can be no assurance that we will be able to comply with the continued listing standards of Nasdaq.”
Removed heading “Our stockholders may not be able to enforce judgments entered by U.S. courts against our officers and directors.”
Removed heading “If our shares of common stock become subject to the penny stock rules, it would become more difficult to trade our shares.”
Largest changes
“Any failure or perceived failure by us to comply with applicable laws, regulations, or contractual requirements could result in investigations, enforcement actions, fines, penalties, litigation, restrictions on our operations, loss of customers, and reputational harm. New or expanded requirements could also make our products more expensive or difficult to develop and operate or prevent us from offering certain AI capabilities in particular markets.”see in full comparison
“Any unauthorized access to, disclosure of, loss, theft, misuse, alteration, or destruction of client data could cause significant harm to our business and reputation and could result in governmental investigations, regulatory proceedings, litigation, contractual claims, indemnification obligations, fines, penalties, and other liabilities. A security incident involving one client’s data could also undermine confidence in our ability to protect data for all of our clients.”see in full comparison
“Our security measures, and those of our cloud providers, infrastructure providers, AI technology providers, and other service providers, may be breached or otherwise compromised. Cyberattacks, ransomware, phishing, insider threats, software vulnerabilities, credential theft, and other security incidents are becoming increasingly sophisticated. In addition, AI technologies may create new attack vectors, including attempts to extract confidential information from models or manipulate model behavior.”see in full comparison
“If we develop our own offerings for end users, we will receive, process, store, and transmit a significant amount of personal user and other confidential or sensitive information, including, without limitation, credit card information and user-to-user communications. We would also likely enable our users to share their personal information with each other. In some cases, we might engage third-party service providers to store or process this information. …”see in full comparison
“International trade is affected by numerous factors beyond our control, including global and regional economic conditions, consumer and business demand, government policies, tariffs, trade agreements, import and export restrictions, sanctions, geopolitical conflicts, diplomatic relations, transportation costs, currency exchange rates, interest rates, and disruptions to global supply chains. …”see in full comparison
“Our business is subject to laws and regulations governing international trade, including tariffs, duties, quotas, import and export controls, trade restrictions, embargoes, sanctions, and other barriers to international commerce.”see in full comparison
Full comparison: every changed paragraph (259)
Investing
in our common stock involves a high degree of risk. You
should carefully consider the risks described below and other information in
this Annual Report on Form 10-K, including the financial
statements and related notes that appear at the end of this report, before deciding
to invest in our securities. These risks should be
considered in conjunction with any other information included herein, including in
conjunction with forward-looking statements made herein.
If any of the following risks actually occur, they could materially adversely
affect our business, financial conditioncondition, and operating
results. Additional risks and uncertainties that we do not presently know or
that we currently deem immaterial may also impair our business,
financial conditioncondition, and operating results. The following discussion
of risks is not all-inclusive but is designed to highlight what we
believe are the material factors to consider when evaluating our business
and expectations. These factors could cause our future results
to differ materially from our historical results and from expectations
reflected in forward-looking statements.
AI Services Business
Our business depends on our ability to develop and successfully deploy artificial intelligence technologies, and our failure to do so could adversely affect our business, results of operations and financial condition.
Our business is based on the development and deployment of artificial intelligence, machine learning, and related technologies that are designed to use our clients’ business data to develop customized AI models and solutions. AI technologies are rapidly evolving, and our ability to compete and grow depends in significant part on our ability to develop, improve, and deploy AI models and related technologies that perform reliably, securely, and cost-effectively.
The development and deployment of AI systems involves substantial technical, financial, and operational challenges. Our models may not perform as expected, may produce inaccurate, incomplete, biased, misleading, or otherwise undesirable outputs, or may fail to perform adequately in particular industries, use cases, or environments. AI systems may also generate outputs that appear plausible or authoritative but are factually incorrect, incomplete, or unsupported by the underlying data. Model performance may vary depending on the quality, quantity, relevance, recency, and completeness of the data used to train, fine-tune, or otherwise customize the models, as well as on the particular prompts, inputs, use cases, and operating environments. Model performance may also deteriorate as underlying technologies, client data, business conditions, or other circumstances change. In addition, we may be unable to develop new capabilities or incorporate advances in AI technology as quickly or effectively as our competitors.
Our AI technologies may also be affected by limitations in the quality, completeness, accuracy, consistency, or availability of the data used to train or customize them. Although using a client’s own business data is intended to improve customization and security, client data may contain errors, inconsistencies, biases, or other deficiencies that could be incorporated into our models and adversely affect their performance. Our use of client-specific data does not eliminate the risk that an AI model will produce inaccurate, biased, or otherwise undesirable results, and the use of more extensive or proprietary data could in some circumstances amplify the effects of deficiencies or biases contained in that data.
In addition, AI technologies and the methods used to develop and evaluate them continue to evolve, and techniques for identifying and mitigating inaccurate, biased, unsafe, or insecure model behavior may not be effective in all circumstances. We may incur substantial costs to test, validate, monitor, secure, and govern our AI models and systems, and those efforts may not identify or prevent all undesirable model behavior.
Our clients may rely on our AI solutions to support business decisions or processes. Any failure of our AI solutions to provide the expected benefits could result in customer dissatisfaction, loss of customers, reputational harm, contractual claims, liability, and reduced demand for our services.
The use of client data to train or customize AI models creates significant security, privacy, confidentiality, and data-rights risks.
A fundamental aspect of our business is our ability to access, process, store, and use our clients’ business data to train, fine-tune, customize, evaluate, and operate AI models. This may involve highly confidential, proprietary, personal, regulated, or otherwise sensitive information belonging to our clients or their customers, employees, business partners, or other third parties.
Any unauthorized access to, disclosure of, loss, theft, misuse, alteration, or destruction of client data could cause significant harm to our business and reputation and could result in governmental investigations, regulatory proceedings, litigation, contractual claims, indemnification obligations, fines, penalties, and other liabilities. A security incident involving one client’s data could also undermine confidence in our ability to protect data for all of our clients.
Our security measures, and those of our cloud providers, infrastructure providers, AI technology providers, and other service providers, may be breached or otherwise compromised. Cyberattacks, ransomware, phishing, insider threats, software vulnerabilities, credential theft, and other security incidents are becoming increasingly sophisticated. In addition, AI technologies may create new attack vectors, including attempts to extract confidential information from models or manipulate model behavior.
Our ability to maintain the confidentiality and security of client-specific models and data is particularly important because our value proposition depends in part on allowing clients to obtain the benefits of customized AI without exposing their business information to other customers or unauthorized persons. If we fail, or are perceived to have failed, to adequately segregate client data, model parameters, training data, prompts, outputs, or other information, our reputation and business could be materially adversely affected.
Our efforts to provide secure, client-specific AI models may not prevent unintended disclosure or cross-client exposure of confidential information.
Our technology and operating processes are designed to permit us to use individual clients’ data to customize AI models and solutions for those clients. However, technical or operational failures could result in unintended access to one client’s data by another client, employee, contractor, service provider, or other unauthorized party.
AI models and associated systems may also present risks that are different from those associated with conventional software. For example, confidential information may potentially be reflected in model parameters, embeddings, logs, prompts, outputs, evaluation data, or other components of an AI system. Techniques intended to improve model performance could inadvertently increase the risk that information from training or customization data is reproduced or inferred from model outputs.
In particular, our controls intended to prevent one client’s data from being used to train, fine-tune, evaluate, or otherwise improve models or services provided to other clients may not always operate as intended. Similarly, our systems may not successfully prevent confidential or proprietary information from being memorized, inferred, reproduced, or disclosed through model outputs, retrieval systems, embeddings, logs, or other components of an AI system.
