Exceed World, Inc 10-Q for FY2021 Q1
Exceed World, Inc. (EXDW)
About this 10-Q
Exceed World, Inc filed this 10-Q on February 22, 2021, covering the quarter ended December 31, 2020 (FY2021 Q1).
Headline figures
Quarter ended December 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $10.91M
- up 87.1% from $5.83M a year earlier
- Net income
- $2.29M
- up 368.2% from net income of $489.75K a year earlier
- Diluted EPS
- $0.07
- up 600.0% from $0.01 a year earlier
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 DECEMBER 31, 2020
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: 000-55377
Exceed World, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 98-1339955 | ||
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | ||
|
1-23-38-8F, Esakacho, Suita-shi, Osaka Japan |
564-0063 (Zip Code) |
||
| (Address of Principal Executive Offices) |
Issuer's telephone number: +81-6-6339-4177
Fax number: +81-6-6339-4180
Email: ceo.exceed.world@gmail.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, or a non-accelerated filer or a small reporting company. See definition of large accelerated filer, accelerated filer and small reporting company in Rule 12b-2 of the Securities Exchange Act of 1934.
| 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 February 22, 2020, there were approximately 32,700,000 shares of common stock and no shares of preferred stock issued and outstanding.
-1-
-2-
PART I - FINANCIAL INFORMATION
| ITEM 1 | FINANCIAL STATEMENTS |
|
EXCEED WORLD, INC. |
| As of | As of | ||||
| December 31, 2020 | September 30, 2020 | ||||
| (Unaudited) | |||||
| ASSETS | |||||
| Current Assets | |||||
| Cash and cash equivalents | $ | 20,540,913 | $ | 19,370,086 | |
| Marketable securities | 632,522 | 1,123,696 | |||
| Accounts receivable | 136,475 | 68,086 | |||
| Income tax recoverable | 144,416 | 140,725 | |||
| Prepaid expenses | 132,652 | 61,687 | |||
| Inventories | 908,818 | 1,243,228 | |||
| Other current assets | 4,461 | 40,553 | |||
| TOTAL CURRENT ASSETS | 22,500,257 | 22,048,061 | |||
| Non-current Assets | |||||
| Property, plant and equipment, net | 614,138 | 629,784 | |||
| Software, net | 1,169,444 | 1,267,150 | |||
| Operating lease right-of-use assets | 906,140 | 849,062 | |||
| Other intangible assets, net | 178,110 | 174,911 | |||
| Long-term prepaid expenses | 59,440 | 58,465 | |||
| Deferred tax assets | 309,087 | 132,239 | |||
| Insurance funds | 226,544 | 201,377 | |||
| Security deposits | 275,133 | 269,367 | |||
| TOTAL NON-CURRENT ASSETS | 3,738,036 | 3,582,355 | |||
| TOTAL ASSETS | $ | 26,238,293 | $ | 25,630,416 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Current Liabilities | |||||
| Accounts payable | $ | 743,453 | $ | 823,448 | |
| Accrued expenses and other payables | 412,870 | 446,281 | |||
| Contingency liability | 522,772 | 574,484 | |||
| Income tax payable | 362,950 | 1,328 | |||
| Deferred income | 566,494 | 3,571,723 | |||
| Finance lease obligations, current | 31,130 | 30,263 | |||
| Operating lease liabilities, current | 426,392 | 363,651 | |||
| Due to related parties | 848,290 | 761,040 | |||
| Due to director | 741,350 | 741,248 | |||
| Other current liabilities | 1,208,281 | 650,896 | |||
| TOTAL CURRENT LIABILITIES | 5,863,982 | 7,964,362 | |||
| Non-current Liabilities | |||||
| Finance lease obligations, non-current | 91,693 | 97,472 | |||
| Operating lease liabilities, non-current | 438,925 | 445,443 | |||
| TOTAL NON-CURRENT LIABILITIES | 530,618 | 542,915 | |||
| TOTAL LIABILITIES | 6,394,600 | 8,507,277 | |||
| Shareholders' Equity | |||||
| Preferred stock ($0.0001 par value, 20,000,000 shares authorized; | |||||
| none issued and outstanding as of December 31, 2020 and September 30, 2020) | - | - | |||
| Common stock ($0.0001 par value, 500,000,000 shares authorized, | |||||
| 32,700,000 shares issued and outstanding as of December 31, 2020 and September 30, 2020) | 3,270 | 3,270 | |||
| Additional paid-in capital | 103,840 | 103,840 | |||
| Retained earnings | 18,094,097 | 15,802,004 | |||
| Accumulated other comprehensive income | 1,642,486 | 1,214,025 | |||
| TOTAL SHAREHOLDERS' EQUITY | 19,843,693 | 17,123,139 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 26,238,293 | $ | 25,630,416 | |
| The accompanying notes are an integral part of these unaudited consolidated financial statements. | |||||
-F1-
EXCEED WORLD, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended | Three Months Ended | ||||
| December 31, 2020 | December 31, 2019 | ||||
| Revenues | $ | 10,911,737 | $ | 5,832,608 | |
| Cost of revenues | 5,269,396 | 2,819,884 | |||
| Gross profit | 5,642,341 | 3,012,724 | |||
| OPERATING EXPENSES | |||||
| Selling and distribution expenses | 91,524 | 198,825 | |||
| Administrative expenses | 2,588,782 | 2,289,472 | |||
| Total operating expenses | 2,680,306 | 2,488,297 | |||
| Income from operations | 2,962,035 | 524,427 | |||
| Other income (expense) | |||||
