UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED July 31, 2023

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER: 000-56208

World Scan Project, Inc.

(Exact name of registrant as specified in its charter)

Delaware	35-2677532
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2-18-23, Nishiwaseda Shinjuku-Ku, Tokyo, Japan	169-0051
(Address of Principal Executive Offices)	(Zip Code)

  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.

Large accelerated filer  ☐	Accelerated filer  ☐	Non-accelerated filer  ☒
Smaller reporting company  ☒	Emerging growth company  ☒

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 September 12, 2023, there were 10,797,350 shares of common stock and 10,000,000 shares of preferred stock issued and outstanding.

-1-

INDEX

		Page
PART I - FINANCIAL INFORMATION
ITEM 1	FINANCIAL STATEMENTS - UNAUDITED	F1
Consolidated Balance Sheets - UNAUDITED		F1
CONSOLIDATED Statements of Operations AND COMPREHENSIVE INCOME- UNAUDITED		F2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)- UNAUDITED		F3
CONSOLIDATED Statement of Cash Flows - unaudited		F4
Notes to CONSOLIDATED Financial Statements - unaudited		F5
ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS	3
ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3
ITEM 4	CONTROLS AND PROCEDURES	4
PART II - OTHER INFORMATION
ITEM 1	LEGAL PROCEEDINGS	5
ITEM 1A	RISK FACTORS
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	5
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	5
ITEM 4	MINE SAFETY DISCLOSURES	5
ITEM 5	OTHER INFORMATION	5
ITEM 6	EXHIBITS	5
SIGNATURES		6

-2-

PART I - FINANCIAL INFORMATION

WORLD SCAN PROJECT, INC.

CONSOLIDATED BALANCE SHEETS

		July 31, 2023 (Unaudited)		October 31, 2022
ASSETS
Current Assets
Cash and cash equivalents	$	2,000,134	$	5,836,065
Accounts receivable, trade		84,634		1,847,068
Other receivables, current		11,509		489
Advance payments and prepaid expenses		8,711,640		16,389,562
Inventories		424		403
TOTAL CURRENT ASSETS		10,808,341		24,073,587
Non-current assets
Furniture, fixtures and equipment, net		267,145		280,024
Lease asset long term		561,397		705,007
Long term prepaid expenses and security deposits, net		66,847		112,145
Deferred tax assets		374,094		307,438
Other intangible assets, non-current		17,296		19,960
TOTAL NON-CURRENT ASSETS		1,286,779		1,424,574
TOTAL ASSETS	$	12,095,120	$	25,498,161
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accrued expenses and other payables	$	1,684,929	$	2,453,668
Accounts payable - related party		19,486		18,517
Income taxes payable		558,592		3,329,572
Consumption tax payable		41,297		941,483
Short-term lease liability		108,991		231,041
Deferred revenue		124,343		7,401,171
Due to related party		458		458
TOTAL CURRENT LIABILITIES		2,538,096		14,375,910
Non-Current Liabilities
Lease liability long term		486,974		520,002
TOTAL LIABILITIES	$	3,025,070	$	14,895,912
Shareholders' Equity
Preferred stock ($0.0001 par value, 200,000,000 shares authorized; 10,000,000 shares issued and outstanding as of July 31, 2023 and October 31, 2022)	$	1,000	$	1,000
Common stock ($0.0001 par value, 200,000,000 shares authorized, 10,797,350 and 10,647,350 shares issued and outstanding as of July 31, 2023 and October 31, 2022)		1,080		1,065
Additional paid-in capital		1,823,975		323,990
Accumulated earnings		8,807,831		12,555,142
Accumulated other comprehensive income		(1,563,836)		(2,278,948)
TOTAL SHAREHOLDERS' EQUITY	$	9,070,050	$	10,602,249
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	12,095,120	$	25,498,161

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

F-1

WORLD SCAN PROJECT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED) 