If our controls intended to isolate client environments or otherwise protect client information are inadequate, or if our models or systems inadvertently disclose confidential information, we could face claims for breach of contract, breach of confidentiality, violation of privacy or data-protection laws, infringement or misappropriation of intellectual property rights, or other legal claims. Such an event could also cause clients to discontinue or limit their use of our services and materially harm our reputation.
Our clients’ data may not be available to us on terms sufficient to operate and improve our AI solutions, and disputes concerning data ownership and usage rights could adversely affect our business.
Our ability to provide customized AI solutions depends on our clients granting us sufficient rights to access, process, and use their data for the purposes contemplated by our agreements. Our clients may not have obtained all rights necessary for us to use the data they provide to us, particularly where their data contains personal information, third-party information, copyrighted materials, trade secrets, or other protected content.
The legal status of data used to train, fine-tune, or evaluate AI models is evolving, and there may be uncertainty regarding who owns such data, what rights a client has to provide the data to us, what rights we have to process or use the data, whether particular uses constitute training or other forms of processing, and whether model weights, parameters, embeddings, outputs, or other materials derived from such data may be used or retained. Clients or other third parties may assert that we do not have sufficient rights to use particular data or that our use of such data violates contractual, privacy, intellectual property, or other legal rights.
For example, data provided by a client may include information obtained from third parties, copyrighted or licensed materials, personal information, trade secrets, or other information that the client is not authorized to provide to us for AI training or customization. Our ability to independently verify the rights associated with all data provided by our clients may be limited. If a client provides data to us without having obtained the necessary rights or consents, we could nevertheless become subject to claims, investigations, or other proceedings relating to our use of that data.
If we are unable to obtain or maintain adequate rights to use client data, or if clients impose restrictions on our ability to use their data, we may be required to modify our products, discontinue certain capabilities, incur additional costs, or develop alternative sources of data. These restrictions could also limit our ability to improve our models or develop new products and could adversely affect our competitive position.
Data protection, privacy, and other regulatory or contractual requirements may also restrict the geographic location in which client data may be processed or stored, the personnel or service providers who may access it, the purposes for which it may be used, and the length of time for which it may be retained. Such restrictions could increase our costs, limit our ability to train or customize models, delay implementation, or prevent us from offering particular products or services to certain clients or in certain jurisdictions.
AI-generated outputs may be inaccurate, biased, inappropriate, or otherwise defective, which could expose us to liability and harm our reputation.
AI systems can generate outputs that are inaccurate, incomplete, misleading, biased, offensive, inappropriate, or inconsistent with the underlying data. AI-generated outputs may also contain “hallucinations,” meaning information that is generated by a model but is not supported by the underlying data or otherwise factually accurate. The outputs generated by our models may also reflect limitations or biases contained in the data used to train or customize those models.
Our models may also generate outputs that are difficult to explain, reproduce or validate. Even where our systems are designed to use only information that a particular user or client is authorized to access, errors in data permissions, retrieval systems, model configuration, or other components may result in an output that contains information that the user should not receive.
Our clients may rely on our AI solutions to support business decisions or processes, and in certain circumstances an inaccurate or inappropriate output could result in financial loss, operational disruption, regulatory violations, damage to a client’s customers or business relationships, or other harm. Even where our agreements limit our liability or require clients to review AI-generated outputs, claims may nevertheless be asserted against us.
The risks associated with AI-generated outputs may be particularly significant when our solutions are used in regulated industries or for decisions involving financial, employment, healthcare, legal, compliance, or other material matters. Our clients may not always identify or independently verify an erroneous or inappropriate output before acting upon it.
As our AI solutions become more capable and are incorporated into increasingly important business processes, the consequences of errors or unexpected model behavior may become more significant. Any material failure of our AI solutions could result in customer claims, increased insurance and compliance costs, loss of customers, negative publicity, and reputational damage.
The legal and regulatory environment governing AI, data privacy, and the use of data for AI training is rapidly evolving, and changes in laws and regulations could increase our costs, restrict our operations, or expose us to liability.
Our business is subject to laws, regulations, and contractual requirements relating to privacy, data protection, cybersecurity, intellectual property, consumer protection, automated decision-making, and artificial intelligence. These requirements are evolving rapidly and may differ materially among jurisdictions.
Governments and regulatory authorities are adopting or considering new laws and regulations addressing AI systems, including requirements concerning transparency, testing, risk management, human oversight, data governance, documentation, security, and accountability. Privacy and data-protection laws may also restrict how we collect, process, transfer, store, and use information, including information used to train or customize AI models.
Regulators and courts may also interpret existing privacy, intellectual property, consumer protection, and other laws in ways that restrict the use of client data for AI training, fine-tuning, evaluation, or other purposes. Requirements concerning consent, data minimization, purpose limitation, data subject rights, automated decision-making, data localization, and cross-border transfers may limit our ability to use or retain client data in the manner contemplated by our business model. For example, laws and regulations in the United States, the European Union, and other jurisdictions may impose requirements on the use of personal data and AI systems that could require us to modify our products, establish additional controls, limit particular uses of data, maintain additional documentation, or incur significant compliance costs.
The regulatory framework applicable to AI is likely to continue changing, and the interpretation and enforcement of existing requirements may also change. New laws or regulatory interpretations could also impose requirements concerning the provenance of training data, documentation of data and model development processes, testing for bias or accuracy, disclosure of AI-generated content, human oversight, model risk management, or the ability of individuals to challenge AI-assisted decisions. Compliance with these requirements could require significant changes to our technology, contracts, processes, and business model.
Any failure or perceived failure by us to comply with applicable laws, regulations, or contractual requirements could result in investigations, enforcement actions, fines, penalties, litigation, restrictions on our operations, loss of customers, and reputational harm. New or expanded requirements could also make our products more expensive or difficult to develop and operate or prevent us from offering certain AI capabilities in particular markets.
Our use of third-party AI models, cloud infrastructure, software, and other technologies exposes us to additional risks and dependencies.
We may rely on third parties for foundation models, AI infrastructure, cloud hosting, data storage, cybersecurity, software, hardware, and other technologies used in the development and operation of our solutions. These third parties may change their pricing, terms, functionality, availability, or licensing practices, or may discontinue or restrict their products or services.
Our use of third-party foundation models or other AI technologies may also create uncertainty concerning the provenance of training data, the rights associated with model inputs and outputs, the security and privacy of data submitted to such providers, the manner in which such providers may use or retain data, and the intellectual property rights associated with resulting models or outputs.
Our reliance on third parties may also expose us to security, privacy, intellectual property, availability, and performance risks. A failure, outage, security incident, or other disruption affecting a third-party provider could impair our ability to provide services to our clients.
If a third-party AI provider changes its model, training practices, terms of use or technical specifications, our models or applications may perform differently or require substantial modification. Changes to a third-party foundation model may also cause changes in the accuracy, bias, security, latency, or other characteristics of our solutions, even where we have not changed our own software or client-specific data. We may also be unable to obtain continued access to third-party technologies on commercially reasonable terms, or at all. Any such disruption could increase our costs, delay product development, reduce functionality, and adversely affect our business.
Our AI models and other technologies may infringe or misappropriate the intellectual property or other rights of third parties, or we may be unable to adequately protect our own intellectual property.
The intellectual property rights applicable to AI technologies, including rights in training data, model architectures, model outputs, software, datasets, and other AI-generated or AI-assisted materials, continue to evolve. There is substantial uncertainty regarding the ownership and scope of intellectual property rights in AI-generated or AI-assisted materials and regarding whether the use of particular datasets, copyrighted works, or other materials in training or fine-tuning AI models may infringe or otherwise violate third-party rights. Third parties may assert that our use of particular data, software, models, or other materials infringes, misappropriates, or otherwise violates their intellectual property or other rights.
