| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a)
Basis of Presentation and Principals of Consolidation The
accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission
(“SEC”). The unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.
All significant intercompany accounts and transactions have been eliminated. The unaudited consolidated financial statements do not include
all of the information and disclosure required by the U.S. GAAP for complete financial statements. Interim results are not necessarily
indicative of results for a full year. In the opinion of management, all adjustments consisting of a normal recurring nature considered
necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have
been included. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial
statements and related notes for the years ended November 30, 2023 and 2022. The
consolidated balance sheets are presented in an unclassified format since the Company has substantial operations in the real estate industry
and its operating cycle is greater than one year. (b)
Foreign Currency The
Company maintains its books and record in its local currency, Japanese YEN (“JPY” or “¥”), 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 other income (expenses)
in the unaudited consolidated statements of operations and comprehensive income. The
reporting currency of the Company is the United States Dollars (“USD” or “$”), and the accompanying unaudited
consolidated financial statements have been expressed in USD. In accordance with ASC Topic 830-30, “Translations of Financial Statements”,
assets and liabilities of the Company whose functional currency is not USD are translated into USD, 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 the
translation of financial statements are recorded as a separate component of accumulated other comprehensive loss within the unaudited
consolidated statements of changes in shareholders’ equity. Translation
of amounts from local currency of the Company into $1 has been made at the following exchange rates: SCHEDULE OF EXCHANGE RATE TRANSLATION OF AMOUNTS FROM LOCAL CURRENCY
May 31, 2024 May 31, 2023
Current JPY: $1 exchange rate 157.19 139.78
Average JPY: $1 exchange rate 150.04 133.83 (c)
Use of Estimates In
preparing the unaudited consolidated financial statements in conformity U.S. GAAP, the management is required to make certain 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. These estimates are based
on information available as of the date of the unaudited consolidated financial statements. Significant estimates required to be made
by management include, but are not limited to, the impairment of long-lived assets, useful lives of property and equipment, valuation
allowance of deferred tax assets, uncertain tax positions, purchase price allocation of acquired real estates, allowance for credit losses
and implicit interest rate of operating leases. Actual results could differ from those estimates. (d)
Investments Investments
in funds that report net asset value (“NAV”) per share We
hold investments in Japanese pooled funds. These funds are generally readily redeemable at their net asset values. The fair value of
investment funds is measured at their net asset values per share (or its equivalent) as a practical expedient. Investments
in privately held companies and organizations that do not report NAV per share Investments
in privately held entities that do not report NAV per share are accounted for using a measurement alternative, under which these investments
are measured at cost, adjusted for observable price changes and impairments, with changes recognized in other income (expenses). Investments
accounted for under equity method We
use the equity method to account for investments in silent partnerships, which is a structure similar to limited partnership, that we
do not have a controlling financial interest but have the ability to influence the operating and financial policies of the investees.
Under the equity method of accounting, we initially recognize our investments at cost and subsequently adjust the carrying amount of
the investments for our share of earnings or losses reported by the investees, distributions received, and other-than-temporary impairments.
Losses in excess of the carrying amount of our equity method investments, if any, are recognized when (i) we are unlikely to abandon
the investee due to operating considerations, or (ii) it is anticipated that the investee’s return to profitability is imminent.
Losses in excess of the carrying amount of our equity method investments are presented as a liability in the unaudited consolidated balance
sheets. (e)
Real Estate Inventories Real
estate inventories represent mainly small adjacent individual lots, which consist of lands and/or lands with buildings attached, that
will be grouped into larger lots for the purpose of selling to developers. Substantially all of our real estate inventories are in the
process of combining into larger lots. Real estate inventories are recorded at the lower of cost or fair value less cost to sell. If
an asset’s fair value less cost to sell, based on discounted future cash flows, management estimates or market comparisons, is
less than its carrying amount, an allowance is recorded against the asset. The
cost basis of the real estate inventories includes all direct acquisition costs including but not limited to the property purchase price,
acquisition costs, dismantlement costs, capitalized interest, capitalized real estate taxes and other costs. Interests and real estate
taxes are not capitalized unless active redevelopment is underway. When acquiring real estate with existing buildings, we allocate the
purchase price between land, building and intangibles related to in-place leases, if any, based on their relative fair values. When
real estate inventories are leased to customers under operating leases, the real estate assets are transferred to property and equipment.