		For the Three Months Ended July 31, 2023		For the Three Months Ended July 31, 2022		For the Nine Months  Ended July 31, 2023		For the Nine Months Ended July 31, 2022
Revenues	$	26,243,465	$	(47,570)	$	26,249,456	$	13,148,864
Revenue - related party		-		8,191		-		8,191
Revenues, net		(305,837)		-		22,949,267		-
Total Revenues		25,937,628		(39,379)		49,198,723		13,157,055
Cost of revenues		20,908,693		205,279		20,912,813		6,269,715
Gross profit (loss)	$	5,028,935	$	(244,658)	$	28,285,910	$	6,887,340
OPERATING EXPENSE
Research & Development		18,431,449		-		18,431,449		-
General and administrative expenses		3,677,646		1,167,096		15,878,348		3,283,353
Total operating expenses		22,109,095		1,167,096		34,309,797		3,283,353
Income (loss)  from operations		(17,080,160  )		(1,411,854)		(6,023,887)		3,603,987
Other income (expense)
Other income		(1)		(1,202)		9		25,988
Other expense		6,312		-		(25,627)		-
Total other income (expenses)		6,311		(1,202)		(25,618)		25,988
Net income (loss) before tax		(17,073,849  )		(1,412,956)		(6,049,505)		3,629,975
Income tax expense		(6,177,782)		(493,964)		(2,302,194)		1,463,145
NET INCOME (LOSS)	$	(10,896,067)	$	(918,992)	$	(3,747,311)	$	2,166,830
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment	$	(460,214)	$	(43,191)	$	715,112	$	(772,789)
TOTAL COMPREHENSIVE INCOME (LOSS)	$	(11,356,281)	$	(962,183)	$	(3,032,199)	$	1,394,041
Income (loss) per common share
Basic	$	(1.02)	$	(0.09)	$	(.35)	$	.20
Diluted	$	(1.02)	$	(0.09)	$	(.35)	$	.10
Weighted average common shares outstanding
Basic		10,691,372		10,647,350		10,662,185		10,647,350
Diluted		10,691,372		10,647,350		10,662,185		20,647,350

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

F-2

 WORLD SCAN PROJECT, INC.

 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)

 FOR THE PERIOD ENDING JULY 31, 2023

(UNAUDITED) 

											ACCUMULATED
									ADDITIONAL		OTHER		ACCUMULATED		TOTAL
	PREFERRED STOCK				COMMON STOCK				PAID IN		COMPREHENSIVE		EARNINGS		EQUITY
	NUMBER		AMOUNT		NUMBER		AMOUNT		CAPITAL		INCOME (LOSS)		(DEFICIT)		(DEFICIT)
Balance - October 31, 2022	10,000,000	$	1,000		10,647,350	$	1,065	$	323,990	$	(2,278,948)	$	12,555,142	$	10,602,249
Net income	-		-		-		-		-		-		2,022,241		2,022,241
Foreign currency translation	-		-		-		-		-		1,531,918		-		1,531,198
Balance - January 31, 2023	10,000,000	$	1,000		10,647,350	$	1,065	$	323,990	$	(747,030)	$	14,577,383	$	14,156,408
Net income	-		-		-		-		-		-		5,126,515		5,126,515
Foreign currency translation	-		-		-		-		-		(356,592)		-		(356,952)
Balance - April 30, 2023	10,000,000	$	1,000		10,647,350	$	1,065	$	323,990	$	(1,103,622)	$	19,703,898	$	18,926,331
Common shares sold	-		-		150,000		15		1,499,985		-		-		1,500,000
Net Loss	-		-		-		-		-		-		(10,896,067)		(10,896,067)
Foreign currency translation	-		-		-		-		-		(460,214)		-		(460,214)
Balance - July 31, 2023	10,000,000	$	1,000		10,797,350	$	1,080	$	1,823,975	$	(1,563,836)	$	8,807,831	$	9,070,050

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 JULY 31, 2022 

(UNAUDITED) 

											ACCUMULATED
									ADDITIONAL		OTHER		ACCUMULATED		TOTAL
	PREFERRED STOCK				COMMON STOCK				PAID IN		COMPREHENSIVE		EARNINGS		EQUITY
	NUMBER		AMOUNT		NUMBER		AMOUNT		CAPITAL		INCOME (LOSS)		(DEFICIT)		(DEFICIT)
Balance - October 31, 2021	10,000,000	$	1,000		10,647,350	$	1,065	$	323,990	$	(160,194)	$	3,646,360	$	3,812,221
Net income	-		-		-		-		-		-		938,541		938,541
Foreign currency translation	-		-		-		-		-		(57,443)		-		(57,443)
Balance - January 31, 2022	10,000,000	$	1,000		10,647,.350	$	1,065	$	323,990	$	(217,637)	$	4,584,901	$	4,693,319
Net income	-		-		-		-		-		-		2,147,281		2,147,281
Foreign currency translation	-		-		-		-		-		(672,155)		-		(672,155)
Balance - April 30, 2022	10,000,000	$	1,000		10,647,350	$	1,065	$	323,990	$	(889,792)	$	6,732,182	$	6,168,445
Net income	-		-		-		-		-		-		(918,992)		(918,992)
Foreign currency translation	-		-		-		-		-		(43,191)		-		(43,191)
Balance - July 31, 2022	10,000,000	$	1,000		10,647,350	$	1,065	$	323,990	$	(932,983)	$	5,813,190	$	5,206,262

