EDGAR 10-K Filing

Company CIK: 1813744
Filing Year: 2024
Filename: 1813744_10-K_2024_0001599916-24-000278.json

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ITEM 1. BUSINESS
Item 1. Business.
Corporate History
World Scan Project, Inc., a Delaware corporation (“the Company”) was incorporated under the laws of the State of Delaware on October 25, 2019.
On October 25, 2019, Ryohei Uetaki, our officer and director, paid for expenses involved with the incorporation of the Company with personal funds on behalf of the Company, in exchange for 10,000,000 shares of Common Stock, par value $0.0001 per share and 10,000,000 shares of Series A Preferred stock, par value $0.0001 per share, which issuance was exempt from the registration provisions of Section 5 of the Securities Act under Section 4(2) of such same said act. The value of the stock provided to Mr. Uetaki, based on the par value of $.0001 per share of common stock and Series A Preferred Stock, is valued at $2,000.
On October 25, 2019, Ryohei Uetaki was appointed as Chief Executive Officer, Chief Financial Officer, President, Director, Secretary, and Treasurer.
On November 18, 2019, Yasumasa Ichikawa was appointed as Chief Technology Officer.
On January 25, 2020, the Company entered into and consummated a Share Contribution Agreement with Ryohei Uetaki. Pursuant to this agreement Mr. Uetaki gifted to the Company, at no cost, 300 shares of common stock of World Scan Project Corporation, a Japan corporation (“WSP Japan”), which represented all of its issued and outstanding shares. The Company has since gained a 100% interest in the issued and outstanding shares of WSP Japan’s common stock and WSP Japan is now a wholly owned subsidiary of the Company. The Company and WSP Japan were under common control at the time of the acquisition.
WSP Japan was incorporated under the laws of Japan on January 22, 2020. Currently, WSP Japan is headquartered in Tokyo, Japan. The Company is an industrial automation equipment manufacturer, designing/developing robots, drones, Web3 infrastructure, IoT equipment and other related products. Our operations currently span across the globe
On February 19, 2020, Ryohei Uetaki gifted 7,000,000 shares of our Common Stock and 10,000,000 shares of our Series A Preferred Stock, which represented all of our issued and outstanding shares of Preferred Stock at the time, to SKYPR LLC, a Delaware Limited Liability Company (referred to herein as “SKYPR LLC”). Our CEO Ryohei Uetaki owns and controls 100% of the membership interests in SKYPR LLC.
In September, 2020, the Company entered into subscription agreements with 41 shareholders. Pursuant to these agreements, the Company issued 647,350 shares of common stock in total to these shareholders and received $323,675 as aggregate consideration. At the time of purchase the price paid per share by each shareholder was the equivalent to about 0.50 USD.
These shares were sold pursuant to the Company’s effective S-1 Registration Statement deemed effective on August 28, 2020 at 4pm EST.
In June, 2023, the Company entered into subscription agreements with 9 shareholders. Pursuant to these agreements, the Company issued 150,000 shares of Common Stock in total to these shareholders and received $1,500,000 as aggregate consideration. At the time of purchase the price paid per share by each shareholder was the equivalent of about 10.00 USD. These shares were sold pursuant to the Company’s effective S-1 Registration Statement deemed effective on May 25, 2023 at 4pm EST. The aforementioned offering has been completed and is no longer ongoing.
In August, 2023, the Company entered into subscription agreements with 1 shareholder. Pursuant to these agreements, the Company issued 20,000 shares of Common Stock in total to these shareholders and received $240,000 as aggregate consideration. At the time of purchase the price paid per share by the said shareholder was the equivalent of about 12.00 USD. These shares were sold pursuant to the Company’s effective S-1 Registration Statement deemed effective on August 23, 2023 at 4pm EST.
Overview
We operate through our wholly owned subsidiary, World Scan Project Corporation, a Japanese Company. We are an industrial automation equipment manufacturer in start-up stage currently focused on developing and designing robots, drones, Web3 infrastructure, IoT equipment and other related products. Our operations currently span across the globe.
Our principal executive offices are located at 2-18-23, Nishiwaseda, Shinjuku-Ku, Tokyo, 162-0051, Japan.
The Company’s website is https://www.world-scan-project.com/.
The Company has elected October 31th as its year end.
SkyFight-X Drone Business
SkyFight-X, which was originally developed and designed by our Chief Executive Officer, specifically for the hobbyist drone race known as “SKY FIGHT”, which is organized by Drone Net, a Japanese Company. Drone Net began running a drone school in 2017, and a drone race in 2019. Our CEO, Ryohei Uetaki, was in the planning stages of a new small sized drone product, and believed that his products would have higher performance capabilities than the drones at the time used by Drone Net, which prompted him to propose collaboration between the Company and Drone Net. Currently, Drone Net administrates 16 racetracks in Japan, specifically designed for drone use.
Although SkyFight-X was designed for Sky Fight, the drones can also be used outside the facilities designed exclusively for drone racing, and they can be used for recreational and miscellaneous purposes.
The following includes details regarding the SkyFight-X which we currently offer for sale. As mentioned later on, we have plans to expand our reach to more customers, but at this time it should be noted our only customer is Drone Net.
Schematics of SKYFight-X
- The weight of SKYFight-X is approximately 40 grams.
Product packaging
- One Main body of machine
- One Transmitter (2.4 GHz)
- One Battery
- Four Spare propellers
- One USB charging cable
- One user manual
Structure of Operations of SkyFight-X
At present, the Company’s operations are carried out in the following manner:
(1) The Company receives an order for the Company’s products from Drone Net.
In accordance with the Memorandum of Understanding, entered into on March 1, 2020, Drone Net shall not develop, manufacture, purchase or sell similar products to SkyFight-X without the Company’s consent through February 28, 2023.
(2) The Company places orders to G-Force, Inc., a Japan corporation (“G-Force”) to manufacture the Products, in accordance with the terms outlined in the agreement entered into on March 4, 2020.
(3) G-Force purchases lap measuring sensors (the “Sensors”) from ShenZhen RadioMaster Co., Ltd., a Chinese corporation (“RadioMaster”). The sensors are later installed in the SkyFight-X Drones.
(4) The Sensors are installed into the drones manufactured by G-Force on behalf of the Company.
(5) G-Force manufactures the Products and installs the Sensors. G-Force is a non-exclusive OEM supplier of the Company. After completion of the production process, the Company conducts a final product inspection of the goods produced. During the inspection, on average, the Company physically inspects between five to ten percent of the products for quality control.
(6) Following inspection and acceptance of the products, the Company directs G-Force to deliver the products to a location designated by Drone Net, currently the warehouse of Drone Net in Toyko, Japan, and G-Force delivers the Products directly.
(7) The Company relies on the marketing and sales of Drone Net, in part for its own success. If Drone Net realizes increased demand for the products, then in turn our own operations will increase. It should be noted that, at present, Drone Net is our primary customer.
Marketing
Our marketing plan, at present, is not yet complete and is still being researched and developed. SkyFight-X, our current primary product, is being marketed solely by our primary customer, Drone Net. We believe that Drone Net’s sales of our products will result in increased demand, from Drone Net, for future products, but this is not directly related to any marketing activities conducted by the Company itself. We do not currently engage in any marketing efforts, with the exception of the company’s website located at: https://www.world-scan-project.com/
Flylly: Small sized drone with 4K camera
The Flylly is an extra small sized drone with 38 grams in weight, and not subject to the revised Aviation Act. ４K camera is installed for photo shooting, and angles can be adjusted manually by tilting the camera. Automatic flights are also programmable for simple flight plans.
Flylly and a smartphone is what the users need for operation: download the dedicated app, SKY Drone Go, to the smartphone to connect and control Flylly via Wi-Fi
Schematics of Flylly
- The weight of Flylly is approximately 38 grams.
Product packaging
Specifications: Total length:82 mm, Width:89mm Hight:33 mm Weight:39.5g
A set of Flylly contains the blow:
- Main body of drone, 1 unit
- LiPo battery, 1 unit
- Upper shell, 3 units (in orange, yellow and white)
- Spare propellers, 4 pieces (2 in black and 2 in blue)
- USB battery charger, 1 unit
- Screwdriver, 1
- Demounting tool for propellers, 1
- User manual (in Japanese), 1
META DIVER
META DIVER is an application for smartphones that provides user experience with full-scale VR images. The purpose of the application is to provide 3D data such as historical heritage as VR video content.
The main function of the application is image reproductions of VR images and 360 degree images, with VR images of World Heritages, historical heritages, and natural heritage both in Japan and overseas as its contents. Currently, all contents in the applications are free of charge, although this does not preclude us from monetizing META DIVER in the future.
Pine Hill Productions, Inc., a New York corporation, (“Pine Hill”) is currently supervising the development of META DIVER.
ZEXABOX
ZEXABOX is made pursuant to, what we believe to be, strict Japanese guidelines for quality. The device is a GPU Mining Rig, comprised of computer components, used to “mine” digital currency. In layman’s terms, “mine” is defined as the process of solving complex math problems that verifying transaction(s) in the digital currency or blockchain, which, generally speaking, results in a predetermined amount of digital currency to be gained.
As of October 31, 2023, the company offers for sale the following types of Zexabox machines: PRO, MINI, ULTIMA, DIV, ULTIMA EX, PRO TYPE-C, DIVⅡ, and DIVⅢ.
Current Operations Relating to Zexabox
Sales activities pursuant to ZEXABOX are outsourced to 3rd party marketing companies in Japan. All products are purchased from Web3 Computing Corp., formerly known as Cellessence Corp., an unrelated third party. The company does not carry inventory related to the ZEXABOX. Installation services for the products are conducted by Web3 Computing Corp.
Marketing
Sales and marketing activities pursuant to ZEXABOX are outsourced to 3rd party marketing companies in Japan. At present, company’s marketing activities are constrained to our company website located at: https://www.world-scan-project.com/, through which recent news and updates are released, and general advertising to direct potential customers to our website. Additionally, from time to time the company attends industry specific exhibitions and trade shows.
Future plans
World Scan Project, Inc., as an industrial automation equipment manufacturer, plans to further develop and apply our technologies in designing/developing Web3 infrastructure, IoT equipment (Zexabox) and other related products, in addition to the robots and drones we have been offering to the market globally.