A real estate asset that is reclassified is measured and recorded individually at the lower of (a) its carrying amount adjusted for any
depreciation expense that would have been recognized had the real estate asset been continuously classified as held for lease or (b)
the fair value at the date of the decision not to sell. During the six months ended May 31, 2024 and 2023, there was no reclassification
of real estate inventories to property and equipment. (f)
Property and Equipment, Net Property
and equipment, including real estate properties held for lease, are measured using the cost model and is stated at cost less accumulated
depreciation. Acquisition cost includes mainly the costs directly attributable to the acquisition and the initial estimated dismantlement,
removal, and restoration costs associated with the assets. Depreciation is calculated using the straight-line and declining methods over
the estimated useful lives, as more details follow. Depreciation is included in cost of revenues and selling, general and administrative
expenses and is allocated based on estimated usage for each class of asset. Certain
buildings were still under construction as of May 31, 2024 and November 30, 2023, and the costs of construction were reported as construction
in progress. No provision for depreciation is made on the assets under construction until such time as the relevant assets are completed
and ready for their intended use. SCHEDULE
DEPRECIATION METHOD OF PROPERTY AND EQUIPMENT
Depreciation Method Useful Life
Buildings, including buildings held for lease Straight-line method 23 47
Facilities attached to buildings Straight-line method 3 15
Vehicles Declining balance method 5 10
Tools, furniture and fixture Declining balance method 3 15
Land Not depreciated -
Software* Straight-line method 5
* Represent
software that is non-detachable to the hardware. Expenditures
for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures
for major renewals and betterments which substantially extend the useful life of assets are capitalized. When items are retired or otherwise
disposed of, income is charged or credited for the difference between net book value of the item disposed and proceeds realized thereon. The
Company holds certain real estate assets for the purpose of leasing and generating rental revenue, which are included in property and
equipment, net. The Company reclassifies real estate assets it plans to sell to real estate inventories when management has determined
that the held for sale criteria have been met and records those assets at the lower of their carrying amount of fair values less costs
to sell. During the six months ended May 31, 2024 and 2023, real estate assets held for lease in the carrying amount of $ 6,179,266 Nil The
classification of cash flows associated with the purchase and sale of real estate assets is based on the activity that is likely to be
the predominant source or use of cash flows for the assets. (g)
Presentation of Cash Flows Associated with Real Estate Assets The
Company classifies cash flows associated with real estate assets in accordance with ASC 230, Statement of Cash Flows (h)
Leases The
Company determines if an arrangement is or contains a lease at inception or modification of the arrangement. An arrangement is or contains
a lease if there are identified assets and the right to control the use of an identified asset is conveyed for a period in exchange for
consideration. Control over the use of the identified assets means the lessee has both the right to obtain substantially all of the economic
benefits from the use of the asset and the right to direct the use of the asset. We
classify our leases as either finance leases or operating leases if we are the lessee, or sale-type, direct financing, or operating leases
if we are the lessor. We use the following criteria to determine if a lease is a finance lease (as a lessee) or sales-type or direct
financing lease (as a lessor):
(i) ownership
is transferred from lessor to lessee by the end of the lease term;
(ii) an
option to purchase is reasonably certain to be exercised;
(iii) the
lease term is for the major part of the underlying asset’s remaining economic life;
(iv) the
present value of lease payments equals or exceeds substantially all of the fair value of the underlying assets; or
(v) the
underlying asset is specialized and is expected to have no alternative use at the end of the lease term. If
we meet any of the above criteria, we account for the lease as a finance, a sales-type, or a direct financing lease. If we do not meet
any of the criteria, we account for the lease as an operating lease. Lessee
accounting The
Company recognizes right-of-use assets and lease liabilities for all leases other than those with a term of twelve months or less as
the Company has elected to apply the short-term lease recognition exemption. Right-of-use assets represent the Company’s right
to use an underlying asset for the lease term. Lease liabilities represent the Company’s obligation to make lease payments arising
from the lease. Right-of-use assets and lease liabilities are classified and recognized at the commencement date of a lease. Lease liabilities
are measured based on the present value of fixed lease payments over the lease term. Right-of-use assets consist of (i) initial measurement
of the lease liability; (ii) lease payments made to the lessor at or before the commencement date less any lease incentives received;
and (iii) initial direct costs incurred by the Company. As
the rates implicit on the Company’s leases for which it is the lessee are not readily determinable, the Company uses its incremental
borrowing rate based on information available at the commencement date in determining the present value of lease payments. When determining
the incremental borrowing rate, the Company assesses multiple variables such as lease term, collateral, economic conditions, and its
creditworthiness. From
time to time, we may enter into sublease agreements with third parties. Our subleases generally do not relieve us of our primary obligations
under the corresponding head lease. As a result, we account for the head lease based on the original assessment at lease inception. We
determine if the sublease arrangement is either a sales-type, direct financing, or operating lease at inception of the sublease. If the
total remaining lease cost on the head lease for the term of the sublease is greater than the anticipated sublease income, the right-of-use
asset is assessed for impairment. Our subleases are generally operating leases and we recognize sublease income on a straight-line basis