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

F-3

WORLD SCAN PROJECT, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED) 

			Nine Months		Nine Months
			July 31, 2023		July 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
	Net income (loss)	$	(3,747,311)	$	2,166,830
	Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
	Depreciation and amortization		38,844		35,674
	Amortization of long-term deposits		40,882		78,270
	Lease expense		212,842		241,458
Changes in operating assets and liabilities:
	Accounts receivable		1,918,714		(6,187)
	Advance payments and other prepaid expense		8,804,820		(24,822,770)
	Inventories		-		(151,316)
	Other receivables		-		(784,048)
	Deposits		-		(14,501)
	Other current liabilities		(450)		-
	Deferred tax assets		(52,417)		-
	Accrued expenses and other payables		(924,897)		472,716
	Taxes payable		(4,019,319)		1,794,931
	Deferred revenue		(7,910,059)		21,331,045
	ROU asset/liability		(227,144)		(218,345)
	Net cash provided by (used in) operating activities		(5,865,495  )		123,757
CASH FLOWS FROM INVESTING ACTIVITIES
	Cash paid for purchase of fixed assets		(6,558)		(219,651)
	Other Assets		-		(25,568)
	Net cash used in investing activities		(6,558)		(245,219)
CASH FLOWS FROM FINANCING ACTIVITIES
	Stock issuance for cash		1,500,000		-
	Net cash provided by (used in) financing activities		1,500,000		-
Net effect of exchange rate changes on cash		$	536,122	$	(797,236)
Net Change in Cash and Cash Equivalents			(3,835,931)		(918,698)
Cash and cash equivalents - beginning of period			5,836,065		2,583,218
Cash and cash equivalents - end of period		$	2,000,134	$	1,664,520
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid		$	-	$	-
Income taxes paid		$	790,547	$	-
NON-CASH INVESTING AND FINANCING TRANSACTIONS
ROU Asset/Liability		$	-	$	1,269,132

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

F-4

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

JULY 31, 2023

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

World Scan Project, Inc., a Delaware corporation (“the Company”) was incorporated under the laws of the State of Delaware on October 25, 2019.

On October 25, 2019, Ryohei Uetaki, our officer and director, paid for expenses involved with the incorporation of the Company with personal funds on behalf of the Company, in exchange for 10,000,000 shares of Common Stock, par value $0.0001 per share and 10,000,000 shares of Series A Preferred stock, par value $0.0001 per share, which issuance was exempt from the registration provisions of Section 5 of the Securities Act under Section 4(2) of such same said act. The value of the stock provided to Mr. Uetaki, based on the par value of $.0001 per share of common stock and Series A Preferred Stock, is valued at $2,000.

On October 25, 2019, Ryohei Uetaki was appointed as Chief Executive Officer, Chief Financial Officer, President, Director, Secretary, and Treasurer.

On 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.

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 offering   became effective May 25, 2023. As of July 31, 2023, all 150,000 shares have been sold.

We operate through our wholly owned subsidiary, World Scan Project Corporation, a Japanese Company. We are a start-up stage company currently focused on developing, designing and selling small sized drones which may be used for a variety of purposes.

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

The Company has elected October 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-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of six months or less when purchased to be cash equivalents.

Accounts Receivable and Credit Policies

Accounts receivable are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. If there is a claim for a defect of product within four days after arrival of goods, the Company shall accept a goods return.

Advance payments and prepaid expenses

Advance payments and prepaid expenses are cash paid amounts that represent costs incurred from which a service or benefit is expected to be derived in the future.