We may also face claims arising from the incorporation of third-party AI technologies into our products and services. For example, claims may allege that training data used by a third-party foundation model provider, or outputs generated by a model that we use, infringe copyrights, trademarks, patents, or other rights. Our ability to determine whether such claims have merit or to control the conduct of third-party providers whose technologies we incorporate into our solutions may be limited. Any such claims, whether or not meritorious, could require us to expend substantial resources to defend them, obtain licenses, modify our technology, or discontinue particular products or features.
At the same time, our ability to protect our own intellectual property, including proprietary methods for customizing AI models and protecting client-specific model configurations, may be limited. We rely on a combination of intellectual property laws, confidentiality obligations, contractual restrictions, and technical safeguards, all of which may fail to prevent unauthorized use or disclosure. If we are unable to protect our intellectual property, competitors may be able to replicate aspects of our technology, which could reduce our competitive advantage.
Our highly competitive and rapidly changing market may make it difficult for us to maintain or increase our market share.
The markets for AI, machine learning, data analytics, and enterprise software are highly competitive and subject to rapid technological change. We compete with established technology companies, enterprise software providers, AI companies, consulting and professional services firms, cloud providers, and internally developed solutions maintained by our potential clients.
Our competitors may have substantially greater financial, technical, marketing, sales, and other resources than we do. They may also have greater access to proprietary data, larger installed customer bases, stronger brand recognition, or established relationships with enterprises.
Our clients may also choose to develop AI capabilities internally or use general-purpose AI platforms rather than purchase our solutions. As AI technology becomes more widely available, the functionality that differentiates our products today may become more commoditized. In particular, improvements in general-purpose foundation models may reduce the perceived need for customized models or other client-specific AI solutions. Conversely, if customers demand increasingly sophisticated customization, security, validation, and governance capabilities, we may incur substantial additional costs to meet those expectations. If we are unable to innovate rapidly, demonstrate measurable value to clients, or differentiate our customized and secure approach from competing alternatives, our business and results of operations could be adversely affected.
Our ability to attract and retain highly skilled personnel is critical to our success.
Our success depends substantially on our ability to attract, train, and retain highly skilled employees, including AI researchers, machine learning engineers, software engineers, cybersecurity professionals, data scientists, product managers, sales personnel, and other technical and business personnel.
Competition for individuals with expertise in AI and related technologies is intense. Larger technology companies and other organizations may be able to offer greater compensation, resources, and opportunities than we can. The loss of key personnel, or our inability to recruit and retain qualified personnel, could impair our ability to develop, operate, and support our products and could delay our growth initiatives.
Our sales cycles may be lengthy and unpredictable, and our business may depend on our ability to demonstrate the value and security of our solutions to prospective clients.
Enterprise customers may require substantial evaluation, testing, security reviews, legal review, and implementation work before purchasing our solutions. Because our solutions may process sensitive business data and may be integrated into important business processes, prospective clients may subject us to extensive security, privacy, AI governance, and compliance requirements.
These processes may increase our sales cycle and sales expenses and make the timing and amount of our revenue difficult to predict. Prospective customers may also delay or abandon purchases because of economic uncertainty, concerns about AI, budget constraints, competing technologies, or internal initiatives to develop AI capabilities themselves.
If we are unable to demonstrate that our solutions provide sufficient value relative to their cost and risks, our sales may decline and our growth prospects could be adversely affected.
Failure to successfully implement our solutions or meet contractual requirements could result in customer disputes, loss of customers, and liability.
Our solutions may require significant implementation, integration, configuration, training, and ongoing support. The successful deployment of our solutions may depend on the quality and completeness of client data, the client’s IT environment, cooperation by the client’s personnel, and the performance of third-party systems.
If implementations are delayed or fail to meet customer expectations, we may incur additional costs, provide service credits or other concessions, delay revenue recognition, or become subject to contractual disputes. Certain customer agreements may also contain service-level commitments, warranties, indemnification obligations, or other provisions that could expose us to significant liability.
Our business may be adversely affected by service interruptions, system failures or other disruptions to our operations.
Management's Discussion & Analysis (MD&A)
New heading “Cost of revenue”
New heading “General and Administrative Expenses”
New heading “Selling and Marketing Expenses”
New heading “Operating activities”
New heading “Investing Activities”
New heading “Financing Activities”
New heading “Advertising revenue”
Removed heading “Share-Based Payment”
Largest changes
“For the year ended April 30, 2026, net cash used in operating activities was $20.9 million, which was primarily attributable to (i) net non-cash and other reconciling items of $20.2 million, primarily consisting of depreciation and amortization expense, impairment losses on intangible assets, an investment in Brightstar, amounts due from a director, other receivables, and a loss on financial assets at fair value through profit or loss; (ii) an increase of approximately $19.2 million in digital assets, primarily reflecting cash used to acquire digital assets during the year; …”see in full comparison
“Through Rafael AI, the Company provides end-to-end full-cycle services designed to empower enterprises to transition seamlessly from raw data to intelligent applications. This business is structured around five interconnected AI-related modules, together forming a closed-loop system in which data generation, model refinement, and operational feedback continuously reinforce one another. Its services are tailored to specialist industries such as healthcare, industrial manufacturing, and autonomous driving. …”see in full comparison
“The Company acquired Rafael AI on January 30, 2026. Rafael AI generates revenue from the sale of customized “data-to-AI” end-to-end software solutions directly to customers. Rafael AI is the sole legal and beneficial owner of the software and enters into contracts with its customers as a principal in the related transactions. The sale of customized “data-to-AI” end-to-end solutions is considered a distinct product as it is highly integrated, interdependent, and interrelated. The customers cannot use any component on a standalone basis to obtain economic benefits. …”see in full comparison
“On June 30, 2025, we executed a securities purchase agreement to issue 20 million 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. Closing is contingent on Nasdaq listing compliance and shareholder approval. The warrants allow for cashless exercise if no effective registration is in place. This financing, if consummated, will significantly improve liquidity and capital resources through 2025 and beyond.”see in full comparison
Full comparison: every changed paragraph (83)
Through Rafael AI, the Company provides end-to-end full-cycle services designed to empower enterprises to transition seamlessly from raw data to intelligent applications. This business is structured around five interconnected AI-related modules, together forming a closed-loop system in which data generation, model refinement, and operational feedback continuously reinforce one another. Its services are tailored to specialist industries such as healthcare, industrial manufacturing, and autonomous driving. We recorded $6.6 million of revenue from our AI services business in the final quarter of our financial year ended April 30, 2026, which was the period during which Rafael AI was our subsidiary.
The Company operates through YYEM, a Hong Kong-based subsidiary established
in November 2021 that is engaged in the emerging love and marriage market sector.
YYEM’sThrough
missionYYEM, isthe toCompany empower global connections through innovative matchmaking technology. We
own advancedowns patents and other proprietary technology whichfor welicensing license out, and we are using this intellectual property to develop an
AI-powered matchmaking platform to licenseout to partners worldwide, enabling them to create localized
matchmaking experiences tailored
to their specific markets and cultures. WeBy believeproviding such patents, we aim to enable our pioneeringpartners to
develop matchmaking services that resonate with local users while benefiting from advanced matching algorithms, safety features, and
engagement tools. Our technology haslicensing thebusiness powergenerated toroyalties transformof the$7.3 matchmakingmillion industry, leading
to greater success forin our licenseesfinancial andyear theirended clients,April and30, ultimately leading to more people finding successful life partnerships.2026.
Our subsidiary YYEM also provides digital marketing solution services related to performance advertising across diversified advertising channels such as Google, TikTok, and Meta. Services typically include marketing strategy and planning; platform account setup and media placement; production of advertising creative (video and other content); and ongoing campaign monitoring, analytics, optimization, and reporting. We have developed key relationships integral to this business, both with companies seeking to promote their products and services and with companies that have direct buying relationships with the platforms, which we are leveraging as we build market share. This business generated approximately $12.0 million of revenue in our financial year ended April 30, 2026.