over the sublease term. Lessor
accounting – operating leases We
account for the revenue from our lease contracts by utilizing the single component accounting policy. This policy requires us to account
for, by class of underlying asset, the lease component and nonlease component(s) associated with each lease as a single component if
two criteria are met:
(i) the
timing and pattern of transfer of the lease component and the nonlease component(s) are the same; and
(ii) the
lease component would be classified as an operating lease if it were accounted for separately. Lease
components consist primarily of fixed rental payments, which represent scheduled rental amounts due under our leases. Nonlease components
consist primarily of tenant recoveries representing reimbursements of rental operating expenses, including recoveries for utilities,
repairs and maintenance and common area expenses. If
the lease component is the predominant component, we account for all revenues under such lease as a single component in accordance with
the lease accounting standard. Conversely, if the nonlease component is the predominant component, all revenues under such lease are
accounted for in accordance with the revenue recognition accounting standard. Our operating leases qualify for the single component accounting,
and the lease component in each of our leases is predominant. Therefore, we account for all revenues from our operating leases under
the lease accounting standard and classify these revenues as rental income. We
commence recognition of rental income related to the operating leases at the date the property is ready for its intended use by the tenant
and the tenant takes possession or controls the physical use of the leased asset. Income from rentals related to fixed rental payments
under operating leases is recognized on a straight-line basis over the respective operating lease terms. Amounts received currently but
recognized as revenue in future periods are classified in other liabilities in our unaudited consolidated balance sheets. (i)
Impairment of Long-Lived Assets Long-lived
assets with finite lives, primarily real estate inventories, property and equipment, including real estate properties held for lease,
and operating lease right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below
the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no (j)
Revenue Recognition The
Company recognizes revenue from sales of real estate, providing real estate brokerage service under ASC Topic 606, “Revenue from
Contracts with Customers”. To
determine revenue recognition for contracts with customers, the Company performs the following five steps : (i) identify the contract(s)
with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable
consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price
to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance
obligation. Revenue amount represents the invoiced value, net of consumption tax and applicable local government levies, if any. The
consumption tax on sales is calculated at 10% of gross sales. The
Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or
agent in the transaction. The determination of whether the Company acts as a principal or an agent in a transaction is based on the evaluation
of whether (i) the Company is primarily responsible for fulfilling the promise to provide the specified goods or service, (ii) the Company
has inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer
and (iii) the Company has discretion in establishing the price for the specified good or service. If the terms of a transaction do not
indicate the Company is acting as a principal in the transaction, then the Company is acting as an agent in the transaction and the associated
revenues are recognized on a net basis. The
Company has utilized the practical expedient in ASC Topic 606 and elected not to capitalize contract costs for contracts with customers
with durations less than one year. The Company does not have significant remaining unfulfilled performance obligations or contract balances. The
Company recognizes revenue from rental services under ASC Topic 842, “Leases”. The
Company currently generates its revenue from the following main sources: Real
estate sales Revenues
from real estate sales are recognized when the parties are bound by the terms of a contract, consideration has been exchanged, title
and other attributes of ownership have been conveyed to the buyer by means of a closing and the Company is not obligated to perform further
significant development of the specific property sold, which is generally upon the delivery of
the real estate, which generally coincides with the receipt of cash consideration from the customer. Our contracts with customers contain
a single performance obligation and we do not provide warranties for sold real estate. Rental
revenue Rental
income is generally recognized on a straight-line basis over the terms of the tenancy agreements. For real estate leases, these contracts
are treated as leases for accounting purposes, rather than contracts with customers subject to ASC Topic 606. Also see Note 2(h). Real
estate brokerage revenue We
recognize commission-based brokerage revenue upon closing of a brokerage transaction. The transaction price is either fixed or calculated
by taking the agreed upon commission rate and applying that to the real estate’s selling price. Brokerage revenue primarily contains
a single performance obligation that is satisfied upon the closing of a real estate services transaction, at which point the entire transaction
price is earned. We are not entitled to any commission until the performance obligation is satisfied and are not owed any commission
for unsuccessful transactions, even if services have been provided. (k)
Concentration of Credit Risk Financial
instruments that potentially subject the Company to credit risk consist primarily of accounts receivable. The Company does not require
collateral or other security to support these receivables. The Company conducts periodic reviews of the financial condition and payment
practices of its customers to minimize collection risk on accounts receivable. For
the six months ended May 31, 2024, no customer represents more than 10 10 As
of May 31, 2024, customer C, G, H, I, and J represent 13 31 25 13 13 60 40 As
of May 31, 2024 and November 30, 2023, vendor A, a related party, represents 88 95 (l)
Stock Based Compensation The
Company accounts for stock based compensation awards in accordance with ASC Topic 718, “Compensation – Stock Compensation.”