Inventory

Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out (“FIFO”) method, and are valued at the lower of cost or market value. This valuation requires the Company to make judgments, based on currently-available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category

Fixed assets and depreciation

Property, plant and equipment are stated at cost less depreciation and impairment loss. The initial cost of the assets comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Depreciation is calculated using the straight-line method over the shorter of the estimated useful life of the respective assets as follows: computer software developed or acquired for internal use, 2 to 5 years; computer equipment, 2 to 5 years; buildings and improvements, 5 to 15 years; leasehold improvements, 2 to 10 years; and furniture and equipment, 1 to 5 years.

F-5

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:

	July 31, 2023
Current JPY: US$1 exchange rate	140.97
Average JPY: US$1 exchange rate	136.51

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 consolidated statements of operations:

		Nine Months Ended
		July 31,
		2023				2022
Revenues
Product sales		$		26,163,666		$	12,905,805
Crypto miners sales, net				22,949,267			-
Drone imaging and video production				82,567			20,031
Program for educational institution			-				34,869
Other				3,223			196,350
Total Revenue Under ASC 606		$		49,198,723		$	13,157,055

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. During the three month period ended July 31, 2023, there were changes in the Company’s operating agreements that ultimately resulted in the Company becoming the principle in transactions. As of July 31, 2023, $122,196 of deferred revenues related to product sales.

Revenue from crypto miners sales, net       

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 the sale of crypto miners was recognized when the miners were delivered to the customers and the customers completed the inspection of the miners. Management assessed the Company’s contracts with the third-party manufacturer and customers in consideration of ASC 606, “Revenue from Contracts with Customers”, and determined the Company as the agent in said transactions. As such, the company recognized crypto miner sales net of costs. For the period ended April 30, 2023, cost of goods sold for miner purchases, netted by the gross sales was $83,700,987. As of July 31, 2023, the Company had no deferred revenues related to this stream.

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 July 31, 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. The Company recognized deferred tax assets of $374,094 and $307,438 as of July 31, 2023 and October 31, 2022, respectively.

Basic Earnings (Loss) Per Share

The Company computes basic and diluted earnings (loss) per share in accordance with ASC Topic 260, Earnings per Share. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted earnings (loss) per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. Each shareholder of Series A Preferred Stock may convert their shares at the option of the holder thereof into an equal amount of shares of any other class or series of the Company’s stock on a one to one basis, therefore the Company computes diluted earnings (loss) per shares by dividing net income (loss) by the sum of the total of weighted average number of common shares and total preferred shares outstanding.

Basic and diluted earnings per share or the three and nine months ended July 31^st are as follows:

		Three Months Ended July 31, 2023		Three Months Ended July 31, 2022	Nine Months Ended July 31, 2023		Nine Months Ended  July 31, 2022
Basic earnings per share	$	(1.02)	$	(.09)	$	(.35)	$	.14
Diluted earnings per share	$	(1.02)	$	(.09)	$	(.35)	$	.15

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 July 31, 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 July 31, 2023 and October 31, 2022, the Company had no 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 July 31, 2023, 85.69% of the inventories were purchased from Web3 Computing Corp. in the amount of $17,919,823 and 14.17% of the inventories were purchased from CU Holdings Co., Ltd for $2,963,577.

For the period ended July 31, 2022, 85.64% of the inventories were purchased from G-Force in the amount of $5,306,411.

Concentration of Revenues     

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

For the period ended July 31, 2023, 13.13% of total revenue was generated from Kinoshita Group in the amount of $6,459,307.

For the period ended July 31, 2022, 95.72% of total revenue was generated from Done Net in the amount of $12,593,394.

F-6

NOTE 3 - GOING CONCERN

The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company demonstrates mixed trends, compared with the previous fiscal years, in our financial statements as in below:

As of July 31, 2023, the Company had working capital of $8,270,245, a decrease of $1,427,432 (-15%) as compared to working capital of $9,697,677 as of October 31, 2022. Additionally, the Company recorded cash and cash equivalents of $2,000,134, an increase of $335,614 as compared to $1,664,520 in the prior year period ended July 31, 2022, The Company’s increased liquidity is derived from increased sales, particularly sales of crypto miners, and the sale of common shares (see Note 10).   As stated in the consolidated financial statements, the Company, for the period ended July 31, 2023, recorded a net loss of $3,747,311 (-34% y-o-y) and used $5,902,536 (-4,869% y-o-y) in cash flows from operating activities. The change in net profit(loss), use of cash from operations, and decrease in working capital is mainly related to a large increase in research and development costs expensed in the quarter ended July 31, 2023 (see Note 8).

