UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED April 30, 20222023

OR

For the transition period from to

COMMISSION FILE NUMBER: 000-56208

World Scan Project, Inc.

(Exact name of registrant as specified in its charter)

  Issuer's telephone number: +81-3-6670-1692

Email: contact@world-scan-project.com

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes [ ] No

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 [  ] Yes [X] No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of July 29, 2022,June 8, 2023, there were 10,647,350 shares of common stock and 10,000,000 shares of preferred stock issued and outstanding.

-1-

INDEX

-2-

Table of Contents

PART I - FINANCIAL INFORMATION

WORLD SCAN PROJECT, INC.

CONSOLIDATED BALANCE SHEETS

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

F-1

Table of Contents

WORLD SCAN PROJECT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED) 

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

F-2

Table of Contents

 WORLD SCAN PROJECT, INC.

 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)

 FOR THE PERIOD ENDING APRIL 30, 20222023

(UNAUDITED) 

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

WORLD SCAN PROJECT, INC.  

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

FOR THE PERIOD ENDING APRIL 30, 20212022 

(UNAUDITED) 

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

F-3

Table of Contents

WORLD SCAN PROJECT, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED) 

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

F-4

Table of Contents

WORLD SCAN PROJECT, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

CONSOLIDATED NOTES TO FINANCIAL STATEMENTS

APRIL 30, 20222023

 (UNAUDITED)

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 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’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.

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. During the period ended April 30, 2022, we orderedcryptocurrency miners with expected delivery in the next fiscal quarter. The Company intends to capitalize on the growing popularity of cryptocurrency by expanding its operations to include the sale of cryptocurrency miners. Currently our sales team is reaching out to potential customers and our goal is to sell 50 units each month. We hope to revise our sales plan in the future, as we grow our customer base, so that the cryptocurrency miners will be a mainstay commercial product of the Company.

Our principal executive offices are located at 2-18-23, Nishiwaseda, Shinjuku-Ku, Tokyo, 169-0051, Japan.

The Company has elected October 31^st 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-lengtharm’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-lengtharm’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 ninesix 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"(“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.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, 2 to 10 years; and furniture and equipment, 1 to 5 years.

F-5

Table of Contents

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 average 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.

Translation of amounts from the local currency of the Company into US$1 has been made at the following exchange rates:

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.

The following table summarizes our revenue recognized under ASC 606 in our condensed consolidated statements of operations:operations:

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 deferred revenues. As of April 30, 2022, the Company had2023, $1,233 of deferred revenues of $4,758.are related to product sales. 

Revenue from drone imaging and video productioncrypto miners sales

During the period ended April 30, 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 drone imaging and video production isthe sale of crypto miners was recognized when the products and/or services areminers were delivered or provided to the customercustomers and the customer completescustomers completed the product inspection. Cash receiptsinspection 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. For the period ended April 30, 2023, cost of goods sold for undelivered products or services are recorded as deferred revenues.miner purchases, netted by the gross sales was $83,700,987. As of April 30, 2022, the Company had no2023, $330,232of deferred revenues are related to drone imaging and video production.deposits for 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 deferred revenues. As of April 30, 2022,2023, the Company had no deferred revenues related to the educational institution program.

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. NoThe Company recognized deferred tax assets or liabilities were recognized atof $650,604 and $307,438 as of April 30, 2022.2023 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.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 intointo 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 or the three and six months ended April 30^th are as follows:

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. 

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of April 30, 2022.2023. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. As of April 30, 20222023 and October 31, 2021,2022, the Company had no off-balance-sheet financial instruments.

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 April 30, 2023, 100% of the inventories were purchased from G-Force in the amount of $4,120.

For the period ended April 30, 2022, 91.7% of the inventories were purchased from G-Force in the amount of $5,546,529.

Concentration of Revenues

Gross revenues from customers accounting for 10% or more of total revenues are as follows:

For the period ended April 30, 2023, 28.14% of total revenue was generated from Kinoshita Group.