The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the unaudited
consolidated statements of operations and comprehensive income based on the estimated fair value of those awards on the grant date and
amortized on a straight-line basis over the requisite service period or vesting period. The Company records forfeitures as they occur. (m)
Fair Value Measurements The
Company performs fair value measurements in accordance with ASC Topic 820. Fair value is defined as the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic
820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon
the lowest level of input that is significant to the fair value measurement. ASC Topic 820 establishes three levels of inputs that may
be used to measure fair value:
● Level
1: quoted prices in active markets for identical assets or liabilities;
● Level
2: inputs other than Level 1 that are observable, either directly or indirectly; or
● Level
3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets
or liabilities. As
of May 31, 2024 and November 30, 2023, the carrying values of cash and cash equivalents, accounts receivable and accounts and other payables
approximated their fair values reported in the unaudited consolidated balance sheets due to the short-term maturities of these instruments.
Debt that bears variable interest rates index to prime also approximates fair value as it reprices when market interest rates change. (n)
Commitments and Contingencies Liabilities
for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable
that a liability has been incurred and the amount of the assessment can be reasonably estimated. (o)
Recent Accounting Pronouncements In November 2023, the
FASB issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment
Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures
about significant segment expenses. ASU No. 2023-09 is effective for public entities for annual reporting periods beginning after December
15, 2023, on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard
update on its consolidated financial statements and related disclosures. In
December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures (“ASU
2023-09”), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in
ASU 2023-09 provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid
information. ASU 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024 and for
other entities for annual periods beginning after December 15, 2025. Early adoption is permitted. The guidance should be applied
prospectively, but entities have the option to apply it retrospectively for each period presented. The Company is currently
evaluating the impact of this accounting standard update on its consolidated financial statements and
related disclosures. | NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a)
Basis of Presentation and Principals of Consolidation The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission
(“SEC”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated. The
consolidated balance sheets are presented in an unclassified format since the Company has substantial operations in the real estate industry
and its operating cycle is greater than one year. (b)
Foreign Currency The
Company maintains its books and record in its local currency, Japanese YEN (“JPY” or “¥”), 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 other income (expenses)
in the consolidated statements of operations and comprehensive income. The
reporting currency of the Company is the United States Dollars (“USD” or “$”), and the accompanying consolidated
financial statements have been expressed in USD. In accordance with ASC Topic 830-30, “Translations of Financial Statements”,
assets and liabilities of the Company whose functional currency is not USD are translated into USD, 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 the translation of financial statements are recorded as a separate component of accumulated other comprehensive income
(loss) within the statements of changes in shareholders’ equity. Translation
of amounts from local currency of the Company into $1 has been made at the following exchange rates: SCHEDULE OF EXCHANGE RATE TRANSLATION OF AMOUNTS FROM LOCAL CURRENCY
November 30, November 30, November 30,
2023 2022 2021
Current JPY: $1 exchange rate 147.87 139.31 113.22
Average JPY: $1 exchange rate 139.75 129.69 109.00 (c)
Use of Estimates In
preparing the consolidated financial statements in conformity U.S. GAAP, the management is required to make certain 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. These estimates are based on information available
as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not
limited to, the impairment of long-lived assets, useful lives of property and equipment, valuation allowance of deferred tax assets,
uncertain tax positions, purchase price allocation of acquired real estates, allowance for credit losses and implicit interest rate of
operating leases. Actual results could differ from those estimates. (d)
Cash and Cash Equivalents Cash
and cash equivalents include cash on hand and deposits in banks and other financial institutions that are unrestricted as to withdrawal
or use, and which have original maturities of three months or less. The Company maintains all of its bank accounts in Japan. Cash balances
in bank accounts in Japan are insured by the Deposit Insurance Corporation of Japan subject to certain limitations. (e)
Restricted Cash Restricted
cash represents cash pledged to financial institutions as collateral for the Company’s bank loans. The restricted cash is not available
for withdrawal or the Company’s general use until after the corresponding bank loans are repaid. (f)
Term Deposits Term
deposits consist of deposits placed with financial institutions with original maturities of greater than three months. (g)
Accounts Receivable Accounts
receivable represents the Company’s right to an amount of consideration that is unconditional (i.e., only the passage of time is