(1) To begin direct sales to consumers in Japan
The Company has tentative plans to evaluate the possibility of directly selling its products via web-based direct sales in Japan. It is possible that we may evaluate, and even begin to do so in 2024, but we do not currently have any definitive plans to do so at this point in time.
(2) To expand the sales volume for our digital currency mining rigs
The Company is planning to gain sales agents and agencies to expand the sales of its new product named XEXABOX series.
(3) To start selling products overseas, mainly in the USA
The Company has intentions to begin developing its own sales agencies, and at such time to begin to sell products through such agencies, overseas beginning, potentially, in 2023. These plans remain speculative in nature, however, in order to begin to progress these efforts, the Company entered into a consulting agreement with Pine Hill Productions, Inc., a New York corporation (Pine Hill”) on March 3, 2020. Pine Hill shall support the Company to expand its business operations into the USA. The consulting fee due to Pine Hill is $3,000 per month. As of October 31, 2023, there has been no material progress to disclose as pertains to this agreement.
(4) To sell new products
The Company intends to sell core products other than drones and digital currency mining rigs.
(5) The Company also has tentative plans, to evaluate the possibility of working on developing an underwater drone and a hover bike (flying bike). At this time, we are developing a scanner device that can be attached to an underwater drone and used to scan the sea floor, and the hover bike has been successfully tested in flight. The underwater 3D robot is called MURAKUMO, and the Hovercraft bike is called FREAP. At present neither of these potential products are available for sale as testing remains ongoing. However. we are still exploring the feasibility of these endeavors, and there is no guarantee that such plans will come to fruition.
Government Regulations in Japan
Currently, given that the entirety of our operations are conducted within Japan, and our customers reside in Japan, only the rules and regulations pertaining to drones within Japan are presently applicable to the Company’s operations.
Based on the revised Civil Aeronautics Act of 2020, registration of Unmanned Aircraft has been mandated. Based on the amendment to the Civil Aeronautics Act in 2020, unregistered Unmanned Aircraft flights will be banned. From June 20, 2022, Unmanned Aircraft will have to be marked with a registration ID to identify them and be fitted with a Remote ID function. The exclusion for Unmanned Aircraft was changed from “those weighing less than 200g” to “those weighing less than 100g.” This means that all Unmanned Aircraft of 100g or more are subject to registration. Acceptance of pre-registration began on December 20, 2021 and mandatory registration of all unmanned aircrafts began on June 20, 2022. The registration system for Unmanned Aircraft has been established to ensure safety and security in the expanded use of Unmanned Aircraft. While this regulation does not directly impact our ability to conduct any of our operations, it has placed the burden of registering autonomous drones onto the consumer, which we believe has had, and will continue to have, a detrimental impact upon our sales.
PATENTS AND TRADEMARKS
The following table is the list of patent registered..
Application Number Name
Applicant Application Date Country Record Date
2021-501939 Unmanned flight equipment,
management equipment,
operating equipment,
and flight management methods World Scan Project Corporation 2020/02/14 Japan 2022/07/22
2021-145931 Supporting equipment World Scan Project Corporation 2021/09/08 Japan 2023/10/10
Employees
As of the date of this Annual Report, the Company, and its subsidiary, collectively have a total of 14 full-time employees. We do not presently have pension, health, annuity, insurance, stock options, profit sharing, or similar benefit plans; however, we may adopt plans in the future. There are presently no personal benefits available to our officers/or directors and or employees.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors.
As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments.
None.

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ITEM 2. PROPERTIES
Item 2. Properties.
Our principal executive offices are located at 2-18-23, Nishiwaseda, Shinjuku-Ku, Tokyo, 162-0051, Japan.
The following table details the terms of the lease agreements for the various properties leased by the Company.
Work space Address Lessee Lessor Monthly Rent Date of Agreement Term (Expiration of Lease)
Tokyo Office 2-18-23-2F, Nishiwaseda,
Shinjuku-ku, Tokyo, Japan World Scan Project Corporation Make V Holdings Co., Ltd, JPY 200,000
$1,569
January 22, 2020 December 31, 2024
Kojimachi Office 3-5-2-201, Kojimachi,
Chiyuda-ku, Tokyo, Japan World Scan Project Corporation Kenedix Property Design Co., Ltd, JPY 601,920
$4,725
June 28, ,
October 26, 2025
Kojimachi Office 3-5-2-1112, Kojimachi,
Chiyuda-ku, Tokyo, Japan World Scan Project Corporation Kenedix Property Design Co., Ltd, JPY 581,058
$4,561
June 28,
September 30, 2025
Kojimachi Office 3-5-2-610, Kojimachi,
Chiyuda-ku, Tokyo, Japan World Scan Project Corporation Kenedix Property Design Co., Ltd, JPY627,575
$4,926
August 27, 2021 December 2, 2025
Kojimachi Office 3-5-2-203, Kojimachi,
Chiyuda-ku, Tokyo, Japan
World Scan Project Corporation Kenedix Property Design Co., Ltd, JPY 325,325
$2,553
February 1, 2022 April 1, 2026
Tenshodo 4-3-9 12fl.
Ginza, Chuo-ku, Tokyo, Japan World Scan Project Corporation Tenshodo Co. JPY 1,050,000
$8,242
October 30, 2021 November 18, 2031

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings.
From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures.
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock was quoted on the over-the-counter market (the “OTC Markets”) in the Pink Open® Market (the “Pink Market”) under the symbol “WDSP”. Prior to the filing of this report, due to our delinquent SEC Reporting status, we were demoted by OTC Markets to the "Expert Market" tier. After the filing of this Form 10-K, our Form 10-Q for the quarter ending January 31, 2024, our Form 10-Q for the quarter ending April 30, 2024 and our Form 10-Q for the quarter ending July 31, we believe we will be current with our SEC Reporting obligations.
Holders
As of the date of this report, and as of our fiscal year end, there are approximately 51 shareholders of record of our common stock and 10,817,350 shares of common stock deemed issued and outstanding. As of the date of this report, and as of our fiscal year end, there is one shareholder of record of our Series A preferred stock and 10,000,000 shares of common stock deemed issued and outstanding.
Dividends and Share Repurchases
We have not paid any dividends to our shareholder. There are no restrictions which would limit our ability to pay dividends on common equity or that are likely to do so in the future.
Issuer Purchases of Equity Securities
None.
Equity Compensation Plan Information
None.
Recent Sales of Unregistered Securities
On October 25, 2019 the Company issued 10,000,000 shares of restricted Common Stock to Ryohei Uetaki for services rendered to the Company. Additionally, on the same day, it issued 10,000,000 shares of its restricted Series A Preferred Stock to Ryohei Uetaki, also for services rendered. The aforementioned shares of common and preferred stock were all issued at par value, $0.0001, having a total value of $2,000. No monies were exchanged per the issuances and the shares were all exempt from the registration provisions of Section 5 of the Securities Act under Section 4(2) of such same said act.
On February 19, 2020, Ryohei Uetaki gifted 7,000,000 shares of our Common Stock and 10,000,000 shares of our Series A Preferred Stock, which represented all of our issued and outstanding shares of Preferred Stock at the time, to SKYPR LLC, a Delaware Limited Liability Company (referred to herein as “SKYPR LLC”). Our CEO Ryohei Uetaki owns and controls 100% of the membership interests in SKYPR LLC.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Selected Financial Data.
No applicable because the Company is a smaller reporting company.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Liquidity and Capital Resources
As of October 31, 2023 we had cash and cash equivalents in the amount of $5,698,883. Currently, our cash balance is sufficient to fund our operations without the need for additional funding.
Revenues
We recorded revenues of $30,986,882 for the year ended October 31, 2023. We recorded revenues of $29,440,341 for the year ended October 31, 2022.
Net Income(Loss)
We recorded net loss of $3,416,587 for the year ended October 31, 2023. We recorded a net income of $8,908,782 for the year ended October 31, 2022.
Cash flow
For the year ended October 31, 2023, we had negative cash flows used in operations in the amount of $170,461 as compared to cash flow provided by operations of $4,605,591 for the year ended October 31, 2022. The decrease in operating cash flow is attributed to the net operating loss during this this period, mainly due to R&D expenses (see Note 10). For year ended October 31, 2023, we had negative cash flows from investing activities in the amount of $1,627,412, due mainly to the purchase of investment securities, as compared to cash flow used in investing activities of $227,180 for the year ended October 31, 2022. For the year ended October 31, 2023, we had cash flows provided by financing activities in the amount of $1,862,361, due to the sale of common shares (see Note 12) and deposits received for subscriptions of shares prior to registration, as compared to cash flow provided by financing activities of $0 for the year ended October 31, 2022.
Going Concern
The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.
The Company demonstrates mixed trends, compared with the previous fiscal years, in our financial statements as in below:
As of October 31, 2023, the Company had working capital of $6,608,501, a decrease of $3,089,176 (-32%) as compared to working capital of $9,697,677 as of October 31, 2022. Additionally, the Company recorded cash and cash equivalents of $5,698,883, a decrease of $137,182 as compared to $5,836,065 in the prior year period ended October 31, 2022, The Company’s comparable liquidity to prior year is derived from increased sales of crypto miners and drone products and the sale of common shares (see Note 12), which balance out increased expenditures in research and development (see Note 10). As stated in the consolidated financial statements, the Company, for the year ended October 31, 2023, recorded a net loss of $3,416,587 (-138.35% y-o-y) and used $170,461 (-101.01% y-o-y) in cash flows from operating activities. The change in net profit(loss), use of cash from operations, and decrease in working capital is mainly related to a large increase in research and development costs expensed in the year ended October 31, 2023 (see Note 10).
Having reviewed the above, the Company realizes that whether we shall be able to continue demonstrating the positive trends demonstrated in our previous financial statements, lies in our ability to continue to generate revenue and increase revenue going forward. Principally, the Company's consolidated financial statements are based on going concern assumptions, which assume the realization of assets and offset of liabilities in the normal course of business. Based on this, the Company also recognizes that it is critical for us to continue to operate and/or perform our obligation(s) in the future and procure any required funds needed to meet the redemption of its debt during normal business operations.