Having reviewed the above, the Company realizes that whether we shall be able to continue the positive trends demonstrated in our previous financial statements, lies in our ability to continue to generate revenue and increase revenue going forward. Principally, the Company's consolidated financial statements are based on going concern assumptions, which assume the realization of assets and offset of liabilities in the normal course of business. Based on this, the Company also recognizes that it is critical for us to continue to operate and/or perform our obligation(s) in the future and procure any required funds needed to meet the redemption of its debt during normal business operations. 

Management has evaluated the estimated impact of COVID-19, which has become a significant factor impacting operations of businesses globally, one of which we believe we will need to continue to monitor as to the potential effects it may have on our own business.

The Company assessed the impact of COVID-19 and believes there to be minimal impact of COVID-19 on the Company’s crypto miner sales, which is currently the Company’s primary source of revenue. The Company will need to continue to monitor COVID-19 and the effects it may have, socially and economically, as it is possible that such developments may in fact impact our operations going forward or more specifically, our sales results. At this time, the Company believes that it will not affect our assumptions as a going concern.

Based on the Company’s evaluation and considering the positive financials trends the Company has experienced for many previous quarters, management believes that the one-time R&D expense this quarter will not adversely impact the Company’s ability to continue as a going concern (see Note 8).   

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 $84,634 as of July 31, 2023 and $1,847,068 as of October 31, 2022. No bad debt allowance was provided as of July 31, 2023 and October 31, 2022.

Concentration of Accounts Receivable

Accounts receivable from customers accounting for 10% or more of total accounts receivable are as follows:

As of July 31, 2023, 99.74% of total accounts receivable was owed to the Company by a public interest incorporated foundation, Kadokawa Culture Promotion Foundation, in the amount of $84,415.    

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 5 - ADVANCE PAYMENTS AND PREPAID EXPENSES

Advance payments are comprised of the payments for the undelivered products and other deliverables. As of July 31, 2023 and October 31, 2022, the Company had advance payments and other prepaid expenses of $8,711,640 and $16,389,562, respectively. Details of the advance payments as of July 31, 2023 and October 31, 2022 are as follows:

		July 31, 2023		October 31, 2022
Purchase of products from G-Force Inc.	$	98,506	$	101,158
Purchase of products from Royal Sensing		-		-
Purchase of products from Sankyu Co., Ltd		30,526		-
Purchase of parts from Team M		39,015		37,097
Purchase of parts from Wise Partners Co., Ltd		-		228,785
Purchase of parts from Rogyx Co., Ltd		-		31,161
Purchase of consulting services from IBC Consulting		9,364		-
Purchase of cryptocurrency miners from Web3 Computing Corp		8,354,075		15,915,311
Other advances and prepaid expenses		180,154		76,050
Totals	$	8,711,640	$	16,389,562

 NOTE 6 - FIXED ASSETS

The company recognizes purchased assets with a useful life longer than one year as fixed or non-current assets. These assets are depreciated using the straight-line method of depreciation over the estimated useful life of the assets.

During the period ended July 31, 2023, the Company purchased additional long-term assets totaling $6,558. The Company is depreciating fixed assets over a 5-10 year period once they were put into use. Depreciation expense for the periods ended July 31, 2023 and July 31, 2022 were $38,844 and $35,674, respectively.

During the year ended October 31, 2022, the Company purchased long-term assets, including building renovations, totaling approximately $227,180. The Company is depreciating these assets over a 5-10 year period once they were put into use.

NOTE 7 - DEFERRED REVENUE

Deferred revenue is the amount the Company received in advance from the customer for their orders placed with us. As of July 31, 2023 deferred revenue in the amount of $124,343 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, 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 8 – RESEARCH & DEVELOPMENT  

During the period ended July 31, 2023, the Company incurred expenses totaling $18,431,449 for research and development for two products the Company intends to offer for sale in the future. Expenses totaling $13,222,880 were recorded for R&D related to producing a cost-effective cooling system for data centers. Expenses totaling $5,208,569 were recorded for R&D related to producing technology to be used by other companies to produce NFTs, mainly for marketing purposes. The R&D expense contributed to a net loss before tax for the three month period ended July 31, 2023 of $17,073,849, which necessitated an adjustment to the accrual for income taxes payable resulting in a tax credit of $6,177,782 for the three month period (see Note 9). 