required before payment of the consideration is due). The Company’s accounts receivable balances are unsecured, bear no interest
and are due upon normally within a year from the date of the sale. The
allowance for credit losses reflects the Company’s current estimate of credit losses expected to be incurred over the life of the
receivables. The Company considers various factors in establishing, monitoring, and adjusting its allowance for credit losses including
the aging of receivables and aging trends, customer creditworthiness and specific exposures related to particular customers. The Company
also monitors other risk factors and forward-looking information, such as country specific risks and economic factors that may affect
a customer’s ability to pay in establishing and adjusting its allowance for credit losses. Accounts receivable balances are written
off after all collection efforts have ceased. No allowance for credit losses were reserved as of November 30, 2023 and 2022. (h)
Investments Investments
in funds that report net asset value (“NAV”) per share We
hold investments in Japanese pooled funds. These funds are generally readily redeemable at their net asset values. The fair value of
investment funds is measured at their net asset values per share (or its equivalent) as a practical expedient. Investments
in privately held companies and organizations that do not report NAV per share Investments
in privately held entities that do not report NAV per share are accounted for using a measurement alternative, under which these investments
are measured at cost, adjusted for observable price changes and impairments, with changes recognized in other income (expenses). Investments
accounted for under equity method We
use the equity method to account for investments in silent partnerships, which is a structure similar to limited partnership, that we
do not have a controlling financial interest but have the ability to influence the operating and financial policies of the investees.
Under the equity method of accounting, we initially recognize our investments at cost and subsequently adjust the carrying amount of
the investments for our share of earnings or losses reported by the investees, distributions received, and other-than-temporary impairments.
Losses in excess of the carrying amount of our equity method investments, if any, are recognized when (i) we are unlikely to abandon
the investee due to operating considerations, or (ii) it is anticipated that the investee’s return to profitability is imminent.
Losses in excess of the carrying amount of our equity method investments are presented as a liability in the consolidated balance sheets. (i)
Real Estate Inventories Real
estate inventories represent mainly small adjacent individual lots, which consist of lands and/or lands with buildings attached, that
will be grouped into larger lots for the purpose of selling to developers. Substantially all of our real estate inventories are in the
process of combining into larger lots. Real estate inventories are recorded at the lower of cost or fair value less cost to sell. If
an asset’s fair value less cost to sell, based on discounted future cash flows, management estimates or market comparisons, is
less than its carrying amount, an allowance is recorded against the asset. The
cost basis of the real estate inventories includes all direct acquisition costs including but not limited to the property purchase price,
acquisition costs, dismantlement costs, capitalized interest, capitalized real estate taxes and other costs. Interests and real estate
taxes are not capitalized unless active redevelopment is underway. When acquiring real estate with existing buildings, we allocate the
purchase price between land, building and intangibles related to in-place leases, if any, based on their relative fair values. (j)
Prepaid Expenses Prepaid
expenses represent prepayments made to landowners and other suppliers for purchasing real estate inventories and other operational
purpose. (k)
Property and Equipment, Net Property
and equipment, including real estate properties held for lease, are measured using the cost model and is stated at cost less accumulated
depreciation. Acquisition cost includes mainly the costs directly attributable to the acquisition and the initial estimated dismantlement,
removal, and restoration costs associated with the assets. Depreciation is calculated using the straight-line and declining methods over
the estimated useful lives, as more details follow. Depreciation is included in cost of revenues and selling, general and administrative
expenses and is allocated based on estimated usage for each class of asset. Certain
buildings were still under construction as of November 30, 2023 and 2022, and the costs of construction were reported as
construction in progress. No provision for depreciation is made on the assets under construction until such time as the relevant assets
are completed and ready for their intended use. SCHEDULE
DEPRECIATION METHOD OF PROPERTY AND EQUIPMENT
Depreciation
Method Useful
Life
Buildings,
including buildings held for lease Straight-line
method 23 47
Facilities
attached to buildings Straight-line
method 3 15
Vehicles Declining
balance method 5 10
Tools,
furniture and fixture Declining
balance method 3 15
Land Not
depreciated -
Software* Straight-line
method 5
* Represent
software that is non-detachable to the hardware. Expenditures
for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures
for major renewals and betterments which substantially extend the useful life of assets are capitalized. When items are retired or otherwise
disposed of, income is charged or credited for the difference between net book value of the item disposed and proceeds realized thereon. (l)
Corporate-owned Life Insurance Policies The
Company has purchased corporate-owned life insurance policies to insure the life of its Chief Executive Officer (“CEO”).