Management has evaluated the estimated impact of COVID-19, which has become a significant factor impacting operations of businesses globally, one of which we believe we will need to continue to monitor as to the potential effects it may have on our own business.
The Company assessed the impact of COVID-19 and believes there to be minimal impact of COVID-19 on the Company’s crypto miner sales, which is currently the Company’s primary source of revenue. The Company will need to continue to monitor COVID-19 and the effects it may have, socially and economically, as it is possible that such developments may in fact impact our operations going forward or more specifically, our sales results. At this time, the Company believes that it will not affect our assumptions as a going concern.
Based on the Company’s evaluation and considering the positive financials trends the Company has experienced for many previous quarters, management believes that the one-time R&D expense this quarter will not adversely impact the Company’s ability to continue as a going concern.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
As a “smaller reporting company”, we are not required to provide the information required by this Item.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data.
WORLD SCAN PROJECT, INC.
FINANCIAL STATEMENTS
Pages
Report of Independent Registered Public Accounting Firm (PCAOB FIRM ID - 2738)
Report of Independent Registered Public Accounting Firm (PCAOB FIRM ID - 3223)
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Income
Consolidated Statements of Changes in Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to the Audited Consolidated Financial Statements -F10
-F1-
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Shareholders of World Scan Project, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of World Scan Project, Inc. (the Company) as of October 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive income, changes in shareholders’ equity, and cash flows for each of the years then ended and the related notes to the consolidated financial statements. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition
As discussed in Note 2 to the financial statements, when another party is involved in providing goods or services to the Company’s clients, a determination is made as to who is acting in the capacity as the principal in the sales transaction.
Auditing management’s evaluation of agreements with customers involves significant judgment, given the fact that some agreements require management’s evaluation of principal versus agent.
To evaluate the appropriateness and accuracy of the assessment by management, we evaluated management’s assessment in relationship to the relevant agreements.
/s/ M&K CPAS, PLLC
We have served as the Company’s auditor since 2020.
Houston, TX
February 10, 2023
-F2-
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of World Scan Project, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of World Scan Project, Inc. and its subsidiary (the “Company”) as of October 31, 2023, the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at October 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relates.
Research and Development Expense
As discussed in Notes 2 and 10 to the consolidated financial statements, the Company records expenses for research and development activities based on Management’s estimates of services received and efforts expended pursuant to contracts with vendors that conduct research and development on the Company’s behalf. The financial terms vary from contract to contract and may result in uneven payment flows as compared with services performed or products delivered. As a result, the Company is required to estimate research and development expenses incurred during the period, which impacts the amount of Advance payments and prepaid expenses balances related to such costs as of each balance sheet date. Management estimates the amount of work completed through discussions with internal personnel and the contract research and contract manufacturing entity as to the progress or stage of completion of the services. The Company’s estimates are based on a number of factors, including the Company’s knowledge of the status of each of the research and development project milestones. Management makes significant judgments and estimates in determining the accrued balance at the end of each reporting period. The Company incurred Research and Development expenditure totaling $18,717,456 in respect of various technologies mainly for two products Company intends to offer for sale in the future during the year ended October 31, 2023. All the technologies were in progress as on October 31, 2023, and all the expenditure incurred till year end was expensed in accordance with ASC 985 “Software - Costs of Software to Be Sold, Leased, or Marketed” and ASC 730 “Research and Development Costs”. Subsequent to year ended October 31, 2023, the Company has made a capitalization in accordance with ASC 985 “Software - Costs of Software to Be Sold, Leased, or Marketed”. Such capitalization has been made by the Company considering the fact that the Net realizable value/Future Economic Benefits exceeds unamortized cost.
The principal considerations for our determination that performing procedures related to management's assessment of recognizing Research and Development expenditures constitutes a critical audit matter include: (i) the significant judgment exercised by management in determining the recognition and accounting treatment of such costs; (ii) the higher degree of auditor judgment required in evaluating the results of audit procedures, due to the subjectivity and estimation uncertainty involved; and (iii) the involvement of professionals with specialized skills and expertise in assessing the appropriateness of the related estimates.
Addressing this matter involved performing procedures and evaluating audit evidence as part of forming our overall opinion on the consolidated financial statements. These procedures included: (i) inquiring with Company personnel responsible for overseeing the research and development activities to understand the progress of these activities, including project milestones and contract terms; (ii) discussing management's underlying assumptions regarding future economic benefits and treatment of such Research and Development cost; and (iii) Analyzing the terms of contracts between the Company and its contract research and manufacturing organizations, reviewing correspondence between the Company and these organizations regarding project completion status. We used this information to develop an independent estimate of the Advance payments and prepaid expenses and compared it to the amounts recorded by the Company.
Revenue Recognition
As discussed in Note 2 and 9 of the financial statements, the Company acted as an agent in facilitating the sales of crypto miners, produced by a third-party manufacturer, to customers of the Company during the year ended October 31, 2023. Net revenue for the sale of such products was recognized when the products were delivered to the customers and the customers completed the inspection of the same. Management assessed the Company’s contracts with the third-party manufacturer and customers in consideration of ASC 606, “Revenue from Contracts with Customers”, and determined the Company as the agent in said transactions.
We identified the recognition of revenue as a critical audit matter. Higher degree of auditor judgement is required in relation to Management’s assessment for revenue recognition and transfer of significant risk rewards associated with the sale of crypto miners.
Addressing this matter involved performing procedures and evaluating audit evidence as part of forming our overall opinion on the consolidated financial statements. These procedures included (i) reviewing and analyzing the relevant contractual terms with the third-party manufacturer; (ii) evaluating the Company’s assessment of the transfer of inventory risk and rewards; and (iii) inquiries and discussions with Management in relation to Company’s responsibility to act as an agent.
/s/ Mercurius & Associates LLP
(Formerly known as AJSH & Co LLP)
We have served as the Company’s auditor since 2024.
New Delhi, India
Date: November 19, 2024
-F3-
WORLD SCAN PROJECT, INC.
CONSOLIDATED BALANCE SHEETS
October 31,
October 31,
ASSETS
Current Assets
Cash and cash equivalents $ 5,698,883 $ 5,836,065
Accounts receivable, trade
125,981
1,847,068
Other receivables, current
-
Advance payments and prepaid expenses
5,122,849
16,389,562
Inventories
358,635
TOTAL CURRENT ASSETS
11,306,348
24,073,587
Non-current assets
Furniture, fixtures, equipment and leasehold improvements, net
244,277
280,024
Lease asset long term
788,150
705,007
Investment securities
1,605,244
-
Long term prepaid expenses and security deposits, net
52,769
112,145
Deferred tax assets
27,841
307,438
Other intangible assets, non-current
15,147
19,960
TOTAL NON-CURRENT ASSETS
2,733,428
1,424,574
TOTAL ASSETS $ 14,039,776 $ 25,498,161
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accrued expenses and other payables $ 1,103,686 $ 2,453,668
Accounts payable - related party
19,679
18,517
Income taxes payable
3,329,572
Consumption tax payable
29,027
941,483
Short-term lease liability
186,351
231,041
Advance received
3,358,529
7,401,171
Due to related party
TOTAL CURRENT LIABILITIES
4,697,847
14,375,910
Non-Current Liabilities
Lease liability long term
626,242
520,002
TOTAL LIABILITIES $ 5,324,089 $ 14,895,912
Shareholders' Equity
Preferred stock ($0.0001 par value, 200,000,000 shares authorized; 10,000,000 shares issued and outstanding as of October 31, 2023 and 2022) $ 1,000 $ 1,000
Common stock ($0.0001 par value, 200,000,000 shares authorized, 10,817,350 and 10,647,350 shares issued and outstanding as of October 31, 2023 and 2022, respectively)
1,082
1,065
Additional paid-in capital
2,063,973
323,990
Accumulated earnings
9,138,555
12,555,142
Accumulated other comprehensive income
(2,488,923)
(2,278,948)
TOTAL SHAREHOLDERS' EQUITY $ 8,715,687 $ 10,602,249
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 14,039,776 $ 25,498,161
The accompanying notes are an integral part of these audited financial statements.
-F4-
WORLD SCAN PROJECT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Year Ended
Year Ended
October 31, 2023
October 31, 2022
Revenues
Revenues $ 288,094 $ 14,515,175
Revenues - related party
-
7,879
Revenues, net
30,698,788
14,917,287
Total Revenues
30,986,882
29,440,341
Cost of revenues
135,307
11,319,348
Gross profit
30,851,575
18,120,993
OPERATING EXPENSE
Research and development
18,717,456
-
General and administrative expenses
17,618,847
4,308,251
Total operating Expenses
36,336,303
4,308,251
Income (loss) from operations
(5,484,728)
13,812,742
Other income (expense)
Other income
20,918
Other expense
(24,351)
-
Total other income (expense)
(24,320)
20,918
Net income (loss) before tax
(5,509,048)
13,833,660
Income tax expense (credit)
(2,092,461)
4,924,878
NET INCOME (LOSS) $ (3,416,587) $ 8,908,782
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment $ (209,975) $ (2,118,754)
TOTAL COMPREHENSIVE INCOME (LOSS) $ (3,626,562) $ 6,790,028
Income per common share
Basic $ (0.32) $ 0.84
Diluted $ (0.17) $ 0.43
Weighted average common shares outstanding
Basic
10,696,528
10,647,350
Diluted
20,696,528
20,647,350
The accompanying notes are an integral part of these audited financial statements.
-F5-
WORLD SCAN PROJECT, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
ACCUMULATED
ADDITIONAL
OTHER
ACCUMULATED
TOTAL
PREFERRED STOCK
COMMON STOCK
PAID IN
COMPREHENSIVE
EARNINGS
EQUITY
NUMBER
AMOUNT
NUMBER
AMOUNT
CAPITAL
INCOME (LOSS)
(DEFICIT)
(DEFICIT)
Balance - October 31, 2021 10,000,000 $ 1,000
10,647,350 $ 1,065 $ 323,990 $ (160,194) $ 3,646,360 $ 3,812,221
Net income -
-
-
-
-
-
8,908,782
8,908,782
Foreign currency translation -
-
-
-
-
(2,118,754)
-
(2,118,754)
Balance - October 31, 2022 10,000,000 $ 1,000
10,647,350 $ 1,065 $ 323,990 $ (2,278,948) $ 12,555,142 $ 10,602,249
Common shares sold -
-
170,000
1,739,983
-
-
1,740,000
Net loss -
-
-
-
-
-
(3,416,587)
(3,416,587)
Foreign currency translation -
-
-
-
-
(209,975)
-
(209,975)
Balance - October 31, 2023 10,000,000 $ 1,000
10,817,350 $ 1,082 $ 2,063,973 $ (2,488,923) $ 9,138,555 $ 8,715,687
The accompanying notes are an integral part of these audited financial statements.