For the period ended April 30, 2022, 99.0% of total revenue was generated from Done Net in the amount of $13,061,272.

F-6

Table of Contents

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 some positive trends, compared with the previous fiscal years, in our financial statements as in below:

As of April 30, 2022,2023, the Company recorded net incomecash and cash equivalents of $3,085,822,$2,381,921, an increase of $2,167,706$468,434 as compared to the same period$1,913,487 in the prior fiscal year period ended October 31, 2021, and theApril 30, 2022, The Company’s major source ofincreased liquidity is derived from theincreased sales, particularly sales of drones. crypto miners.As stated in the fiscal 2021 year-end consolidated financial statements, the Company, for the yearperiod ended October 31, 2021,April 30, 2023, recorded a net income of $2,332,451$7,148,756 (+177%132% y-o-y) and earned $2,032,197 (+357%used $4,071,264 (2,225% y-o-y) in cash flows from operating activities.Additionally, during the six months ended April 30, 2023, the Company increased working capital by $8,034,660 (83%) as compared to working capital at October 31, 2022.

Having reviewed the above, the Company realizes that our concerns, whether we shall be able to continue demonstrating thosethe positive trends for the following years from the issuance of thedemonstrated in our financial statements, lies in our ability to continue to generate revenue.revenue and increase revenue going forward. Principally, the Company’sCompany'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 obligationobligation(s) in the future as well and to procure any required funds needed to meet the redemption of its debt during the normal business operation.operations.

The management alsoManagement has evaluated the estimated impact of COVID-19, which has become a significant factor for socialimpacting 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 economic activities, since the previous fiscal year,believes there to be minimal impact of COVID-19 on the Company’s operation and business results for the years following the filing of the financial statements. The Company assessed that, although it depends on future developments relating to COVID-19, the impact on dronecrypto miner sales, which is a majorcurrently 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 liquidity, shall be immaterial andoperations 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 itsthe Company’s evaluation withand considering the positive financial trends afore-mentioned,the Company has experienced year over year, e.g. the increase in net income and increase in net cash provided by operating activities, increased working capital,management believes that it has completely mitigated the circumstancecircumstances that led to a doubt with respect to the Company’s ability to continue as a going concern, i.e. dependency on a single major customer, which existed at the time of the filing of the Company’s fiscal 2020 year-endprior year report.

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 $27,585 as of April 30, 2023 and $1,847,068 as of October 31, 2022. No bad debt allowance was provided as of April 30, 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 April 30, 2023, 100% of total accounts receivable was owed to the Company by Reshare in the amount of $27,585.  

For the year ended 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 45 - ADVANCE PAYMENTS AND PREPAID EXPENSES

Advance payments are comprised of the payments for the undelivered products and other prepaid services.deliverables. As of April 30, 20222023 and October 31, 2021,2022, the Company had advance payments and other prepaid expenses of $5,970,70931,477,156 and $3,035,135, respectively.16,389,562, respectively. Details of the advance payments as of April 30, 20222023 and October 31, 20212022 are as follows:

NOTE 56 - 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 period ended April 30, 2022,2023, the Company purchased no additional long-term assets totaling approximately $243,462, of which approximately $171,310 of Leasehold improvements were added, related to our lease at Tenshodo Bldg. 12F, 4-3-9 Ginza, Chuo-ku, Tokyo.assets. The Company is depreciating thesepreviously purchased assets over a range of 3 to 10 years once they were put into use. Depreciation expense for the period ended April 30, 2022 was approximately $22,179.

During the year ended October 31, 2021, the Company purchased long-term assets, including a 360 laser scanner, and various tools, furniture and fixtures, totaling approximately $177,526. The Company is depreciating these assets over a five5-10 year period once they were put into use. Depreciation expense for the periods ended April 30, 2023and April 30, 2022 were $26,019 and $22,179, respectively.

During the year ended October 31, 2021 was2022, the Company purchased long-term assets, including building renovations, totaling approximately $16,136227,180. Details ofThe Company is depreciating these assets over a 5-10 year period once they were put into use.