Management considers these policies to be operating assets. These insurance policies are recorded at their cash surrender values, included
in other assets in the consolidated balance sheets with change in cash surrender value during the period recorded in selling, general
and administrative expenses. (m)
Leases The
Company determines if an arrangement is or contains a lease at inception or modification of the arrangement. An arrangement is or contains
a lease if there are identified assets and the right to control the use of an identified asset is conveyed for a period in exchange for
consideration. Control over the use of the identified assets means the lessee has both the right to obtain substantially all of the economic
benefits from the use of the asset and the right to direct the use of the asset. We
classify our leases as either finance leases or operating leases if we are the lessee, or sale-type, direct financing, or operating leases
if we are the lessor. We use the following criteria to determine if a lease is a finance lease (as a lessee) or sales-type or direct
financing lease (as a lessor):
(i) ownership
is transferred from lessor to lessee by the end of the lease term;
(ii) an
option to purchase is reasonably certain to be exercised;
(iii) the
lease term is for the major part of the underlying asset’s remaining economic life;
(iv) the
present value of lease payments equals or exceeds substantially all of the fair value of the underlying assets; or
(v) the
underlying asset is specialized and is expected to have no alternative use at the end of the lease term. If
we meet any of the above criteria, we account for the lease as a finance, a sales-type, or a direct financing lease. If we do not meet
any of the criteria, we account for the lease as an operating lease. Lessee
accounting The
Company recognizes right-of-use assets and lease liabilities for all leases other than those with a term of twelve months or less as
the Company has elected to apply the short-term lease recognition exemption. Right-of-use assets represent the Company’s right
to use an underlying asset for the lease term. Lease liabilities represent the Company’s obligation to make lease payments arising
from the lease. Right-of-use assets and lease liabilities are classified and recognized at the commencement date of a lease. Lease liabilities
are measured based on the present value of fixed lease payments over the lease term. Right-of-use assets consist of (i) initial measurement
of the lease liability; (ii) lease payments made to the lessor at or before the commencement date less any lease incentives received;
and (iii) initial direct costs incurred by the Company. As
the rates implicit on the Company’s leases for which it is the lessee are not readily determinable, the Company uses its incremental
borrowing rate based on information available at the commencement date in determining the present value of lease payments. When determining
the incremental borrowing rate, the Company assesses multiple variables such as lease term, collateral, economic conditions, and its
creditworthiness. From
time to time, we may enter into sublease agreements with third parties. Our subleases generally do not relieve us of our primary obligations
under the corresponding head lease. As a result, we account for the head lease based on the original assessment at lease inception. We
determine if the sublease arrangement is either a sales-type, direct financing, or operating lease at inception of the sublease. If the
total remaining lease cost on the head lease for the term of the sublease is greater than the anticipated sublease income, the right-of-use
asset is assessed for impairment. Our subleases are generally operating leases and we recognize sublease income on a straight-line basis
over the sublease term. Lessor
accounting – operating leases We
account for the revenue from our lease contracts by utilizing the single component accounting policy. This policy requires us to account
for, by class of underlying asset, the lease component and nonlease component(s) associated with each lease as a single component if
two criteria are met:
(i) the
timing and pattern of transfer of the lease component and the nonlease component(s) are the same; and
(ii) the
lease component would be classified as an operating lease if it were accounted for separately. Lease
components consist primarily of fixed rental payments, which represent scheduled rental amounts due under our leases. Nonlease components
consist primarily of tenant recoveries representing reimbursements of rental operating expenses, including recoveries for utilities,
repairs and maintenance and common area expenses. If
the lease component is the predominant component, we account for all revenues under such lease as a single component in accordance with
the lease accounting standard. Conversely, if the nonlease component is the predominant component, all revenues under such lease are
accounted for in accordance with the revenue recognition accounting standard. Our operating leases qualify for the single component accounting,
and the lease component in each of our leases is predominant. Therefore, we account for all revenues from our operating leases under
the lease accounting standard and classify these revenues as rental income. We
commence recognition of rental income related to the operating leases at the date the property is ready for its intended use by the tenant