-F6-
WORLD SCAN PROJECT, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended
Year Ended
October 31, 2023
October 31,
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (3,416,587) $ 8,908,782
Adjustments to reconcile net income(loss) to net cash provided by (used in) operating activities:
Depreciation and amortization
102,436
146,437
Lease expense
293,406
311,951
Changes in operating assets and liabilities:
Accounts receivable
1,730,647
(2,145,524)
Advance payments and other prepaid expense
11,293,327
(16,413,398)
Inventories
(363,486)
42,482
Other receivables
14,443
Other current assets
-
(41,345)
Deferred tax assets
281,087
(357,819)
Accrued expenses and other payables
(1,469,879)
2,642,891
Software
-
(24,602)
Taxes payable
(4,267,861)
4,527,091
Advance received
(4,039,118)
7,292,667
ROU asset/liability
(314,925)
(298,465)
Net cash provided by (used in) operating activities
(170,461)
4,605,591
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for purchase of fixed assets
(9,649)
(227,180)
Proceeds from refund of leasehold deposits
11,011
-
Cash paid for investment securities
(1,628,775)
-
Net cash used in investing activities
(1,627,413)
(227,180)
CASH FLOWS FROM FINANCING ACTIVITIES
Stock issuance for cash
1,740,000
-
Cash received for share subscriptions prior to registration
122,361
-
Net cash provided by financing activities
1,862,361
-
Net effect of exchange rate changes on cash $ (201,669) $ (1,125,564)
Net Change in Cash and Cash Equivalents
(137,182)
3,252,847
Cash and cash equivalents - beginning of period
5,836,065
2,583,218
Cash and cash equivalents - end of period $ 5,698,883 $ 5,836,065
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Income taxes paid 　$ 1,013,417 　$ 1,592,781
NON-CASH INVESTING AND FINANCING TRANSACTIONS
ROU Asset/Liability $ - $ 1,269,132
The accompanying notes are an integral part of these audited financial statements.
-F7-
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2023
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
World Scan Project, Inc., a Delaware corporation (“the Company”) was incorporated under the laws of the State of Delaware on October 25, 2019.
On October 25, 2019, Ryohei Uetaki, our officer and director, paid for expenses involved with the incorporation of the Company with personal funds on behalf of the Company, in exchange for 10,000,000 shares of Common Stock, par value $0.0001 per share and 10,000,000 shares of Series A Preferred stock, par value $0.0001 per share, which issuance was exempt from the registration provisions of Section 5 of the Securities Act under Section 4(2) of such same said act. The value of the stock provided to Mr. Uetaki, based on the par value of $.0001 per share of common stock and Series A Preferred Stock, is valued at $2,000.
On October 25, 2019, Ryohei Uetaki was appointed as Chief Executive Officer, Chief Financial Officer, President, Director, Secretary, and Treasurer.
On January 25, 2020, the Company entered into and consummated a Share Contribution Agreement with Ryohei Uetaki. Pursuant to this agreement Mr. Uetaki gifted to the Company, at no cost, 300 shares of common stock of World Scan Project Corporation, a Japan corporation (“WSP Japan”), which represented all of its issued and outstanding shares. The Company has since gained a 100% interest in the issued and outstanding shares of WSP Japan’s common stock and WSP Japan is now a wholly owned subsidiary of the Company. The Company and WSP Japan were under common control at the time of the acquisition.
WSP Japan was incorporated under the laws of Japan on January 22, 2020. Currently, WSP Japan is headquartered in Tokyo, Japan. The Company’s primary business is focused on developing and manufacturing of autonomous aerial vehicles including drones.
On February 19, 2020, Ryohei Uetaki gifted 7,000,000 shares of our Common Stock and 10,000,000 shares of our Series A Preferred Stock, which represented all of our issued and outstanding shares of Preferred Stock at the time, to SKYPR LLC, a Delaware Limited Liability Company (referred to herein as “SKYPR LLC”). Our CEO Ryohei Uetaki owns and controls 100% of the membership interests in SKYPR LLC.
In September, 2020, the Company entered into subscription agreements with 41 shareholders. Pursuant to these agreements, the Company issued 647,350 shares of common stock in total to these shareholders and received $323,675 as aggregate consideration. At the time of purchase the price paid per share by each shareholder was the equivalent of about 0.50 USD.
These shares were sold pursuant to the Company’s effective S-1 Registration Statement deemed effective on August 28, 2020 at 4pm EST.
In June and August of 2023, the Company entered into subscription agreements with 10 shareholders. Pursuant to these agreements, the Company issued 170,000 shares of Common Stock in total to these shareholders and received $1,740,000 as aggregate consideration. At the time of purchase the price paid per share by each shareholder was approximately 10.00 USD. These shares were sold pursuant to the Company’s effective S-1 Registration Statement deemed effective on May 25, 2023 at 4pm EST. This offering has been completed and is no longer ongoing. However, offering deemed effective in August, 2023 is still ongoing. On August 13, 2024, we filed a Form 8-K with the SEC to announce that Mr. Ryohei Uetaki had chosen to extend the offering period of the S-1 Registration Statement, which was declared effective by the Securities and Exchange Commission at 4:00 PM EST on August 23, 2023 by an additional 90 calendar days. As a result, the offering will now conclude on or about November 21, 2024.
We operate through our wholly owned subsidiary, World Scan Project Corporation, a Japanese Company. We are a start-up stage company currently focused on developing, designing and selling small sized drones which may be used for a variety of purposes.
Our principal executive offices are located at 2-18-23, Nishiwaseda, Shinjuku-Ku, Tokyo, 169-0051, Japan.
The Company has elected October 31st as its year end.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidations
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, World Scan Project Corporation, whose registered address is 2-18-23, Nishiwaseda, Shinjuku-Ku, Tokyo, 162-0051, Japan. All significant intercompany accounts and transactions have been eliminated.
Basis of Presentation
This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements. These accounting policies conform to accounting principles, generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.
Reclassification
Certain amounts in the prior period have been reclassified to conform to the current period presentation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates.
Advertising and Promotion
All advertising, promotion and marketing expenses, including commissions, are expensed when incurred.
Leases
The Company capitalizes all leased assets pursuant to ASU 2016-02, Leases (Topic 842) (“Topic 842”), which requires lessees to recognize right-of-use (“ROU”) assets and lease liability, initially measured at present value of the lease payments, on its balance sheet for leases with terms longer than 12 months and classified as either financing or operating leases. The Company excludes short-term leases having initial terms of 12 months or less from Topic 842 as an accounting policy election and recognizes rent expense on a straight-line basis over the lease term.
Related party transaction
A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The Company conducts business with its related parties in the ordinary course of business.
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of six months or less when purchased to be cash equivalents.
Accounts Receivable and Credit Policies
Accounts receivable are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. If there is a claim for a defect of product within four days after arrival of goods, the Company shall accept a goods return.
Advance payments and prepaid expenses
Advance payments and prepaid expenses are cash paid amounts that represent costs incurred from which a service or benefit is expected to be derived in the future.
Inventory
Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out (“FIFO”) method, and are valued at the lower of cost or market value. This valuation requires the Company to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category.
Fixed assets and depreciation
Property, plant and equipment are stated at cost less depreciation and impairment loss. The initial cost of the assets comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Depreciation is calculated using the straight-line method over the shorter of the estimated useful life of the respective assets as follows: computer software developed or acquired for internal use, 2 to 5 years; computer equipment, 2 to 5 years; buildings and improvements, 5 to 15 years; leasehold improvements, 13, 15, up to 39 years; and furniture and equipment, 1 to 5 years.
Investment and Securities
In accordance with ASC 321-10-35-2, the Company elected to measure an equity security without a readily determinable fair value at its cost subject to impairment. The Company has not identified any observable price changes in orderly transactions for the identical or a similar investment of the same issuer.
-F8-
Foreign currency translation
The Company maintains its books and records in its local currency, Japanese YEN (“JPY”), which is a functional currency as being the primary currency of the economic environment in which its operation is conducted. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations.
The reporting currency of the Company is the United States Dollars (“US$”) and the accompanying consolidated financial statements have been expressed in US$. In accordance with ASC Topic 830-30, “Translation of Financial Statement”, assets and liabilities of the Company whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at weighted average quarterly rates prevailing during the period. The gains and losses resulting from translation of financial statements are recorded as a separate component of accumulated other comprehensive income within the statements of shareholders’ equity.
--------
Comprehensive income or loss
ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income or loss, its components and accumulated balances. Comprehensive income or loss as defined includes all changes in equity during a period from non-owner sources. Accumulated comprehensive income, as presented in the accompanying consolidated statements of shareholders’ equity consists of changes in unrealized gains and losses on foreign currency translation.
Revenue recognition
The Company adopted ASC 606 - Revenue from contracts with Customers: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
Revenue amount represents the invoiced value, net of a value-added tax (“Consumption Tax”) and applicable local government levies. The Consumption Tax on sales is calculated at 10% of gross sales. The Company is subject to consumption taxes in Japan for the years ended October 31, 2022 and 2023.
Revenue from product sales
Revenue for products is recognized when the products are delivered to the customer and the customer completes the product inspection. Cash receipts for undelivered products are recorded as advance received As of October 31, 2023, the Company had no advance received related to this stream.
Revenue from crypto miners sales, net
During the period ended October 31, 2023, the Company acted as an agent in facilitating the sales of crypto miners, produced by a third-party manufacturer, to customers of the Company. Revenue for the sale of crypto miners was recognized when the miners were delivered to the customers and the customers completed the inspection of the miners. Management assessed the Company’s contracts with the third-party manufacturer and customers in consideration of ASC 606, “Revenue from Contracts with Customers”, and determined the Company as the agent in said transactions. As of October 31, 2023, $3,358,529 of advance received related to sales of crypto miners.