We have licensing agreements in place with various entities to use the IP in numerous countries across Asia, Europe, and Africa, generating
royalties of $12.8 million in our financial year ended April 30, 2025.
On July 27, 2026, we entered into a share purchase agreement with Nova Innovation Tech Ltd, a BVI company, to acquire all the share capital of Oceancrest Investment Holdings Limited, a BVI holding company, which owned 97% of Best Life for $50 million (the “Base Consideration”), payable in USDT (Tether) or cash, with additional earn-out amounts payable if Best Life achieves specified revenue targets.
Best Life is a cross-border consumer-goods distribution and e-commerce business, leveraging direct brand sourcing, import expertise, bonded warehousing, platform operations, offline retail access, and selected private-label development to sell Japanese and other international consumer products across China and other overseas markets. It has in place business relationships with brand owners and manufacturers upstream and with e-commerce platforms, supermarkets, specialty retailers, and online resellers downstream. While Best Life historically has focused on Asia, it has recently launched an international expansion program to the UK, the U.S., Canada, and New Zealand.
On July 30, 2026, we closed on the transaction, paying $30 million toward the purchase price and receiving all of the shares of the holding company, giving us a 97% equity interest in Best Life. By October 28, we are required to pay the balance of the Base Consideration. If the Target achieves gross revenue of $10 million for the fiscal year ending December 31, 2026, the Company will make an earn-out payment of $30 million, and if it achieves gross revenue of $25 million for the fiscal year ending December 31, 2027, the Company will make an earn-out payment of $50 million.
To fund the purchase of Best Life, we sold 4,526,380 shares of Common Stock on a split-adjusted basis, following the financial year end on April 30, 2026, under the Sales Agreement described below under Results of Operations — Liquidity and Capital Resources — Financing Activities, raising approximately $16.3 million in gross proceeds.
Because the acquisition of Best Life occurred after April 30, 2026, it does not form part of management’s analysis of our financial condition and results of operations as of, and for the financial year ended on, that date.
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 April 30, 2025, influencer network capabilities were still nascent. We consider this development a positive step toward the diversification of our revenue streams.
On
January 8, 2025, we entered into a sales agreement with A.G.P./Alliance Global Partners (“A.G.P.”) under a registered
Form S-3 shelf registration, enabling us to raise up to $2,213,152 through periodic sales of common stock. We may sell shares via
A.G.P. as agent, or to A.G.P. as principal, and will pay a 3% commission on gross proceeds, plus limited out-of-pocket expense
reimbursements. No shares had been sold through this facility as of April 30, 2025, but the agreement provides strategic
flexibility for future capital raising.
On
June 30, 2025, we executed a securities purchase agreement to issue 20 million 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. Closing is contingent on
Nasdaq listing compliance and shareholder approval. The warrants allow for cashless exercise if no effective registration is in
place. This financing, if consummated, will significantly improve liquidity and capital resources through 2025 and
beyond.
Our
revenue is generated from the sale of customized “data-to-AI” end-to-end solutions, from license fees paid by customers for
the use of our technology.technology, and from digital marketing solution services.
AI services revenue is generated from the sale of customized “data-to-AI” end-to-end solutions directly to customers. These solutions consist of highly integrated software deliverables that are designed and customized based on customers’ specific requirements. Revenue from the sale of such solutions is recognized when control of the completed software solution is transferred to and accepted by the customer.
License revenue is generated from license fees paid by customers for the use of our technology.
Advertising revenue is generated from the provision of digital marketing solution services related to performance advertising across diversified advertising channels.
Cost of revenue
Expenses
Cost
of revenue consists primarily of amortization charges against intangible assets (specifically, technology rights), which arecosts directly attributable
to the generation of revenue.
For our AI services business, cost of revenue consists primarily of salaries, amortization charges related to intangible assets, and depreciation of property and equipment that are directly attributable to the development and delivery of our customized “data-to-AI” end-to-end solutions.
For our technology licensing business, cost of revenue consists primarily of amortization charges related to intangible assets, specifically technology rights.
For our advertising business, cost of revenue consists primarily of media and platform costs and third-party cooperating-platform and campaign delivery costs.
General and Administrative Expenses
General
and administrative expenseexpenses primarily consistsconsist of salaries and benefits for employees involved in general corporate functions; professional
fees for external legal,
accounting, and other consulting services; travelingtravel expenses; and other general office and administrative expenses.
Our revenue increased by $12.9 million, or 101%, from $12.8 million for the year ended April 30, 2025 to $25.8 million for the year ended April 30, 2026, driven by the recognition of approximately $6.6 million of AI services income following the acquisition of Rafael AI and the recognition of approximately $12.0 million of advertising income following the launch of our advertising business, partially offset by an approximately $5.7 million decrease in license revenue following the termination of the related license agreements.
Our revenue increased by $7.6 million, or 147.0%, from $5.2 million for
the year ended April 30, 2024 to $12.8 million for the year ended April 30, 2025, driven by royalty income from new licensees following
the entry into agreements, initially in the form of binding term sheets, with three licensees in January 2024.
Our cost of revenue increased by $19.5 million, or 655%, from $3.0 million to $22.5 million, primarily due to increased costs as we grew with the addition of our advertising and new AI-related businesses during the year ended April 30, 2026. In particular, Rafael AI had an uptick in expenditure on medical-related research and development from February through April 2026 as it sought to establish itself as a leader in Southeast Asia in developing AI models for traditional Chinese medicine. As a result, gross profit decreased by $6.5 million, or 66%, from $9.8 million to $3.3 million.
Selling and Marketing Expenses
Selling and marketing expenses, which primarily consist of salaries, office expenses, rent, utilities, and marketing fees, increased by $0.7 million, from nil for the year ended April 30, 2025, as we promoted our new advertising services and our newly acquired AI services business.
Our cost of revenue increased by $1.8 million, or 153%, from $1.2 million
to $3.0 million, primarily driven by higher amortization costs related to our greater level of intangible assets, many of which were acquired
near the end of the financial year ended April 30, 2024. Gross profit increased by $5.8 million, or 145%, from $4.0 million to $9.8 million,
driven by our higher royalty income described immediately above.
General
and administrative expenses, which mainly relatedrelate to salaries,
professional fees, and other general office and administrative
expenses, increased by $3.1$5.5 million, or 167%, from $164,000$3.3 million for the year ended April 30, 2025 to $3.3$8.7 million,million for the year ended
April 30, 2026, primarily
driven by the growth of our business asthrough wethe acquisition of Rafael AI and related fees and expenses.
Bad debt increased royaltyby revenueapproximately $1.0 million; approximately $1.3 million was paid as commission in relation to the acquisition
of Rafael AI; and byapproximately $2.4 million of professional expenses were paid in relation to the factacquisition, thatsuch in the year ended April 30, 2025, we began incurring
costs relating to YYEM becoming an operating subsidiary of a Nasdaq-listed company. This included audit fees,as legal fees,
accounting insurance premiums,
and directors’fees, and officers’audit compensation.fees.
We finance our operations primarily through cash generated from operations.
We had working capital, or net current assets, of $16.0 million as of April 30, 2025, compared to $8.2 million as of April 30, 2024, an
increase of approximately $7.6 million, or 93%. In comparison with a year prior, our accounts receivable as of April 30, 2025 increased
by $10.0 million as we recognized royalty revenue over the course of the financial year in accordance with our recognition policy while
the credit terms of our licensees permitted payment up to 90 days after the end of our financial year in order to afford them time to
monetize the licensed technology. As of April 30, 2025, we had retained earnings of $6.1 million.
The
following istable sets forth a summary of our cash flows from operating, investing, and financing activitiesflow for the years ended April 30, 20252026 and 2024:2025, as indicated.