NOTE 9 - INCOME TAXES

For the periods ended July 31, 2023 and 2022, the Company had income tax expense in the amount of $3,875,588 and $1,957,109, respectively. 

For the periods ended July 31, 2023 and 2022, the Company had income tax expense(credit) in the amount of $(2,302,194) and $1,463,145, respectively. The income tax credit for the period ended July 31, 2023 was due to the adjustment to income taxes payable resulting from the net loss before taxes for the three months ended July 31, 2023 of $17,073,849 (see Note 8). During the periods ended July 31, 2023 and 2022, the Company paid income taxes totaling $790,547 and $0, respectively. 

United States

The Company was incorporated under the laws of the State of Delaware on October 25, 2019. The U.S. federal income tax rate is 21%.

Japan 

The Company conducts its major businesses in Japan through WSP Japan and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the local tax authority.

The Company is subject to a number of income taxes, which, in aggregate, represent a statutory tax rate approximately as follows:

	Company’s assessable profit
For the year ended October 31,	Up to JPY 4 million	Up to JPY 8 million		Over JPY 8 million
2022	22.9%	25.37%		37.59%

As of July 31, 2023 and October 31, 2022, the Company had income tax payable of $558,592 and $3,329,572, respectively.

As of July 31. 2023 and October 31, 2022, the Company had deferred tax assets of $374,094 and $307,438, respectively. 

NOTE 10 - 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 July 31, 2023 and October 31, 2022.

The rights, preferences, privileges, restrictions and other matters relating to the Series A Preferred Stock are as follows:

(a) Each share of Series A Preferred Stock shall have no voting rights;

(b) Each shareholder of Series A Preferred Stock may convert their shares at the option of the holder thereof into an equal amount of shares of any other class or series of the Company’s stock on a one to one basis.

Common Stock

The authorized common stock of the Company consists of 200,000,000 shares with a par value of $0.0001. There were 10,797,350 shares of common stock issued and outstanding as of July 31, 2023 and October 31, 2022.

During the period ended July 31, 2023, 150,000 shares of common stock were sold to 9 shareholders for proceeds totaling $1,500,000.

NOTE 11 - 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 $212,842 and $241,458 in operating lease costs for the nine months ended July 31, 2023 and July 31, 2022, respectively.

Lease ROU assets and liabilities are recognized at commencement date of the lease, based on the present value of lease payments over the lease term. The lease ROU asset also includes any lease payments made and excludes any lease incentives. When readily determinable, we use the implicit rate in determining the present value of lease payments. When leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date, including the lease term.

The tables below present financial information associated with our leases. As noted above, we adopted Topic 842 using a transition method that does not require application to periods prior to adoption.

	Balance Sheet Classification		July 31, 2023		October 31, 2022
Right-of-use assets	Lease asset long	$	561,397	$	705,007
Current lease liabilities	Short-term lease liability		108,991		231,041
Non-current lease liabilities	Lease liability long term		486,974		520,002
Maturities of lease liabilities as of July 31, 2023 are as follows:
2023	62,613
2024	103,423
2025	85,124
2026	85,124
2027 and beyond	425,622
Total	761,906
Add(Less): Imputed interest	(165,941)
Present value of lease liabilities	595,965

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 July 31, 2023 and October 31, 2022, the Company had accrued expenses and other payables of $1,684,929 and $2,453,668, respectively. Details of the accrued expenses and other payables as of July 31, 2023 and October 31, 2022 are as follows:

		July 31, 2023			October 31, 2022
Accounts payable, trade	$	1,589,256		$	2,383,161
Accounts payable for employees		53,983			54,879
Accrued payroll liabilities		41,690			15,628
Totals	$	1,684,929		$	2,453,668

NOTE 13 - SUBSEQUENT EVENTS  

The Company has evaluated subsequent events through September 7, 2023, the date on which the consolidated financial statements were available to be issued and has found no material transactions to report.

F-7

ITEM 2 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 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.

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 offering   became 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.