NOTE 7 - DEFERRED REVENUE

Deferred revenue is the amount the Company received in advance payments asfrom the customer for their orders placed with us. As of April 30, 20222023 deferred revenue in the amount of $333,721 was mainly related to our sales of cryptocurrency miners which represents a large amount in both number of transactions and values. As of October 31, 2021 are as follows:2022, deferred revenue 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 68 - INCOME TAXES

For the periodperiods ended April 30, 2023 and 2022, the Company had income tax expense in the amount of $3,875,588 and $$1,957,109.1,957,109, 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:

As of April 30, 20222023 and October 31, 2021,2022, the Company had income tax payable totaling $1,436,056of $7,079,847 and $325,692, $3,329,572,respectively. tax payable amount includes consumption tax payable totaling $709,535 as of April 30, 2022 and $170,219 as of October 31, 2021, which does not affect to income tax expense account.

NOTE 79 - 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 April 30, 20222023 and October 31, 2021.2022.

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 10,647,350 shares of common stock issued and outstanding as of April 30, 20222023 and October 31, 2021.2022.

NOTE 810 - RELATED-PARTY TRANSACTIONS

Loan to the Company

As of April 30, 2022,2023, our CEO and Director,  to Ryohei Uetaki, has advanced to the Company approximately $458$14,911 for salary, $5,568 for health insurance and $458 for expenses. This advance is considered as a loan to the companyCompany which is unsecured, noninterest-bearing and payable on demand.

NOTE 911 - 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 3 years. We recognized $144, and $165,942in operating lease costs for the periodsix months ended April 30, 2022.2023 and April 30, 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.leasesThis information is only presented as of, and for the year ended, October 31, 2021.. As noted above, we adopted Topic 842 using a transition method that does not require application to periods prior to adoption.

NOTE 12 - 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 April 30, 2023 and October 31, 2022, the Company had accrued expenses and other payables of $6,674,514 and $2,453,668, respectively. Details of the accrued expenses and other payables as of April 30, 2023 and October 31, 2022 are as follows:

NOTE 1013 - SUBSEQUENT EVENTS  

The Company has evaluated subsequent events through July 29, 2022,June 8, 2023 , the date on which the consolidated financial statements were available to be issued and has found no significant eventsmaterial transactions to report.report except for the following:

On or about May 15, 2023, the Company announced a direct public offering to sell up to 150,000 shares of common stock, at a fixed price of $10.00 per share. This offeringbecame effective May 25, 2023. Our offering will terminate upon the earliest of (i) such time as all of the common stock has been sold pursuant to the registration statement or (ii) 365 days from the effective date of this prospectus unless extended by our Board of Directors for an additional 90 days. We may however, at any time and for any reason terminate the offering.

F-7

Table of Contents

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.”

These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions.

Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Company Overview

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’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.

We operate through our wholly owned subsidiary, World Scan Project Corporation, a Japanese Company. We are a start-up stage company currently focused on The Company is an industrial automation equipment manufacturer, designing/developing designingrobots, drones, Web3 infrastructure, IoT equipment and selling small sized drones which may be used for a variety of purposes.other related products.

Our principal executive offices are located at 2-18-23, Nishiwaseda, Shinjuku-Ku, Tokyo, 169-0051, Japan.

Liquidity and Capital Resources 

As of April 30, 20222023 we had cash and cash balance in the amount of $1,913,487.$2,381,921. Currently, our cash balance is sufficient to fund our operations without the need for additional funding.

Revenues

We recorded product revenues of $13,196,434$23,261,095 for the six months ended April 30, 2022.2023. We recorded product revenues of $4,570,702$13,196,434 for the sixmonths ended April 30, 2021. The variance is due to the fact that the company has been continuing to grow and expand their relationships with existing customers and has also been expanding its customer base by developing relationships with new customers2022..

Net Income

We recorded net income of $7,148,756 for the six months ended April 30, 2023. We recorded a net income of $3,085,822 for the six months ended April 30, 2022. We recorded a net income of $918,116 for the six months ended April 30, 2021.