Operating activities
Net cash used in operating activities for the year ended April 30, 2026, was $20.9 million, compared with $0.4 million for the year ended April 30, 2025. The $20.5 million increase in net cash used in operating activities was primarily attributable to the change from net income of $4.6 million in fiscal year 2025 to a net loss of approximately $15.4 million in fiscal year 2026, together with increased cash deployed into digital assets and contract costs. As detailed below, these increases in cash usage were partially offset by a significantly lower increase in accounts receivable in fiscal year 2026, as well as increases in contract liabilities and accounts payable.
For the year ended April 30, 2026, net cash used in operating activities was $20.9 million, which was primarily attributable to (i) net non-cash and other reconciling items of $20.2 million, primarily consisting of depreciation and amortization expense, impairment losses on intangible assets, an investment in Brightstar, amounts due from a director, other receivables, and a loss on financial assets at fair value through profit or loss; (ii) an increase of approximately $19.2 million in digital assets, primarily reflecting cash used to acquire digital assets during the year; (iii) an increase of $3.8 million in contract costs, reflecting costs incurred and deferred in connection with customer contracts in our AI services business; (iv) an increase of $1.6 million in accounts receivable, primarily attributable to the timing of customer billings and collections; (v) an increase of $0.7 million in prepayments and deposits, primarily reflecting advance payments made in the ordinary course of business; and (vi) a decrease of $4.9 million in income taxes payable, primarily reflecting the settlement of tax liabilities during the year. These cash outflows were partially offset by (i) an increase of approximately $4.4 million in contract liabilities, primarily attributable to consideration received from AI services customers in advance of the satisfaction of the related performance obligations; (ii) an increase of $5.0 million in accounts payable, primarily attributable to the timing of payments to vendors and suppliers in our AI services business; (iii) a decrease of $0.6 million in other receivables, primarily attributable to the collection or settlement of previously outstanding balances; and (iv) an increase of $0.8 million in accrued expenses, primarily attributable to expenses incurred but not yet paid as of year-end.
For the year ended April 30, 2025, net cash used in operating activities was approximately $0.4 million, which was primarily attributable to $8.4 million of net cash used as a result of changes in operating assets and liabilities, partially offset by $3.4 million of non-cash items, primarily consisting of $3.0 million of depreciation and amortization expense on our patents, a $0.3 million loss on financial assets at fair value through profit or loss, and shares issued to prior management upon the exercise of warrants issued in earlier periods for services rendered. Changes in operating assets and liabilities included (i) an increase of $12.1 million in accounts receivable, primarily attributable to revenue growth and the timing of customer collections; and (ii) an increase of $0.6 million in prepayments and deposits, primarily attributable to advance payments made by the Company in the ordinary course of business. These cash outflows were partially offset by (i) an increase of $2.3 million in accrued expenses, mainly attributable to the timing of payments for professional fees, compensation, and other operating expenses; and (ii) an increase of $2.0 million in income taxes payable, as income tax liabilities recognized during the year exceeded cash tax payments.
The cash flow impact from accounts receivable improved significantly in fiscal year 2026. Accounts receivable increased by $1.6 million, compared with an increase of $12.1 million during fiscal year 2025, resulting in a significantly lower amount of operating cash being held as accounts receivable in fiscal year 2026.
Investing Activities
Net cash used in investing activities for the year ended April 30, 2026, was $164.1 million, compared with nil for the year ended April 30, 2025. The net cash used in investing activities in fiscal year 2026 was attributable to the Company’s cash payment of $36.0 million for 30% of YYEM and its purchase of $140.0 million of USDT which was later used as consideration for the purchase of Rafael AI but which was offset in part by the acquisition of Rafael AI’s approximately of $11.8 million of cash and cash equivalents.
Financing Activities
Net cash provided by financing activities for the year ended April 30, 2026 was $197.7 million, compared with $0.4 million for the year ended April 30, 2025. This increase in financing cash inflows was primarily attributable to the Company’s use of external equity financing in fiscal year 2026. Financing cash inflows during this year primarily consisted of (i) $172.6 million of proceeds from at-the-market offerings of shares; (ii) $14.8 million of proceeds from a registered direct offering of shares; (iii) $5.8 million of proceeds from a private placement of shares to our Chairman at the time; and (iv) $4.6 million of proceeds from another private placement. The Company also received an immaterial amount of proceeds from the exercise of warrants for cash during the year.
In comparison, net cash provided by financing activities for the year ended April 30, 2025, was approximately $0.4 million, primarily attributable to an increase of approximately $0.7 million in amounts due to a related party, partially offset by an increase of approximately $0.3 million in amounts due from a related party. Accordingly, the year-over-year increase in financing cash flow primarily reflects a shift from limited related-party financing activities in fiscal year 2025 to substantial equity capital raising activities in fiscal year 2026.
On January 8, 2025, the Company entered into a sales agreement (the “Sales Agreement”) with A.G.P./Alliance Global Partners (the “Agent”), pursuant to which the Company could sell from time to time, at its option, shares of the Company’s common stock through or to the Agent, as sales agent or principal. Sales under the Sales Agreement would be made pursuant to the Company’s registration statement on Form S-3 (File No. 333- 279880) (the “Registration Statement”), filed with the SEC on January 8, 2025, and were described in detail in the related base prospectus and prospectus supplement, as amended, included as part of the Registration Statement. The compensation payable to the Agent as sales agent would be 3.0% of the gross proceeds from each sale of shares through or to the Agent pursuant to the Sales Agreement. During the year ended April 30, 2026, the Company sold 1,147,525 shares of common stock pursuant to the Sales Agreement for aggregate gross proceeds of approximately $172.6 million. As of the date of this Annual Report, the Company is unable to sell shares under the Sales Agreement as the Registration Statement is not available for use as a result of the Company not being current in its reporting obligations under the Securities Exchange Act of 1934. The Company does not expect to be eligible to resume sales under the Sales Agreement until at least August 1, 2027.
As
of April 30, 2025, we had cash and cash equivalents of $54,000, compared to $39,000 as of April 30, 2024.
Net
cash used in operating activities was $379,000 for the year ended April 30, 2025, compared with a net inflow of $2.5 million of cash from
operating activities for the prior year, a decrease of $2.9 million in operating cash flow. A $2.0 million rise in our net income was partially offset by the
combined effect of our non-cash adjustments, including a $10.0 million increase in our accounts receivable as described above, as
well as sizable increases in amortization expense and income taxes payable as our business grew.
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 were two non-cash items: a
$330,000 increase in the value of a guarantee given to the Company by our Chairman in respect of the value of listed shares we own;
and $725,000 owed to our Chairman for amounts he paid on behalf of the Company during the year ended April 30, 2025.
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.investments and to pay amounts potentially owing
under an earn-out in respect of Best Life. 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.assets, and there can
be no guarantee that we will be able to raise sufficient funds on acceptable terms or at all.
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, revenuerevenue, or expenses, results of operations, liquidity, capital expenditure, or
capital resources that are material to investors.
Accounts receivable are stated at their historical carrying amount net of an 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 consideredconsiders various factors, including nature,the nature of the receivable, historical collection experience, theand age of the accounts
receivable balances,
balances; the credit quality and specific risk characteristics of its customers,customers; and current economic conditionsconditions, 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 April 30, 20252026 and 2024,2025, the Company hadrecorded madean noallowance reserves.for credit losses of $300,000
and nil, respectively, against other receivables.
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 flowsflow expected to be generated from the use of the assets and their eventual
disposition. If the sum of the expected future undiscounted cash flowsflow 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. ImpairmentThe Company recognized
an impairment charge recognized
of approximately $7.5 million for the yearsyear ended April 30, 20252026. andNo 2024impairment charge was nil.recognized for the prior
year.
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 forof 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.