and the tenant takes possession or controls the physical use of the leased asset. Income from rentals related to fixed rental payments
under operating leases is recognized on a straight-line basis over the respective operating lease terms. Amounts received currently but
recognized as revenue in future periods are classified in other liabilities in our consolidated balance sheets. (n)
Impairment of Long-Lived Assets Long-lived
assets with finite lives, primarily real estate inventories, property and equipment, including real estate properties held for lease,
and operating lease right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. If the estimated cash flows from the use of the asset and its eventual disposition are below
the asset’s carrying value, then the asset is deemed to be impaired and written down to its fair value. There were no
impairments of these assets during the years
ended November 30, 2023, 2022 and 2021. (o)
Revenue Recognition The
Company recognizes revenue from sales of real estate, providing real estate brokerage service under ASC Topic 606, “Revenue from
Contracts with Customers”. To
determine revenue recognition for contracts with customers, the Company performs the following five steps : (i) identify the contract(s)
with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable
consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price
to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance
obligation. Revenue amount represents the invoiced value, net of consumption tax and applicable local government levies, if any. The
consumption tax on sales is calculated at 10% of gross sales. The
Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or
agent in the transaction. The determination of whether the Company acts as a principal or an agent in a transaction is based on the evaluation
of whether (i) the Company is primarily responsible for fulfilling the promise to provide the specified goods or service, (ii) the Company
has inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer
and (iii) the Company has discretion in establishing the price for the specified good or service. If the terms of a transaction do not
indicate the Company is acting as a principal in the transaction, then the Company is acting as an agent in the transaction and the associated
revenues are recognized on a net basis. The
Company has utilized the practical expedient in ASC Topic 606 and elected not to capitalize contract costs for contracts with customers
with durations less than one year. The Company does not have significant remaining unfulfilled performance obligations or contract balances. The
Company recognizes revenue from rental services under ASC Topic 842, “Leases”. The
Company currently generates its revenue from the following main sources: Real
estate sales Revenues
from real estate sales are recognized when the parties are bound by the terms of a contract, consideration has been exchanged, title
and other attributes of ownership have been conveyed to the buyer by means of a closing and the Company is not obligated to perform further
significant development of the specific property sold, which is generally upon the delivery of
the real estate, which generally coincides with the receipt of cash consideration from the customer. Our contracts with customers contain
a single performance obligation and we do not provide warranties for sold real estate. Rental
revenue Rental
income is generally recognized on a straight-line basis over the terms of the tenancy agreements. For real estate leases, these contracts
are treated as leases for accounting purposes, rather than contracts with customers subject to ASC Topic 606. Also see Note 2(m). Real
estate brokerage revenue We
recognize commission-based brokerage revenue upon closing of a brokerage transaction. The transaction price is either fixed or calculated
by taking the agreed upon commission rate and applying that to the real estate’s selling price. Brokerage revenue primarily contains
a single performance obligation that is satisfied upon the closing of a real estate services transaction, at which point the entire transaction
price is earned. We are not entitled to any commission until the performance obligation is satisfied and are not owed any commission
for unsuccessful transactions, even if services have been provided. (p)
Advertising Expenses The
Company expenses advertising costs as they incurred. Total advertising expenses were $ 6,787 ,
$ 97,360
and $ 49,242
for the years ended November 30, 2023,
2022 and 2021, respectively, and have been included as part of selling, general and administrative expenses. (q)
Concentration of Credit Risk Financial
instruments that potentially subject the Company to credit risk consist primarily of accounts receivable. The Company does not require
collateral or other security to support these receivables. The Company conducts periodic reviews of the financial condition and payment
practices of its customers to minimize collection risk on accounts receivable. For
the year ended November 30, 2023, no customer represents more than 10 %
of the Company’s total revenues. For the year
ended November 30, 2022, customer A accounts for 12 %
of the Company’s total revenues. For the year ended November 30, 2021, customer B accounts for 14 %
of the Company’s total revenues. As
of November 30, 2023, customer C and E represent 60 %
and 40 %
of the Company’s total outstanding accounts receivable, respectively.