We operate through our wholly owned subsidiary, World Scan Project Corporation, a Japanese Company. The Company is an industrial automation equipment manufacturer, designing/developing robots, drones, Web3 infrastructure, IoT equipment and 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 July 31, 2023 we had cash and cash balance in the amount of $2,000,134. Currently, our cash balance is sufficient to fund our operations without the need for additional funding. 

Revenues

We recorded revenues of $49,198,723 for the nine months ended July 31, 2023. We recorded revenues of $13,157,055 for the nine   months ended July 31, 2022.

Net Income(Loss)

We recorded net loss of $3,747,311   for the nine months ended July 31, 2023. We recorded a net income of $2,166,830 for the nine months ended July 31, 2022.

Cash flow

For the nine months ended July 31, 2023, we had negative cash flows used in operations in the amount of $5,865,495. The decrease in operating cash flow is attributed to the net operating loss during this this period, mainly due to R&D expenses (see Note 8). For the nine months ended July 31, 2023, we had negative cash flows from investing activities in the amount of $6,558 due to the purchase of fixed assets. For the nine months ended July 31, 2023, we had cash flows from financing activities in the amount of $1,500,000 due to the sale of common shares.  

Going Concern

The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company demonstrates mixed trends, compared with the previous fiscal years, in our financial statements as in below:

As of July 31, 2023, the Company had working capital of $8,270,245, a decrease of $1,427,432 (-15%) as compared to working capital of $9,697,677 as of October 31, 2022. Additionally, the Company recorded cash and cash equivalents of $2,000,134, an increase of $335,614 as compared to $1,664,520 in the prior year period ended July 31, 2022, The Company’s increased liquidity is derived from increased sales, particularly sales of crypto miners, and the sale of common shares (see Note 10).   As stated in the consolidated financial statements, the Company, for the period ended July 31, 2023, recorded a net loss of $3,747,311 (-34% y-o-y) and used $5,902,536 (-4,869% y-o-y) in cash flows from operating activities. The change in net profit(loss), use of cash from operations, and decrease in working capital is mainly related to a large increase in research and development costs expensed in the quarter ended July 31, 2023 (see Note 8).

Having reviewed the above, the Company realizes that whether we shall be able to continue demonstrating the positive trends demonstrated in our previous financial statements, lies in our ability to continue to generate revenue and increase revenue going forward. Principally, the Company's consolidated financial statements are based on going concern assumptions, which assume the realization of assets and offset of liabilities in the normal course of business. Based on this, the Company also recognizes that it is critical for us to continue to operate and/or perform our obligation(s) in the future and procure any required funds needed to meet the redemption of its debt during normal business operations.

Management has evaluated the estimated impact of COVID-19, which has become a significant factor impacting operations of businesses globally, one of which we believe we will need to continue to monitor as to the potential effects it may have on our own business.

The Company assessed the impact of COVID-19 and believes there to be minimal impact of COVID-19 on the Company’s crypto miner sales, which is currently the Company’s primary source of revenue. The Company will need to continue to monitor COVID-19 and the effects it may have, socially and economically, as it is possible that such developments may in fact impact our operations going forward or more specifically, our sales results. At this time, the Company believes that it will not affect our assumptions as a going concern.

Based on the Company’s evaluation and considering the positive financials trends the Company has experienced for many previous quarters, management believes that the one-time R&D expense this quarter will not adversely impact the Company’s ability to continue as a going concern.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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-

ITEM 4 CONTROLS AND PROCEDURES

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 July 31, 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 July 31, 2023, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

-4-

PART II-OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS

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

ITEM 1A RISK FACTORS

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

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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

During the period ended July 31, 2023, 150,000 shares of common stock were sold to 9 shareholders for proceeds totaling $1,500,000.

These shares were sold pursuant to the Company’s effective S-1 Registration Statement deemed effective on May 25, 2025.

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

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 OTHER INFORMATION

None.

ITEM 6 EXHIBITS

Exhibit No.	Description
3.1	Certificate of Incorporation (1)
3.2	By-laws (1)
31	Certification of the Company’s Principal Executive and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s report on Form 10-Q for the period ended July 31, 2023 (2)
32	Certification of the Company’s Principal Executive and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (2)
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

(1)	Filed as an exhibit to the Company's Registration Statement on Form S-1, as filed with the SEC on August 26, 2020, and incorporated herein by this reference.
(2)	Filed herewith.

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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: September 12, 2023 

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