Consistent
with the criteria of ASC 606, “Revenue from Contracts with Customers,” the Company recognizes revenue when performance obligations
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.
Royalty income
TheIn
the case of royalty income, the Company recognizes revenue in an amount that reflects the consideration to which it expects to be entitled
for its products and services.
Accounts receivablereceivables are recorded when obligations have been performed and
billed to the customer. During the period after the right to paymentconsideration hasbecomes become unconditional but before a bill has been issued, the amount
owed is recorded as accrued revenue (receivables).unconditional. The Company’s
terms and conditions vary
by customer andbut 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
with the terms and conditions of the relevant license agreement. Revenue is recognized by the Company not only when invoices have been signed
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
provided to the customers.
What changed in the latest 10-Q
Risk Factors
New heading “We have received a deficiency notice from Nasdaq relating to our failure to timely file periodic reports, and our failure to maintain compliance with Nasdaq listing requirements could result in delisting of our common stock.”
Largest changes
“We have received a deficiency notice from Nasdaq relating to our failure to timely file periodic reports, and our failure to maintain compliance with Nasdaq listing requirements could result in delisting of our common stock.”see in full comparison
“On August 24, 2026, the Company received a letter from the Listing Qualifications Department of Nasdaq, indicating that the Company’s failure to file its Annual Report on Form 10-K for the period ended April 30, 2026 (the “Filing”), violated Nasdaq’s continued listing requirements under Nasdaq Listing Rule 5250(c)(1) (the “Rule”). The delay resulted from the fact that, following a significant acquisition, it had proven more time-consuming than anticipated to consolidate the financial results of the acquired business with the Company’s own. …”see in full comparison
Full comparison: every changed paragraph (3)
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. ThereExcept as set forth below, there have been no material changes to the risk factors previously disclosed in the Form 10-K.
We have received a deficiency notice from Nasdaq relating to our failure to timely file periodic reports, and our failure to maintain compliance with Nasdaq listing requirements could result in delisting of our common stock.
On August 24, 2026, the Company received a letter from the Listing Qualifications Department of Nasdaq, indicating that the Company’s failure to file its Annual Report on Form 10-K for the period ended April 30, 2026 (the “Filing”), violated Nasdaq’s continued listing requirements under Nasdaq Listing Rule 5250(c)(1) (the “Rule”). The delay resulted from the fact that, following a significant acquisition, it had proven more time-consuming than anticipated to consolidate the financial results of the acquired business with the Company’s own. The Company had 60 calendar days to submit a plan to regain compliance and if the plan was accepted, Nasdaq could grant an exception of up to 180 calendar days from the Filing’s due date, or until January 25, 2027, to regain compliance. The Company made the Filing before the October 23, 2026, deadline for submission of the plan and expects to regain compliance with Nasdaq’s listing requirements as a result. There can be no assurance that the Company will be able to satisfy Nasdaq’s continued listing requirements, regain compliance with the Rule, and maintain compliance with other Nasdaq listing requirements. If we fail to meet any of the continued listing requirements, Nasdaq could initiate delisting procedures, which could result in our common stock being delisted from the Nasdaq Capital Market. Delisting could adversely affect the liquidity and market price of our common stock, our ability to raise capital, and investor confidence in the Company.
Management's Discussion & Analysis (MD&A)
New heading “Technology Licensing”
New heading “Recent Developments”
New heading “Nasdaq Deficiency”
New heading “General and Administrative Expenses”
New heading “Three months ended July 31, 2026, compared to the three months ended July 31, 2025”
New heading “Advertising revenue”
Removed heading “Fundraising and Corporate Developments”
Removed heading “Private Placement”
Removed heading “Nine months ended, and three months ended, January 31, 2026 compared to the nine months ended, and three months ended, January 31, 2025”
Largest changes
“Through Rafael AI, the Company provides end-to-end full-cycle services designed to empower enterprises to transition seamlessly from raw data to intelligent applications. This business is structured around five interconnected AI-related modules, together forming a closed-loop system in which data generation, model refinement, and operational feedback continuously reinforce one another. Its services are tailored to specialist industries such as healthcare, industrial manufacturing, and autonomous driving. …”see in full comparison
“Nine months ended, and three months ended, January 31, 2026 compared to the nine months ended, and three months ended, January 31, 2025”see in full comparison
“Three months ended July 31, 2026, compared to the three months ended July 31, 2025”see in full comparison
“Rafael AI generates revenue from the sale of customized data-to-AI end-to-end software solutions directly to customers. Rafael AI is the sole legal and beneficial owner of the relevant software and enters into contracts with its customers as a principal in the related transactions. The sale of customized data-to-AI end-to-end solutions is considered a distinct product as it is highly integrated, interdependent, and interrelated. The customers cannot use any component on a standalone basis to obtain economic benefits. …”see in full comparison
Full comparison: every changed paragraph (93)
Business
Overview
AI Services
Through Rafael AI, the Company provides end-to-end full-cycle services designed to empower enterprises to transition seamlessly from raw data to intelligent applications. This business is structured around five interconnected AI-related modules, together forming a closed-loop system in which data generation, model refinement, and operational feedback continuously reinforce one another. Its services are tailored to specialist industries such as healthcare, industrial manufacturing, and autonomous driving. We recorded $6.6 million of revenue from our AI services business in the final quarter of our financial year ended April 30, 2026, which was the period during which Rafael AI was our subsidiary.
Technology Licensing
We
operate principally 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’sThrough
missionYYEM, isthe toCompany empower global connections through innovative matchmaking technology. We own advancedowns patents and other proprietary technology
which wefor licenselicensing out, and we are using this intellectual property to develop an AI-powered matchmaking platform to licenseout to partners
worldwide, enabling them to create localized
matchmaking experiences tailored to their specific markets and cultures. WeBy believeproviding such patents, we aim to enable our partners to
pioneeringdevelop matchmaking services that resonate with local users while benefiting from advanced matching algorithms, safety features, and
engagement tools. Our technology haslicensing thebusiness powergenerated toroyalties transformof the$7.3 matchmakingmillion industry, leading to greater success forin our licenseesfinancial andyear theirended clients,
andApril ultimately30, leading to more people finding successful life partnerships.2026.
Advertising
Our subsidiary YYEM also provides digital marketing solution services related to performance advertising across diversified advertising channels such as Google, TikTok, and Meta. Services typically include marketing strategy and planning; platform account setup and media placement; production of advertising creative (video and other content); and ongoing campaign monitoring, analytics, optimization, and reporting. We have developed key relationships integral to this business, both with companies seeking to promote their products and services and with companies that have direct buying relationships with the platforms, which we are leveraging as we build market share. This business generated approximately $12.0 million of revenue in our financial year ended April 30, 2026.
Fundraising
We
have license agreements in place with various entities to use the IP in numerous countries across Asia, Europe, and Africa, generating
royalties of $7.25 million in the nine months ended January 31, 2026.
In
January and February 2025, as part of our efforts to diversify our revenue streams, we announced the development
of a social networking vertical, in which we would provide content to TikTok and similar social media ventures. Our revenue relating
to social networking will depend on performance-based conversion metrics. In the nine months ended January 31, 2026, our social media advertising business generated revenue of $5.7 million.
In
August 2025, we signed a $500 million joint venture agreement to form AiRWA Exchange, a digital asset exchange focused on the tokenization
of real-world assets (RWA), specifically U.S. stocks. AiRWA Exchange is not yet operational and generating revenue, but we have successfully
completed test runs for settling trades of tokenized U.S. equities, positioning AiRWA Exchange to offer users the ability to trade digital
representations of U.S. stocks with the same simplicity and speed as cryptocurrencies — with transactions settled within seconds
and recorded on the blockchain’s immutable ledger, which is accessible 24 hours per day. We believe AiRWA Exchange will mark a
significant step toward bridging the gap between conventional financial systems and the emerging decentralized economy.