Cash flow

For the six months ended April 30, 2022,2023, we had negative cash flows used in operations in the amount of $175,100.$4,071,264. The decrease in operating cash flow is attributed to prepaid manufacturing services during this this period and recognition of deferred revenues.period. For the six months ended April 30, 2022,2023, we had negativeno cash flows from investing activities in the amount of $243,462.of. For the six months ended April 30, 2022,2023, we had no cash flows from financing activities.

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 some positive trends, compared with the previous fiscal years, in our financial statements as in below:

As of April 30, 2022,2023, the Company recorded net incomecash and cash equivalents of $3,085,822,$2,381,921, an increase of $2,167,706$468,434 as compared to the same period$1,913,487 in the prior fiscal year period ended October 31, 2021, andApril 30, 2022. For the period ended, the Company’s major sourcesources of liquidity derived from the sales of drones.crypto miner sales. As stated in the fiscal 2021 year-end consolidated financial statements the Company, for the yearperiod ended October 31, 2021,April 30, 2023, the Company recorded a net income of $2,332,451$7,148,756 (+177%132% y-o-y) and earned $2,032,197 (+357%used $4,071,264 (2,225% y-o-y) in cash flows from operating activities. As a result, the Company’s working capital has grown to approximately $17.7 million compared to October 31, 2022 working capital of approximately $9.7 million, an 83% increase .

Having reviewed the above, the Company realizes that our concerns, whether we shall be able to continue demonstrating thosethe positive trends for the following years from the issuance of thedemonstrated in our financial statements lies in our ability to continue to generate revenue.revenue and increase revenue going forward. Principally, the Company’sCompany'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 obligationobligation(s) in the future as well and to procure any required funds needed to meet the redemption of its debt during the normal business operation.operations.

The management also

Management has evaluated the estimated impact of COVID-19, which has become a significant factor for socialimpacting 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 economic activities, since the previous fiscal year,believes there to be minimal impact of COVID-19 on the Company’s operation and business results for the years following the filing of the financial statements. The Company assessed that, although it depends on future developments relating to COVID-19, the impact on dronecrypto miner sales, which is a majorcurrently 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 liquidity, shall be immaterial andoperations 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 itsthe Company’s evaluation withand considering the positive financial trends afore-mentionedit has experienced year over year, e.g. the increase in net income theand increase in working capital, management believes that it has completely mitigated the circumstancecircumstances that led to a doubt with respect to the Company’s ability to continue as a going concern, i.e. dependency on a single major customer, which existed at the time of the filing of the Company’s fiscal 2020 year-endprior year report.

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.

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.

-3-

Table of Contents

Management’s Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and our chief financial officer (who is acting as our principal executive officer, principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.

As of April 30, 2022,2023, we carried out an evaluation, under the supervision of our chief executive officer, with the participation of our chief financial officer, of the effectiveness of the design and the operation of our disclosure controls and procedures. The officers concluded that the disclosure controls and procedures were not effective as of the end of the period covered by this report due to material weaknesses identified below. 

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: domination of management by a single individual without adequate compensating controls, lack of a majority of outside directors on board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; inadequate segregation of duties consistent with control objectives, and lack of an audit committee. These material weaknesses were identified by our Chief Executive Officer, who also serves as our Chief Financial Officer, in connection with the above evaluation.

Inherent limitations on effectiveness of controls

Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting that have occurred for the fiscal quarter ended April 30, 2022,2023, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

-4-

Table of Contents

PART II-OTHER INFORMATION

There are no legal proceedings against the Company and the Company is unaware of such proceedings contemplated against it.

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.

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. 

Uses of Proceeds from Registered Securities

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.

These funds are planned to be used for R&D, marketing and working capital.

None.

Not applicable.

None.

-5-

Table of Contents

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

World Scan Project, Inc.

(Registrant)

By: /s/ Ryohei Uetaki 

Name: Ryohei Uetaki

Chief Executive Officer and Chief Financial Officer

Dated: July 29, 2022June 8, 2023 

-6-