Revenue from educational institution program
Revenue for educational institution fees is recognized when the services are provided to the customer. Cash receipts for undelivered products are recorded as advance received. As of October 31, 2023, the Company had no advance received related to the educational institution program.
Research and Development
The Company accounts for research and development costs in accordance with ASC subtopic 730-10, Research and Development (“ASC 730-10”).
Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement.
The Company also applies the principles of ASC 985-20, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed (“ASC 985-20”). ASC 985-20 requires that software development costs incurred in conjunction with product development be charged to research and development expense until technological feasibility is established.
The Company records expenses for research and development activities based on Management’s estimates of services received and efforts expended pursuant to contracts with vendors that conduct research and development on the Company’s behalf. The financial terms vary from contract to contract and may result in uneven payment flows as compared with services performed or products delivered. As a result, the Company is required to estimate research and development expenses incurred during the period, which impacts the amount of Advance payments and prepaid expenses balances related to such costs as of each balance sheet date. Management estimates the amount of work completed through discussions with internal personnel and the contract research and contract manufacturing entity as to the progress or stage of completion of the services. The Company’s estimates are based on a number of factors, including the Company’s knowledge of the status of each of the research and development project milestones.
Income Taxes
The Company accounts for income taxes under ASC 740, “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations. The Company recognized deferred tax assets of $27,841 and $307,438 as of October 31, 2023 and October 31, 2022, respectively.
Basic Earnings (Loss) Per Share
The Company computes basic and diluted earnings (loss) per share in accordance with ASC Topic 260, Earnings per Share. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted earnings (loss) per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. Each shareholder of Series A Preferred Stock may convert their shares at the option of the holder thereof into an equal amount of shares of any other class or series of the Company’s stock on a one to one basis, therefore the Company computes diluted earnings (loss) per shares by dividing net income (loss) by the sum of the total of weighted average number of common shares and total preferred shares outstanding.
Basic and diluted earnings per share are as follows:
October 31,
Basic earnings per share
$ (.32)
$ .84
Diluted earnings per share
$ (.17)
$ .43
Fair Value of Financial Instruments
The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.
ASC 820, Fair Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
- Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
- Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
- Level 3 - Inputs that are both significant to the fair value measurement and unobservable.
Recently Issued Accounting Pronouncements
The Company does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements.
Concentration of Purchases
Net purchase from suppliers accounting for 10% or more of total purchases are as follows:
For the period ended October 31, 2023, 100% of the inventories were purchased from G-Force in the amount of $471,510.
For the year ended October 31, 2022, 51.81% of the inventories were purchased from G-Force in the amount of $5,864,586 and 24.95% of the inventories were purchased from DN Branch in the amount of $2,823,899.
Concentration of Revenues
Revenues from customers accounting for 10% or more of total revenues are as follows:
For the year ended October 31, 2023, 21% of total revenue was generated from Kinoshita Group in the amount of $6,610,618.
For the year ended October 31, 2022, 48.31% of total revenue was generated from Done Net in the amount of $14,221,414.
-F9-
NOTE 3 - GOING CONCERN
The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.
The Company demonstrates mixed trends, compared with the previous fiscal years, in our financial statements as in below:
As of October 31, 2023, the Company had working capital of $6,608,501, a decrease of $3,089,176 (-32%) as compared to working capital of $9,697,677 as of October 31, 2022. Additionally, the Company recorded cash and cash equivalents of $5,698,883, a decrease of $137,182 as compared to $5,836,065 in the prior year period ended October 31, 2022, The Company’s comparable liquidity to prior year is derived from increased sales of crypto miners and drone products and the sale of common shares (see Note 12), which balance out increased expenditures in research and development (see Note 10). As stated in the consolidated financial statements, the Company, for the year ended October 31, 2023, recorded a net loss of $3,416,587 (-138.35% y-o-y) and used $170,461 (-103.7% y-o-y) in cash flows from operating activities. The change in net profit(loss), use of cash from operations, and decrease in working capital is mainly related to a large increase in research and development costs expensed in the year ended October 31, 2023 (see Note 10).
Having reviewed the above, the Company realizes that whether we should be able to continue the positive trends demonstrated in our previous financial statements lies in our ability to continue to generate revenue and increase revenue going forward. Principally, the Company's consolidated financial statements are based on going concern assumptions, which assume the realization of assets and offset of liabilities in the normal course of business. Based on this, the Company also recognizes that it is critical for us to continue to operate and/or perform our obligation(s) in the future and procure any required funds needed to meet the redemption of its debt during normal business operations.
Management has evaluated the estimated impact of COVID-19, which has become a significant factor impacting operations of businesses globally, one of which we believe we will need to continue to monitor as to the potential effects it may have on our own business.
The Company assessed the impact of COVID-19 and believes there to be minimal impact of COVID-19 on the Company’s crypto miner sales, which is currently the Company’s primary source of revenue. The Company will need to continue to monitor COVID-19 and the effects it may have, socially and economically, as it is possible that such developments may in fact impact our operations going forward or more specifically, our sales results. At this time, the Company believes that it will not affect our assumptions as a going concern.
Based on the Company’s evaluation and considering the positive financials trends the Company has experienced for many previous quarters, management believes that the one-time R&D expense this quarter will not adversely impact the Company’s ability to continue as a going concern.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.
NOTE 4 - ACCOUNTS RECEIVABLE
Accounts receivable from customers totaled $125,981 as of October 31, 2023 and $1,847,068 as of October 31, 2022. No bad debt allowance was provided as of October 31, 2023 and October 31, 2022.
Concentration of Accounts Receivable
Accounts receivable from customers accounting for 10% or more of total accounts receivable are as follows:
As of October 31, 2023, 99.86% of total accounts receivable was owed to the Company by Drone Net Co., Ltd, in the amount of $125,811.
As of October 31, 2022, 77.36% of total accounts receivable was owed to the Company by Drone Net in the amount of $1,428,976 and 15.36% of total accounts receivable was owed to the Company by Chabi in the amount of $283,792.
NOTE 5 - ADVANCE PAYMENTS AND PREPAID EXPENSES
Advance payments are comprised of the payments for the undelivered products and other deliverables. As of October 31, 2023 and October 31, 2022, the Company had advance payments and other prepaid expenses of $5,122,849 and $16,389,562, respectively. Details of the advance payments as of October 31, 2023 and October 31, 2022 are as follows:
October 31,
October 31,
Purchase of products from G-Force Inc. $ - $ 101,158
Purchase of products from Sankyu Co., Ltd
28,782
-
Purchase of parts from Team M
-
37,097
Purchase of parts from Wise Partners Co., Ltd
-
228,785
Purchase of parts from Rogyx Co., Ltd
-
31,161
Purchase of consulting services from IBC Consulting
8,829
-
Purchase of cryptocurrency miners from Web3 Computing Corp
4,932,546
15,915,311
Other advances and prepaid expenses
152,692
76,050
Totals $ 5,122,849 $ 16,389,562
NOTE 6 - FIXED ASSETS
The Company recognizes purchased assets with a useful life longer than one year as fixed or non-current assets. These assets are depreciated using the straight-line method of depreciation over the estimated useful life of the assets.
During the year ended October 31, 2023, the Company purchased additional long-term assets totaling $9,649. The Company is depreciating fixed assets over a 1-39 year period once they were put into use. Depreciation expense for the year ended October 31, 2023 was $51,131.
During the year ended October 31, 2022, the Company purchased long-term assets, including building renovations, totaling approximately $227,180. The Company is depreciating these assets over a 5-10 year period once they were put into use. Depreciation expense for the year ended October 31, 2022 was approximately $50,535.
NOTE 7 - ADVANCE RECEIVED
Advance received is the amount the Company received in advance from the customer for their orders placed with us. As of October 31, 2023 advance received in the amount of $3,358,529 was related to our sales of cryptocurrency miners which represents a large amount in both number of transactions and values. As of October 31, 2022, advance received in the amount of $7,401,171 was related to our sales of cryptocurrency miners which represents a large amount in both number of transactions and values.
NOTE 8 - Investment and Securities
During the year ended October 31, 2023, the company has invested $1.6 million (JPY 240 million) in 400 shares of ZYRQ Corp. For that investment, the Company has received an exclusive right to commercialize IOT Edge Data Center Business. Further, the Company is developing IOT Terminal for which the Company has appointed WEB3 and NBCT to develop the said technology and ZYRQ is developing Immersion cooling technology (IOT Edge Data Centre).
There is no impairment required for such investment as at October 31, 2023 and in subsequent period.
NOTE 9 - REVENUE
During the year ended October 31, 2023, the Company acted as an agent in facilitating the sales of crypto miners, produced by a third-party manufacturer, to customers of the Company. Revenue for the sale of crypto miners was recognized when the miners were delivered to the customers and the customers completed the inspection of the miners. Management assessed the Company’s contracts with the third-party manufacturer and customers in consideration of ASC 606, “Revenue from Contracts with Customers”, and determined the Company as the agent in said transactions. As such, the company recognized crypto miner sales net of costs. During the three month period ended July 31, 2023, there were changes in the Company’s operating agreements that resulted in a change in the reporting of revenue associated with the sales of crypto miners, to that of product sales with the corresponding cost of sales of the crypto miners included in total cost of revenues. However, the effect of such restatement doesn't have any impact on the net income.