To
support the development of our AiRWA Exchange, we intend to leverage our commercial relationships, launching our Exchange services to
our JV partner’s millions of users in order to help scale the Exchange’s operations more quickly, and partnering with a leading
provider of digital asset intelligence and security solutions, to add advanced monitoring, threat detection, and compliance capabilities
for the long-term integrity of the AiRWA Exchange ecosystem.
Our
change of name to AiRWA, Inc. reflects our intention to make AiRWA Exchange core to our business and to focus on our goal of enhancing
global access to tokenized financial products.
Fundraising
and Corporate Developments
Private
Placement
On
August 19, 2025, we completed a private placement, issuing 20,000,000 units (each unit comprising one share of common stock and two five-year
warrants with an exercise price of $0.89 and cashless exercise if no effective registration is in place), which raised gross proceeds
of $4,600,000, without taking into account any exercise of the warrants.
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.AGP dated as of January 8, 2025,2025 (the “Sales Agreement”),
the amount we could raise under our ATM facility was specified to be
$200 million. During the three months ended July 31, 2026,
the Company sold 4,526,380 shares of common stock pursuant to the Sales Agreement, generating aggregate gross proceeds of approximately $16.3
million. As of Januarythe 31,date 2026,of wethis hadReport, soldthe 21,775,662Company is unable to sell shares (adjustedunder the Sales Agreement as the Registration Statement
is not available for stockuse splits)as anda raised $177,099,426
after payment to the Placement Agent of 3%result of the grossCompany proceedsnot andbeing certaincurrent otherin expenses.its reporting obligations under the Securities Exchange Act
of 1934. The Company does not expect to be eligible to resume sales under the Sales Agreement until at least October 1, 2027.
Recent Developments
Best Life Acquisition
On
JanuaryJuly 30,27, 2026, we entered into a share purchase agreement with variousNova sellersInnovation Tech Ltd, a BVI company, to acquire all the share capital
of AberfeldyOceancrest Investment Holdings Limited,
a SeychellesBVI holding companycompany, owningwhich 100%owned 97% of 26Best RafaelLife, Sdn.for Bhd.,$50 a Malaysian operating companymillion (the “TargetBase SubsidiaryConsideration”),
for $140,000,000, payable in cash.USDT (Tether) or cash, with additional earn-out amounts payable if Best Life achieves specified revenue targets.
Best Life is a cross-border consumer-goods distribution and e-commerce business, leveraging direct brand sourcing, import expertise, bonded warehousing, platform operations, offline retail access, and selected private-label development to sell Japanese and other international consumer products across China and other overseas markets. It has in place business relationships with brand owners and manufacturers upstream and with e-commerce platforms, supermarkets, specialty retailers, and online resellers downstream. While Best Life historically has focused on Asia, it has recently launched an international expansion program to the UK, the U.S., Canada, and New Zealand.
On July 30, 2026, we closed on the transaction, paying $30 million toward the purchase price and receiving all of the shares of the holding company, giving us a 97% equity interest in Best Life. On September 10, 2026, we paid half of the balance of the Base Consideration, with the other half due by October 28. If the Target achieves gross revenue of $10 million for the year ending December 31, 2026, the Company will make an earn-out payment of $30 million, and if it achieves gross revenue of $25 million for the year ending December 31, 2027, the Company will make an earn-out payment of $50 million.
To fund the purchase of Best Life, we sold 4,526,380 shares of Common Stock on a split-adjusted basis under the Sales Agreement, raising approximately $16.3 million in gross proceeds.
The
Target Subsidiary is an AI-specialist company providing end-to-end full-cycle services designed to empower enterprises to transition
seamlessly from raw data to intelligent applications. Its business is structured around five interconnected AI-related modules, together
forming a closed-loop system in which data generation, model refinement, and operational feedback continuously reinforce one another.
Its services are tailored to specialist industries such as healthcare, industrial manufacturing, and autonomous driving.
Reverse
Split Stock Splits
On May 18, 2026, and August 17, 2026, the Company effected reverse stock splits of its common stock at ratios of 1-for-40 and 1-for-20, respectively. The reverse stock splits did not change the par value of the Company’s common stock or the number of authorized shares. All share and per-share amounts presented in these consolidated financial statements and accompanying notes have been retrospectively adjusted to reflect the reverse stock splits for all periods presented, unless otherwise indicated.
Nasdaq Deficiency
On August 24, 2026, the Company received a letter from the Listing Qualifications Department of Nasdaq, indicating that the Company’s failure to file its Annual Report on Form 10-K for the period ended April 30, 2026 (the “Filing”) violated Nasdaq’s continued listing requirements under Nasdaq Listing Rule 5250(c)(1) (the “Rule”). The delay resulted from the fact that, following a significant acquisition, it had proven more time-consuming than anticipated to consolidate the financial results of the acquired business with the Company’s own. The Company had 60 calendar days to submit a plan to regain compliance and if the plan was accepted, Nasdaq could grant an exception of up to 180 calendar days from the Filing’s due date, or until January 25, 2027, to regain compliance. The Company made the Filing before the October 23, 2026, deadline for submission of the plan and expects to regain compliance with Nasdaq’s listing requirements as a result. There can be no assurance that the Company will be able to satisfy Nasdaq’s continued listing requirements, regain compliance with the Rule, and maintain compliance with other Nasdaq listing requirements.
Also
on October 22, 2025, as previously reported on Form 8-K and on our Form 10-Q for the quarter ended October 31, 2025, we filed a
Certificate of Amendment to our Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a
reverse stock split of the Common Stock at a ratio of 1-for-50, which became effective on
October 27, 2025.
Our
revenue is generated principallyfrom the sale of customized “data-to-AI” end-to-end solutions, from license fees paid by customers
for the use of our technologytechnology, Theand Company also providesfrom digital
marketing solution services related to performance advertising across diversified advertising channels.services.
AI services revenue is generated from the sale of customized data-to-AI end-to-end solutions directly to customers. These solutions consist of highly integrated software deliverables that are designed and customized based on customers’ specific requirements. Revenue from the sale of such solutions is recognized when control of the completed software solution is transferred to and accepted by the customer.
License revenue is generated from license fees paid by customers for the use of our technology.
Advertising revenue is generated from the provision of digital marketing solution services related to performance advertising across diversified advertising channels.
Cost
of revenue consists primarily of amortization charges against intangible assets (specifically, technology rights), which arecosts directly
attributable to the generation of revenue.
For our AI services business, cost of revenue consists primarily of salaries, amortization charges related to intangible assets, and depreciation of property and equipment that are directly attributable to the development and delivery of our customized data-to-AI end-to-end solutions.
For our technology licensing business, cost of revenue consists primarily of amortization charges related to intangible assets, specifically technology rights.
For
our advertising business, cost of revenue consists primarily consists of media and platform costs and third-party cooperating-platform and campaign
campaign delivery costs.
General and Administrative Expenses
Expenses
General
and administrative expenseexpenses primarily consistsconsist of salaries and benefits for employees involved in general corporate functions; professional
fees for external legal, accounting, and other consulting services; travel expenses; and other general office and administrative expenses.
Three months ended July 31, 2026, compared to the three months ended July 31, 2025
Nine
months ended, and three months ended, January 31, 2026 compared to the nine months ended, and three months ended, January 31, 2025
The
following are the results of our operations for the nine-month period ended, and the three-month period ended,ended JanuaryJuly 31, 2026, as compared
to the correspondingthree-month periodsperiod aended
July year31, earlier2025:
Our revenue increased by $18.2 million, or 608%, from $3.0 million for the three-month period ended July 31, 2025 to $21.2 million for the three-month period ended July 31, 2026, driven by the recognition of approximately $15.2 million of AI services income following the acquisition of Rafael AI and the recognition of approximately $6.0 million of advertising income following the launch of our advertising business, partially offset by an approximately $3.0 million decrease in license revenue following the termination of the related license agreements.