As of November 30, 2022, customer C and D account for 38 %
and 38 %
of the Company’s total accounts receivable, respectively. As
of November 30, 2023 and 2022, vendor A, a related party, represents 95 %
of the Company’s total outstanding accounts and other payables. (r)
Segment Reporting ASC
Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management
approach model is based on the way a company’s chief operating decision maker organizes segments within the company for making
operating decisions assessing performance and allocating resources. Reportable segments are based on products and services, geography,
legal structure, management structure, or any other manner in which management disaggregates a company. Management
determined the Company’s operations constitute a single reportable segment. (s)
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 shareholders’ equity during a period
from non-owner sources. (t)
Net Income Per Share Basic
net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting
period. Diluted net income per share reflects the potential dilution that could occur if stock options and other commitments to issue
common shares were exercised or equity awards vest resulting in the issuance of common shares that could share in the net income of the
Company. (u)
Stock Based Compensation The
Company accounts for stock based compensation awards in accordance with ASC Topic 718, “Compensation – Stock Compensation.”
The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the consolidated
statements of operations and comprehensive income based on the estimated fair value of those awards on the grant date and amortized on
a straight-line basis over the requisite service period or vesting period. The Company records forfeitures as they occur. (v)
Related Parties and Transactions The
Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC Topic 850, “Related
Party Disclosures” and other relevant ASC standards. Parties,
which can be an entity or individual, are considered to be related if they have the ability, directly or indirectly, to control the Company
or exercise significant influence over the Company in making financial and operational decisions. Entities are also considered to be
related if they are subject to common control or common significant influence. 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. (w)
Income Taxes Income
taxes are accounted for using an asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income
Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current
period and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s
financial statements or tax returns. Deferred tax assets also include the prior years’ net operating losses carried forward. 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 the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred
tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or
all of the deferred tax assets will not be realized. The
Company follows ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on recognition of income tax assets
and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated
with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Under
the provisions of ASC Topic 740, when tax returns are filed, it is likely that some positions taken would be sustained upon examination
by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position
that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which,
based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination,
including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions.
Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more
than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax
positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the
accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general
and administrative expenses in the statements of operations. (x)
Fair Value Measurements The
Company performs fair value measurements in accordance with ASC Topic 820. Fair value is defined as the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic
820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. An asset’s or a liability’s categorization within the fair value hierarchy is based upon
the lowest level of input that is significant to the fair value measurement. ASC Topic 820 establishes three levels of inputs that may
be used to measure fair value:
● Level
1: quoted prices in active markets for identical assets or liabilities;
● Level
2: inputs other than Level 1 that are observable, either directly or indirectly; or
● Level
3: unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets
or liabilities. As
of November 30, 2023 and 2022, the carrying values of cash and cash equivalents, accounts receivable and accounts and other
payables approximated their fair values reported in the consolidated balance sheets due to the short-term maturities of these instruments.
Debt that bears variable interest rates index to prime also approximates fair value as it reprices when market interest rates
change. (y)
Commitments and Contingencies Liabilities
for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable
that a liability has been incurred and the amount of the assessment can be reasonably estimated. (z)
Recent Accounting Pronouncements In
October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements - Codification Amendment in Response to the SEC’s Disclosure
Update and Simplification Initiative.” This ASU modified the disclosure and presentation requirements of a variety of codification
topics by aligning them with the SEC’s regulations. The amendments to the various topics should be applied prospectively, and the
effective date will be determined for each individual disclosure based on the effective date of the SEC’s removal of the related
disclosure. If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, then this
ASU will not become effective. Early adoption is prohibited. The Company does not expect the amendments of this accounting standard update
to have a material impact on its consolidated financial statements and related disclosures. In
December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvement to Income Tax Disclosures” to enhance
the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid
information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, on a prospective basis. Early adoption is
permitted. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements
and related disclosures. |