Year Ended
October 31,
Revenues
Product sales
$ 203,225
$ 14,043,637
Product sales - related party
-
7,879
Crypto miners sales, net
30,698,788
14,917,287
Drone imaging and video production
81,187
-
Program for educational institution
-
33,541
Other
3,682
437,997
Total Revenue Under ASC 606
$ 30,986,882
$ 29,440,341
NOTE 10 - RESEARCH & DEVELOPMENT
The Company incurred Research and Development expenditure totaling $18,717,456 in respect of various technologies mainly for two products Company intends to offer for sale in the future during the year ended October 31, 2023. All the technologies were in progress as on October 31, 2023, and all the expenditure incurred till year end was expensed in accordance with ASC 985 “Software - Costs of Software to Be Sold, Leased, or Marketed” and ASC 730 “Research and Development Costs”. Subsequent to year ended October 31, 2023, the Company has made a capitalization in accordance with ASC 985 “Software - Costs of Software to Be Sold, Leased, or Marketed”. Such capitalization has been made by the Company considering the fact that the Net realizable value/Future Economic Benefits exceeds unamortized cost. Expenses totaling $12,889,323 were recorded for R&D specifically related to producing a cost-effective cooling system for data centers. Expenses totaling $5,077,179 were recorded for R&D specifically related to producing technology to be used by other companies to produce NFTs, mainly for marketing purposes. There were also general R&D costs of $750,954. The total R&D expense contributed to a net loss before tax for the year ended October 31, 2023 of $3,416,587, which necessitated an adjustment to the accrual for income taxes payable resulting in a tax credit of $2,092,461 for the year (see Note 11).
NOTE 11 - INCOME TAXES
For the years ended October 31, 2023 and 2022, the Company had income tax expense(credit) in the amount of ($2,092,461) and $4,924,878, respectively. The income tax credit for year ended October 31, 2023 was due to the adjustment to income taxes payable resulting from the net loss before taxes for the year ended October 31, 2023 of $3,416,587). During the years ended October 31, 2023 and 2022, the Company paid income taxes totaling $1,013,417 and $1,592,781, respectively.
United States
The Company was incorporated under the laws of the State of Delaware on October 25, 2019. The U.S. federal income tax rate is 21%.
Japan
The Company conducts its major businesses in Japan through WSP Japan and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the local tax authority.
The Company is subject to a number of income taxes, which, in aggregate, represent a statutory tax rate approximately as follows:
Company’s assessable profit
For the year ended October 31, Up to JPY 4 million
Up to JPY 8 million
Over JPY 8 million
23.15%
25.73%
38.07%
As of October 31, 2023 and October 31, 2022, the Company had income tax payable of $117 and $3,329,572, respectively.
As of October 31. 2023 and October 31, 2022, the Company had deferred tax assets of $27,841 and $307,438, respectively.
For the years ended October 31, 2023 and 2022, the Company’s income tax expenses (credit) are as follows:
For the Years Ended
October 31,
Current
$ (2,352,130 )
$ 5,282,697
Deferred
259,669
(357,819 )
Total
$ (2,092,461 )
$ 4,924,878
A reconciliation of the effective income tax rates reflected in the accompanying consolidated statements of operations to the Japanese statutory tax rate for the years ended October 31, 2023 and 2022 is as follows:
For the Years Ended
October 31,
Japanese statutory tax rate
34.59 %
34.59 %
Change in valuation allowance
(0.19 )
1.01
Tax credit
(9.00 )
-
Effective tax rate
25.40 %
35.60 %
The tax effects of temporary differences that give rise to the deferred tax assets at October 31, 2023 and 2022 are presented below:
October 31,
October 31,
Deferred tax assets
Business tax payable
$ -
$ 307,438
Loss carry forward
26,255
-
Other
89,684
82,991
Subtotal
115,939
390,429
Less valuation allowance
(88,098 )
(82,991 )
Total deferred tax assets
$ 27,841
$ 307,438
The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future periods. The Company regularly assesses the ability to realize its deferred tax assets and establish a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. The Company weighs all available positive and negative evidence, including its earnings history and results of recent operations, projected future taxable income, and tax planning strategies.
The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as the Company’s projections for growth. The adjustments of a valuation allowance against deferred tax assets may cause greater volatility in the effective tax rate in the periods in which the valuation allowance is adjusted. For the year ended October 31, 2023, certain valuation allowance was released for WSP Japan considering the collectability of deferred tax assets.
As of October 31, 2023, WSP Japan had net operating losses which can be carried forward for income tax purposes of $75,904 to reduce future taxable income. If not used, these carryforwards will expire in 2033.
NOTE 12 - SHAREHOLDERS’ EQUITY
Preferred Stock
The authorized preferred stock of the Company consists of 200,000,000 shares with a par value of $0.0001. The authorized Series A Preferred Stock of the Company consists of 100,000,000. There were 10,000,000 shares of Series A Preferred Stock issued and outstanding as of October 31, 2023 and October 31, 2022.
The rights, preferences, privileges, restrictions and other matters relating to the Series A Preferred Stock are as follows:
(a) Each share of Series A Preferred Stock shall have no voting rights;
(b) Each shareholder of Series A Preferred Stock may convert their shares at the option of the holder thereof into an equal amount of shares of any other class or series of the Company’s stock on a one to one basis.
Common Stock
The authorized common stock of the Company consists of 200,000,000 shares with a par value of $0.0001. There were 10,817,350 and 10,647,350 shares of common stock issued and outstanding as of October 31, 2023 and October 31, 2022, respectively.
During the year ended October 31, 2023, 170,000 shares of common stock were sold to 9 shareholders for proceeds totaling $1,500,000 by S-1 offering deemed effective on May 25, 2023. In addition, due to another offering by S-1 deemed effective on August 23, 2023, proceeds totaling $240,000 from 1 shareholder has been recorded. The latter offering has not been closed yet. On August 13, 2024, we filed a Form 8-K with the SEC to announce that Mr. Ryohei Uetaki had chosen to extend the offering period of the S-1 Registration Statement, which was declared effective by the Securities and Exchange Commission at 4:00 PM EST on August 23, 20234 by an additional 90 calendar days. As a result, the offering will now conclude on or about November 21, 2024.
NOTE 13 - LEASE ASSETS AND LIABILITIES
Our adoption of ASU 2016-02, Leases (Topic 842), and subsequent ASUs related to Topic 842, requires us to recognize substantially all leases on the balance sheet as an ROU asset and a corresponding lease liability. The new guidance also requires additional disclosures as detailed below. We adopted this standard on the effective date of November 1, 2020 and used this effective date as the date of initial application. Under this application method, we were not required to restate prior period financial information or provide Topic 842 disclosures for prior periods. We elected the ‘package of practical expedients,’ which permitted us to not reassess our prior conclusions related to lease identification, lease classification, and initial direct costs, and we did not elect the use of hindsight.
We determine if a contract is a lease at the inception of the arrangement. We review all options to extend, terminate, or purchase the ROU assets, and when reasonably certain to exercise, we include the option in the determination of the lease term and lease liability. We have six operating leases related to our office space in Tokyo with remaining lease terms of 1 to over 3 years. We recognized $293,406 and $311,951 in operating lease costs for the years ended October 31, 2023 and October 31, 2022, respectively.
Lease ROU assets and liabilities are recognized at commencement date of the lease, based on the present value of lease payments over the lease term. The lease ROU asset also includes any lease payments made and excludes any lease incentives. When readily determinable, we use the implicit rate in determining the present value of lease payments. When leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date, including the lease term.
The tables below present financial information associated with our leases. As noted above, we adopted Topic 842 using a transition method that does not require application to periods prior to adoption.
Balance Sheet Classification October 31, 2023 October 31, 2022
Right-of-use assets Lease asset long $ 788,150 $ 705,007
Current lease liabilities Short-term lease liability
186,351
231,041
Non-current lease liabilities Lease liability long term
626,242
520,002
Maturities of lease liabilities as of October 31, 2023 are as follows:
225,282
155,499
80,262
2027 and beyond 387,934
Total 848,977
Add(Less): Imputed interest (36,384)
Present value of lease liabilities 812,593
NOTE 14 - ACCRUED EXPENSES AND OTHER PAYABLES
Accrued expenses and other payables are comprised of trade accounts payable, accrued payroll tax liabilities and accrued expenses. As of October 31, 2023 and October 31, 2022, the Company had accrued expenses and other payables of $1,103,686 and $2,453,668, respectively. Details of the accrued expenses and other payables as of October 31, 2023 and October 31, 2022 are as follows:
October 31, 2023
October 31, 2022
Accounts payable, trade $ 893,805
$ 2,383,161
Accounts payable for employees
43,106
54,879
Deposits received prior to registration of shares
120,618
-
Accrued payroll liabilities
46,157
15,628
Totals $ 1,103,686
$ 2,453,668
NOTE 15 - RELATED-PARTY TRANSACTIONS
Revenue
During the year ended October 31, 2022, revenue totaling $7,879 was recognized from sales to related party ZEXAVERSE. The said company is considered as a related party due to the fact that Ryohei Uetaki, CEO of the Company, controls the said company.
The terms and conditions applied to the above transactions were the same as those applied to sales to customers not related to the Company.
Loan to the Company
As of October 31, 2023, our CEO and Director, Ryohei Uetaki, has advanced to the Company $19,679 for salary and $458 for expenses. This advance is considered as a loan to the Company which is unsecured, noninterest-bearing and payable on demand.
As of October 31, 2022, our CEO and Director, Ryohei Uetaki, has advanced to the Company $18,517 for salary and $458 for expenses. This advance is considered as a loan to the Company which is unsecured, noninterest-bearing and payable on demand.
Transfer of assets to ZEXAVERSE
Aiming to establish a new revenue source, the Company planned to enter a new business, create avatars which offer exploring opportunities in metaverse. Found less feasible to realize reasonable revenue, the Company gave up the idea and related assets were transferred to ZEXAVERSE before the Company put those in service.
For the said transaction, the Company and ZEXAVERSE entered into a memorandum on July 1, 2022 and assets were all transferred to ZEXAVERSE on July 15, 2022. However, the Company was the contracting party with the vendors in sourcing assets for the new business, the Company invoiced the sum of contract value with vendors to ZEXAVERSE upon the said transfer and booked the said amount as other receivables - related party, a total of $727,911. The amount we disbursed to the vendors and the amount the company invoiced to ZEXAVERSE, which was paid by October 31, 2022, are the same amount. There is no revenue/loss, inventory, cost of goods sold occurred or recorded as an asset to the Company in relation to this transaction.
Sales activities with ZEXAVERSE
During the year ended October 31, 2022, the Company sold goggles ($7,879 in total) to ZEXAVERSE. The terms of conditions applied to the said transactions were the same conditions the Company applies to the non-Related Party clients, and the Company did not give any advantages to ZEXAVERSE.
Account receivables and sales relevant to the said transactions are presented in the Consolidated Balance Sheets and Consolidated Statements of Operations and Comprehensive Income hereinabove.