Our
revenue increased by $3.2 million, or 32%, $13.0 million for the nine-month period ended January 31, 2026, from $9.8
million for the corresponding period a year earlier. Our revenue increased by $3.7 million, or 113%, to $7.0 million for the
three-month period ended January 31, 2026, from $3.2
million for the corresponding period a year earlier. In both these cases, the increases were attributable to the new source
of revenue from our advertising business. Revenue from
this new business line totaled $5.0 million or 44% of total revenue for the three-month period ended January 31, 2026. This revenue
was primarily derived from the provision of performance advertising services across diversified advertising channels, such as Google
and Meta, and included services such as marketing strategy and planning, media placement, creative production, and campaign
monitoring, analytics, optimization, and reporting. The addition of this new revenue stream was a major driver of the
Company’s increase in revenue over the nine-month and three-month periods and reduces comparability to prior
periods.
Our cost of revenue increased by $14.9 million, or 1,997%, from $0.7 million to $15.6 million, primarily due to increased costs as we grew with the addition of our advertising and new AI-related businesses during the three-month period ended July 31, 2026. In particular, Rafael AI increased its expenditure on medical-related research and development from February through April 2026 as it sought to establish itself as a leader in Southeast Asia in developing AI models for traditional Chinese medicine. As a result, gross profit increased by $3.5 million, or 150%, from $2.3 million to $5.6 million.
Our
cost of revenue increased by $5.8 million, or 261%, to $8.1 million for the nine-month period ended January 31, 2026, from $2.2
million for the corresponding period a year earlier. Our cost of revenue also increased by $5.8 million, or 784%, to $6.6 million
for three-month period ended January 31, 2026 from $0.7 million for the corresponding period a year earlier. These increases were
driven by the Company’s new business line.
Selling and marketing expenses, which primarily consist of salaries, office expenses, rent, utilities, and marketing fees, increased by $0.5 million, from nil for the three-month period ended July 31, 2025, as we promoted our new advertising services and our newly acquired AI services business.
Our
selling and marketing expenses were $0.5 million and nil in the nine-month and three-month periods ended January 31, 2026 respectively
as we began amortizing agent fees in relation to the Company’s social media advertising business.
General and administrative expenses, which mainly relate to salaries, professional fees, and other general office and administrative expenses, increased by $4.7 million, or 618%, from $0.8 million for the three-month period ended July 31, 2025 to $5.5 million for the three-month period ended July 31, 2026, primarily driven by the growth of our business through the acquisition of Rafael AI. The increase was mainly due to the amortization of the intangible assets incurred from the acquisition of Rafael AI, including the acquired development costs and customer relationships.
General
and administrative expenses, which mainly consist of salaries, professional fees, and other general office and administrative
expenses, increased by $2.1 million, or 96.0%, to $4.5 million, for the nine-month period ended January 31, 2026 compared with
$2.3 million for the corresponding period a year
earlier. This increase was primarily driven by higher professional and management costs relating to the build-out of our new social
media advertising business and the acquisition of the AI data business. General and administrative expenses did not change
significantly for the three-month period ended January 31, 2026 compared with the corresponding period a year earlier.
Our
principal sources of liquidity during the nine-month period ended January 31, 2026, were cash generated from financing activities and
cash provided by operating activities. Our primary liquidity requirements were funding working capital, making investments in subsidiaries,
paying vendors and service providers, and supporting our ongoing business expansion.
As
of January 31, 2026, we had working capital, defined as current assets less current liabilities, of $49.7 million, compared to $15.9
million as of April 30, 2025, representing an increase of approximately $33.8 million, or 212%. This increase in working capital was
primarily attributable to an increase in cash and cash equivalents and prepayments and deposits, partially offset by increases in accounts
receivable and other working capital balances.
Accounts
receivable increased by approximately $0.9 million as of January 31, 2026, compared to April 30, 2025, primarily due to the expansion
of our advertising business, which generated higher revenue during the period. Prepayments and deposits increased by approximately $4.2
million as of January 31, 2026, from nil as of April 30, 2025, primarily due to advance payments made to vendors and service providers
in connection with our operating activities and business expansion. Cash and cash equivalents increased by approximately $36.0 million,
from $0.05 million as of April 30, 2025, to $36.0 million as of January 31, 2026, primarily due to proceeds raised under our at-the-market,
or ATM, facility and other equity financing transactions, as well as cash collections from customers.
The
following istable sets forth a summary of our cash flows from operating, investing, and financing activitiesflow for the nine-monththree-month periods ended January
July 31, 2026 and 2025:2025, as indicated.
Net cash provided by operating activities for the three-month period ended July 31, 2026, was $27.7 million, compared with $1.1 million for the three-month period ended July 31, 2025. Cash provided by operating activities for the three-month period ended July 31, 2026 primarily reflected a decrease of $19.0 million in digital assets and a decrease of $11.2 million in accounts receivable. These cash inflows were partially offset by a decrease of $5.0 million in contract liabilities. Cash used in operating activities for the three-month period ended July 31, 2025 primarily reflected in increase of $3.0 million in accounts receivable, partially offset by net income of $1.3 million.
Net
cash provided by operating activities was $3.8 million for the nine-month period ended January 31, 2026. Operating cash flow was
primarily affected by changes in working capital accounts, primarily the increase in accounts payable of $4.0 million, the increase
in income taxes payable of $0.6 million, and the increase in accrued expenses of $0.4 million, which were partially offset by an
increase in prepayments and deposits of $4.4 million and increases in accounts receivable and other receivables. The increase in
prepayments and deposits was primarily the result of refundable advance payments made to vendors and service providers in connection
with the Company’s advertising business and expansion activities. The increase in accounts receivable was mainly attributable
to higher revenue generated from the launch of the advertising business, while the increase in other receivables primarily
related to amounts paid on behalf of another company. The increase in accounts payable and accrued expenses was
mainly due to the timing of payments to vendors and service providers as the Company expanded its operations.
Net cash used in investing activities for the three-month period ended July 31, 2026, was $29.4 million, compared with nil for the three-month period ended July 31, 2025. The net cash used in investing activities for the three-month period ended July 31, 2026 consisted of the Company’s cash payment of $29.4 million for the acquisition of Best Life.
Net
cash used in investing activities was $165.8 million during the nine-month period ended January 31, 2026, consisting primarily of
payments of $36.0 million and $129.8 million for investments in subsidiaries. The significant use of cash in investing activities
reflected the Company’s strategic expansion and acquisition-related activities during the period. Accordingly, the fluctuation
in investing cash flows was primarily driven by these investments, which were not part of the Company’s ordinary operating
activities.
YYAI insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 2 Form 4 filings (2 insiders, 2 trade dates, 85,985 shares, about $15.2K) and open-market sales in 3 filings (1 insider, 3 trade dates, 1,722,381 shares, about $112.9K). Net open-market shares: -1,636,396 (purchases minus sales); net value about -$97.7K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-11 | Hrt Financial Lp |
Open-market sale | 885,977 | $0.08 | $70.9K |
| 2026-08-10 | Hrt Financial Lp |
Open-market sale | 421,879 | $0.08 | $33.8K |
| 2026-08-07 | Hrt Financial Lp |
Open-market purchase | 75,985 | $0.08 | $6.1K |
| 2026-08-04 | Hrt Financial Lp |
Open-market sale | 414,525 | $0.02 | $8.3K |
| 2026-04-10 | Zhou Hongyu |
Open-market purchase | 10,000 | $0.91 | $9.1K |
Well-known investors holding YYAI (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Millennium Management (Israel Englander) | 2026-06-30 | 44,791 | $37.4K | — | Sold out |