NOTE 16 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events through November 19, 2024, the date on which the consolidated financial statements were available to be issued and has found no material transactions to report except the following:
On January 17, 2024, World Scan Project Inc.’s (the “Company”) independent registered public accounting firm, M&K CPAS, PLLC (“MK”) resigned effective immediately. The report of MK on the Company’s consolidated financial statements for fiscal years ended October 31, 2022 and 2021 included in the Company’s annual report on Form 10-K for the year ended October 31, 2022, did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principle, except that such report expressed substantial doubt regarding the Company’s ability to continue as a going concern.
During the fiscal years ended October 31, 2022 and 2021, and the subsequent interim period through January 17, 2024, there were no (1) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and MK on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which would have caused it to make reference to the subject matter of such a disagreement in connection with its audit reports on the Company’s financial statements for such years, or (2) reportable events (as described in Item 304(a)(1)(v) of Regulation S-K).
On May 7, 2024, the Board of Directors approved the engagement of Mercurius & Associates LLP (PCAOB ID: 3223)(“MAS”) as the Company’s independent registered public accounting firm for the audit of the fiscal year ended October 31, 2023, and any reviews of interim periods thereafter. During the fiscal years ended October 31, 2022 and 2021 and through October 31, 2023, neither the Company nor anyone on its behalf consulted with MAS regarding (1) the application of accounting principles to a specified transaction, completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, and neither a written report nor oral advice was provided to the Company that Mercurius & Associates LLP concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (2) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).
On August 13, 2024, we filed a Form 8-K with the SEC to announce that Mr. Ryohei Uetaki had chosen to extend the offering period of the S-1 Registration Statement, which was declared effective by the Securities and Exchange Commission at 4:00 PM EST on August 23, 2023 by an additional 90 calendar days. As a result, the offering will now conclude on or about November 21, 2024. The Company will continue to provide investors with a current prospectus, including up-to-date financial information and any other required disclosures.
-F10-

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
On January 17, 2024, World Scan Project Inc.’s (the “Company”) independent registered public accounting firm, M&K CPAS, PLLC (“MK”) resigned effective immediately.
The report of MK on the Company’s consolidated financial statements for fiscal years ended October 31, 2022 and 2021 included in the Company’s annual report on Form 10-K for the year ended October 31, 2022, did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principle, except that such report expressed substantial doubt regarding the Company’s ability to continue as a going concern.
During the fiscal years ended October 31, 2022 and 2021, and the subsequent interim period through January 17, 2024, there were no (1) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between the Company and MK on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which would have caused it to make reference to the subject matter of such a disagreement in connection with its audit reports on the Company’s financial statements for such years, or (2) reportable events (as described in Item 304(a)(1)(v) of Regulation S-K).
On May 7, 2024, the Board of Directors approved the engagement of Mercurius & Associates LLP (PCAOB ID: 3223) as the Company’s independent registered public accounting firm for the audit of the fiscal year ended October 31, 2023, and any reviews of interim periods thereafter.
During the fiscal years ended October 31, 2022 and 2021 and through October 31, 2023, neither the Company nor anyone on its behalf consulted with Mercurius & Associates LLP regarding (1) the application of accounting principles to a specified transaction, completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, and neither a written report nor oral advice was provided to the Company that Mercurius & Associates LLP concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (2) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
The Company has adopted and maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this annual report, is collected, recorded, processed, summarized and reported within the time periods specified in the rules of the SEC. The Company’s disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. As required under Exchange Act Rule 13a-15, the Company’s management, including the Chief Executive Officer who also serves as our Principal Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures as of the end of the period covered by this annual report. Based on that evaluation, the Chief Executive Office who also serves as our Principal Financial Officer concluded that the disclosure controls and procedures are ineffective.
Our Chief Executive Officer, Ryohei Uetaki, has reviewed the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) as of the end of the period covered by the report October 31, 2023 and has concluded that (i) the Company’s disclosure controls and procedures are not effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Commission, and (ii) the Company’s controls and procedures have not been designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements. Management conducted an assessment of the Company’s internal control over financial reporting based on the framework and criteria established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework issued in 2013. Based on the assessment, management concluded that, as of October 31, 2023, the Company’s internal control over financial reporting is ineffective based on those criteria.
The Company’s management, including its Chief Executive Officer who also serves as our Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures and its internal control processes will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of error or fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that the breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
The matters involving internal controls and procedures that our Chief Executive Officer considered to be material weaknesses under the standards of the Committee of Sponsoring Organizations of Treadway Commission were: domination of management by a single individual without adequate compensating controls, lack of a majority of outside directors on board of directors, inadequate segregation of duties consistent with control objectives, lack of well-established procedures to identify, approve and report related party transactions, and lack of an audit committee.
Management believes that the material weaknesses did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and inadequate segregation of duties results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
Management recognizes that its controls and procedures would be substantially improved if we had an audit committee and two individuals serving as officers and as such is actively seeking to remediate this issue.
Management’s Remediation Initiatives
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:
We have increased our personnel resources and technical accounting expertise to remediate material weakness in internal control over financial reporting. We plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.
Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.
We will work as quickly as possible to implement these initiatives; however, the lack of adequate working capital and positive cash flow from operations will likely slow this implementation.
Changes in Internal Control
There have been no changes in internal controls over the financial reporting that occurred during the fiscal fourth quarter, that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
None.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance.
Biographical information regarding the Officers and Directors of the Company, who will continue to serve as Officers and Directors of the Company are provided below:
World Scan Project, Inc.
NAME AGE POSITION
Ryohei Uetaki Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Director
Yasumasa Ichikawa Chief Technology Officer
World Scan Project Corporation
NAME AGE POSITION
Ryohei Uetaki Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Director
Yasumasa Ichikawa Chief Technology Officer
Ryohei Uetaki
Mr. Ryohei Uetaki graduated from the Osaka Gakuin University Faculty of Commerce in 1997. In 2000, he incorporated Zero Step Ltd and assumed the position of president. In 2006, Zero Step Ltd ceased all operations. In 2006, Mr. Uetaki joined EAZ Holdings Ltd as a director in charge of the company’s marketing efforts. Mr. Uetaki remained as director of EAZ until 2007. From 2007 to 2019, he was engaged as an independent business consultant. From 2017 to 2018, he served as an associated professor of Keio University Graduate School. On October 25, 2019, he was appointed as the president, CEO and director of World Scan Project, Inc. On January 10, 2020, he was appointed as the CEO and member of SKYPR LLC. Inc. On January 22, 2020, he was appointed as the president, CEO and director of World Scan Project Corporation. On November 18, 2020, he was appointed as the president, CEO and director of Kids Cell Technologies Corporation. Currently, he serves as the officer and director of World Scan Project, Inc., World Scan project Corporation, SKYPR LLC, and Kids Cell Technologies Corporation.
Due to Mr. Uetaki’s diverse business experience, the Board has determined it is in the best interest of the company to appoint him as the company’s Chief Executive Officer, Chief Financial Officer, President, Treasurer and Director.
Yasumasa Ichikawa
Mr. Yasumasa Ichikawa graduated from Kyoto Saga University of Arts in 2015. After graduation, he was engaged as an independent computer graphic designer. On November 18, 2019, he was appointed as Chief Technology Officer (“CTO”) of World Scan Project, Inc. On January 22, 2020, he was appointed as the CTO of World Scan Project Corporation and World Scan Project Corporation. Currently, he serves as the CTO of World Scan Project, Inc. and World Scan project Corporation.
Due to Mr. Ichikawa’s technological experience, the Board has determined it is in the best interest of the company to appoint him as the company’s Chief Technology Officer.
Ethics
The Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with the Securities and Exchange Commission (the "SEC") and in other public communications made by the Company; and strives to be compliant with applicable governmental laws, rules and regulations. The Company has not formally adopted a written code of business conduct and ethics that governs the Company's employees, officers and directors as the Company is not required to do so.
In lieu of an Audit Committee, the Company's board of director(s) (the "Board of Directors" or "Board"), is responsible for reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results and effectiveness of the annual audit of the Company's financial statements and other services provided by the Company's independent public accountants. The Board of directors, the Chief Executive Officer and the Chief Financial Officer of the Company review the Company's internal accounting controls, practices and policies.
Committees of the Board
Our Company currently does not have nominating, compensation, or audit committees or committees performing similar functions nor does our Company have a written nominating, compensation or audit committee charter. Our sole director believes that it is not necessary to have such committees, at this time, because the director(s) can adequately perform the functions of such committees.
Audit Committee Financial Expert
Our director has determined that we do not have a board member that qualifies as an “audit committee financial expert” as defined in Item 407(D)(5) of Regulation S-K, nor do we have a Board member that qualifies as “independent” as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(14) of the FINRA Rules.
We believe that our director(s) are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The director(s) of our Company does not believe that it is necessary to have an audit committee because management believes that the Board of directors can adequately perform the functions of an audit committee. In addition, we believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the stage of our development and the fact that we have not generated any positive cash flows from operations to date.
Involvement in Certain Legal Proceedings
Our officers and sole director have not been involved in or a party in any of the following events or actions during the past ten years:
1. any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
4. being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
5. Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
6. Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7. Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:(i) Any Federal or State securities or commodities law or regulation; or(ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or(iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
8. Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Independence of Directors
We are not required to have independent members of our Board of Directors, and do not anticipate having independent Directors until such time as we are required to do so.
Code of Ethics
We have not adopted a formal Code of Ethics. The Board of Director(s) evaluated the business of the Company and the number of employees and determined that since the business is operated by a small number of persons, general rules of fiduciary duty and federal and state criminal, business conduct and securities laws are adequate ethical guidelines. In the event our operations, employees and/or Directors expand in the future, we may take actions to adopt a formal Code of Ethics.
Shareholder Proposals
Our Company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for Directors. The Board of Director(s) believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our Company does not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any specific process or procedure for evaluating such nominees. The Board of Director(s) will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.
A shareholder who wishes to communicate with our Board of Director(s) may do so by directing a written request addressed to our sole Director Ryohei Uetaki, at the address appearing on the first page of this Information Statement.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’s executive officers, directors and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of the Company’s common stock. Such officers, directors and persons are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms that they file with the SEC.
Based solely on a review of the copies of such forms that were received by the Company, or written representations from certain reporting persons that no Form 5s were required for those persons, the Company is not aware of any failures to file reports or report transactions in a timely manner during the Company’s fiscal year ended October 31, 2023.
Procedure for Nominating Directors
In 2022and 2023 we have not made any material changes to the procedures by which security holders may recommend nominees to our Board of Directors.
Family Relationships
There are no family relationships among our directors, executive officers or persons nominated to become executive officers or directors.
Involvement in Certain Legal Proceedings
During the past ten (10) years, none of our directors, persons nominated to become directors, executive officers, promoters or control persons was involved in any of the legal proceedings listen in Item 401 (f) of Regulation S-K.
Arrangements
There are no arrangements or understandings between an executive officer, director or nominee and any other person pursuant to which he was or is to be selected as an executive officer or director.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation.
The table below summarizes all compensation awarded to, earned by, or paid to our named executive officer(s) and director(s) for the year ended October 31, 2023 and for the year ended October 31, 2022 This in relation to the Company, World Scan Project, Inc.
SUMMARY COMPENSATION TABLE
Name and
principal position
Year
Salary
($)
Bonus
($)
Stock
Awards
($)
Option
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)
Nonqualified
Deferred
Compensation
Earnings ($)
All Other
Compensation
($)
Total
($)
Ryohei Uetaki
Chief Executive Officer and Sole Director (1)
213,375
0 213,375
Yasumasa Ichikawa,
Chief Technology Officer (2)
129,491 6,787 0 136,278
Ryohei Uetaki
Chief Executive Officer and Sole Director (1)
188,405
0 188,405
Yasumasa Ichikawa,
Chief Technology Officer (2)
121,678
0 121,678
(1) On October 25, 2019, Ryohei Uetaki was appointed as Chief Executive Officer, Chief Financial Officer, President, Director, Secretary, and Treasurer.
(2) On November 18, 2019, Yasumasa Ichikawa was appointed as Chief Technology Officer.
Option/SAR Grants in Last Fiscal Year
None.
Outstanding Equity Awards at Fiscal Year-End
None.
Equity Compensation Plan Information
Not applicable.
Employment Agreements of our Officers and Directors
None.
Compensation Discussion and Analysis
Director Compensation
The Board of Directors reserves the right in the future to award the members of the Board of Directors cash or stock based consideration for their services to the Company, which awards, if granted shall be in the sole determination of the Board of Directors.
Executive Compensation Philosophy
Our Board of Directors determines the compensation given to our executive officers in their sole determination. Our Board of Directors reserves the right to pay our executive or any future executives a salary, and/or issue them shares of common stock issued in consideration for services rendered and/or to award incentive bonuses which are linked to our performance, as well as to the individual executive officer’s performance. This package may also include long-term stock based compensation to certain executives, which is intended to align the performance of our executives with our long-term business strategies. Additionally, while our Board of Directors has not granted any performance base stock options to date, the Board of Directors reserves the right to grant such options in the future, if the Board in its sole determination believes such grants would be in the best interests of the Company.
Incentive Bonus
The Board of Directors may grant incentive bonuses to our executive officer and/or future executive officers in its sole discretion, if the Board of Directors believes such bonuses are in the Company’s best interest, after analyzing our current business objectives and growth, if any, and the amount of revenue we are able to generate each month, which revenue is a direct result of the actions and ability of such executives.
Long-term, Stock Based Compensation
In order to attract, retain and motivate executive talent necessary to support the Company’s long-term business strategy we may award our executive and any future executives with long-term, stock-based compensation in the future, at the sole discretion of our Board of Directors, which we do not currently have any immediate plans to award.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.
As of our fiscal year end, the Company has 10,797,350 shares of common stock and 10,000,000 shares of Series A preferred stock issued and outstanding..
*The table below is as of October 31, 2023.
Name and Address of Beneficial Owner Shares of Common Stock Beneficially Owned Common Stock Voting Percentage Beneficially Owned Preferred Stock Beneficially Owned Shares of Preferred Stock Voting Percentage Beneficially Owned Total Voting Percentage Beneficially Owned (1)
Executive Officers and Directors
Ryohei Uetaki (1)
Address: 2-18-23, Nishiwaseda, Shinjuku-Ku, Tokyo, 162-0051, Japan
10,000,000 92.6% 10,000,000 * 92.6%
5% or greater shareholders
None - - - - -
* Our Series A Preferred Stock currently has no voting rights. Currently we have 10,000,000 shares of Series A Preferred Stock issued and outstanding of which Ryohei Uetaki owns and controls 100% of through his ownership interests in SKYPR LLC.
(1) Ryohei Uetaki currently serves as our Chief Executive Officer, Chief Financial Officer, President, Director, Secretary, and Treasurer. Ryohei Uetaki owns 100% of the membership interests in SKYPR LLC., a Delaware Limited Liability Company which owns 7,000,000 shares of our common stock and 10,000,000 shares of our Series A Preferred Stock. The table above includes the share ownership of SKYPR LLC with Ryohei Uetaki collectively, in the row for Mr. Uetaki.
Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Under this rule, certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire shares (for example, upon exercise of an option or warrant) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such person by reason of such acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the following table does not necessarily reflect the person’s actual voting power at any particular date.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions.
On October 25, 2019 the Company issued 10,000,000 shares of restricted Common Stock to Ryohei Uetaki for services rendered to the Company. Additionally, on the same day, it issued 10,000,000 shares of its restricted Series A Preferred Stock to Ryohei Uetaki, also for services rendered. The aforementioned shares of common and preferred stock were all issued at par value, $0.0001, having a total value of $2,000. No monies were exchanged per the issuances and the shares were all exempt from the registration provisions of Section 5 of the Securities Act under Section 4(2) of such same said act.
On January 25, 2020, the Company entered into and consummated a Share Contribution Agreement with Ryohei Uetaki. Pursuant to this agreement Mr. Uetaki gifted to the Company, at no cost, 300 shares of common stock of World Scan Project Corporation, a Japan corporation (“WSP Japan”), which represented all of its issued and outstanding shares. The Company has since gained a 100% interest in the issued and outstanding shares of WSP Japan’s common stock and WSP Japan is now a wholly owned subsidiary of the Company. The Company and WSP Japan were under common control at the time of the acquisition. WSP Japan was incorporated under the laws of Japan on January 22, 2020. Currently, WSP Japan is headquartered in Tokyo, Japan. The Company is an industrial automation equipment manufacturer currently focused on developing and designing robots, drones, Web3 infrastructure, IoT equipment and other related products.
On February 19, 2020, Ryohei Uetaki gifted 7,000,000 shares of our Common Stock and 10,000,000 shares of our Series A Preferred Stock, which represented all of our issued and outstanding shares of Preferred Stock at the time, to SKYPR LLC, a Delaware Limited Liability Company (referred to herein as “SKYPR LLC”). Our CEO Ryohei Uetaki owns and controls 100% of the membership interests in SKYPR LLC.
For the year ended October 31, 2023, the Company borrowed $0 from Ryohei Uetaki, our CEO. The total due were $213,375 for salary and $458 for expense October 31, 2022, and were unsecured, due on demand and non-interest bearing.
Aiming to establish a new revenue source, the Company planned to enter a new business, create avatars which offer exploring opportunities in metaverse. Found less feasible to realize reasonable revenue, the Company gave up the idea and related assets were transferred to ZEXAVERSE before the Company put those in service.
Review, Approval and Ratification of Related Party Transactions
Given our small size and limited financial resources, we have not adopted formal policies and procedures for the review, approval or ratification of transactions, such as those described above, with our executive officer(s), Director(s) and significant shareholders. We intend to establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional Directors, so that such transactions will be subject to the review, approval or ratification of our Board of Directors, or an appropriate committee thereof. On a moving forward basis, our Directors will continue to approve any related party transaction.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services.
Below is the aggregate amount of fees billed for professional services rendered by our principal accountants with respect to our last two fiscal years.
Audit fees M&K CPAS, PLLC $139,552 $57,677
Mercurius and Associates LLP(*) - -
Audit related fees
Tax fees
All other fees
Total
$ $57,677
* On May 7, 2024, the Board of Directors approved the engagement of Mercurius & Associates LLP (PCAOB ID: 3223)(“MAS”) as the Company’s independent registered public accounting firm for the audit of the fiscal year ended October 31, 2023, and any reviews of interim periods thereafter. During the fiscal years ended October 31, 2022 and 2021 and through October 31, 2023, neither the Company nor anyone on its behalf consulted with MAS regarding (1) the application of accounting principles to a specified transaction, completed or proposed, or the type of audit opinion that might be rendered on the Company's financial statements, and neither a written report nor oral advice was provided to the Company that Mercurius & Associates LLP concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (2) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).
Board of Directors Pre-Approval Process, Policies and Procedures
Our principal auditors have informed our sole director of the scope and nature of each service provided. With respect to the provisions of services other than audit, review, or attest services, our principal accountants brought such services to the attention of our sole director prior to commencing such services.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits, Financial Statement Schedules.
(a) Financial Statements
1. Financial statements for our company are listed in the index under Item 8 of this document
2. All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the financial statements or notes thereto.
(b) Exhibits required by Item 601 of Regulation S-K.
Exhibit No.
Description
3.1
Certificate of Incorporation (1)
3.2
By-laws (1)
Certification of the Company’s Principal Executive and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s report on Form 10-K for the period ended October 31, 2023. (2)
Certification of the Company’s Principal Executive and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (2)
101.INS
XBRL Instance Document (3)
101.SCH
XBRL Taxonomy Extension Schema (3)
101.CAL
XBRL Taxonomy Extension Calculation Linkbase (3)
101.DEF
XBRL Taxonomy Extension Definition Linkbase (3)
101.LAB
XBRL Taxonomy Extension Label Linkbase (3)
101.PRE
XBRL Taxonomy Extension Presentation Linkbase (3)
(1)
Filed as an exhibit to the Company's Registration Statement on Form S-1, as filed with the SEC on August 26, 2020, and incorporated herein by this reference.
(2) Filed herewith.
(3) Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or Annual Report for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Exchange Act of 1934 and otherwise are not subject to liability.