| Other income | 29,000 | 3,395 | |||
| Other expenses | (1,915) | (23,734) | |||
| Change in fair value of marketable securities | (509,308) | 213,709 | |||
| Interest expenses | (957) | (556) | |||
| Total other income (expense) | (483,180) | 192,814 | |||
| Net income before tax | 2,478,855 | 717,241 | |||
| Income tax expense | 186,762 | 227,488 | |||
| NET INCOME | $ | 2,292,903 | $ | 489,753 | |
| COMPREHENSIVE INCOME (LOSS) | |||||
| Net income | $ | 2,292,093 | $ | 489,753 | |
| Other comprehensive income (loss) | |||||
| Foreign currency translation adjustment | 428,461 | (92,808) | |||
| TOTAL COMPREHENSIVE INCOME | $ | 2,720,554 | $ | 396,945 | |
| Income per common share | |||||
| Basic | $ | 0.07 | $ | 0.01 | |
| Diluted | $ | 0.07 | $ | 0.01 | |
| Weighted average common shares outstanding | |||||
| Basic | 32,700,000 | 32,700,000 | |||
| Diluted | 32,700,000 | 32,700,000 | |||
| The accompanying notes are an integral part of these unaudited consolidated financial statements. | |||||
-F2-
Table of Contents
EXCEED WORLD, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
| ADDITIONAL |
ACCUMULATED OTHER |
||||||||||
| COMMON STOCK | PAID-IN | COMPREHENSIVE | RETAINED | ||||||||
| NUMBER | AMOUNT | CAPITAL | INCOME (LOSS) | EARNINGS | TOTAL | ||||||
| Balance – September 30, 2019 | 32,700,000 | $ | 3,270 | $ | 261,516 | $ | 754,313 | $ | 16,764,282 | $ | 17,783,381 |
| Net income | - | - | - | - | 489,753 | 489,753 | |||||
| Foreign currency translation | - | - | - | (92,808) | - | (92,808) | |||||
| Balance – December 31, 2019 | 32,700,000 | $ | 3,270 | $ | 261,516 | $ | 661,505 | $ | 17,254,035 | $ | 18,180,326 |
| Balance – September 30,2020 | 32,700,000 | $ | 3,270 | $ | 103,840 | $ | 1,214,025 | $ | 15,802,004 | $ | 17,123,139 |
| Net income | - | - | - | - | 2,292,093 | 2,292,093 | |||||
| Foreign currency translation | - | - | - | 428,461 | - | 428,461 | |||||
| Balance – December 31, 2020 | 32,700,000 | $ | 3,270 | $ | 103,840 | $ | 1,642,486 | $ | 18,094,097 | $ | 19,843,693 |
| The accompanying notes are an integral part of these unaudited consolidated financial statements. | |||||||||||
-F3-
EXCEED WORLD, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Three Months Ended | Three Months Ended | |||||
| December 31, 2020 | December 31, 2019 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
| Net income | $ | 2,292,093 | $ | 489,753 | ||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||
| Depreciation and amortization | 152,728 | 193,122 | ||||
| Change in fair value of marketable securities | 509,308 | (213,709) | ||||
| Loss on company owned life insurance policies | 50,217 | 61,582 | ||||
| Noncash lease expense | 116,772 | 126,804 | ||||
| Deferred income taxes | (172,018) | 60,998 | ||||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | (66,162) | (404) | ||||
| Income tax recoverable | (670) | - | ||||
| Prepaid expenses | (68,849) | 41,436 | ||||
| Inventories | 356,875 | (125,518) | ||||
| Other current assets | 37,382 | 174,399 | ||||
| Long-term prepaid expenses | 267 | 1,026 | ||||
| Accounts payable | (96,500) | (605,983) | ||||
| Accrued expenses and other payables | (17,987) | (191,070) | ||||
| Income tax payable | 357,439 | (119,145) | ||||
| Deferred income | (3,046,280) | (1,149,182) | ||||
| Operating lease liabilities | (116,772) | (126,804) | ||||
| Other current liabilities | 537,638 | (481,024) | ||||
| Net cash provided by (used in) operating activities | 825,481 | (1,863,719) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||
| Loan made to third party | - | (275,964) | ||||
| Purchase of property, plant and equipment | - | (2,760) | ||||
| Purchase of company-owned life insurance policies | (70,834) | (70,191) | ||||
| Net cash used in investing activities | (70,834) | (348,915) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
| Repayment of finance lease obligation | (6,609) | (13,938) | ||||
| Proceeds from related parties | - | (105,209) | ||||
| Net cash used in financing activities | (6,609) | (119,147) | ||||
| Net effect of exchange rate changes on cash | 422,789 | (100,324) | ||||
| Net change in cash and cash equivalents | ||||||
| Cash and cash equivalents - beginning of period | 19,370,086 | 20,198,362 | ||||
| Net increase (decrease) in cash | 1,170,827 | (2,432,105) | ||||
| Cash and cash equivalents - end of period | $ | 20,540,913 | $ | 17,766,257 | ||
| NON-CASH INVESTING AND FINANCING TRANSACTIONS | ||||||
| Remeasurement of the lease liabilities and right-of-use assets due to lease modification | $ | 155,228 | $ | - | ||
| Operating expense paid by related parties on behalf of the Company | $ | 87,250 | $ | 8,900 | ||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||
| Interest paid | $ | 949 | $ | - | ||
| Income taxes paid | $ | 2,011 | $ | 285,636 | ||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
-F4-
EXCEED WORLD, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2020
(UNAUDITED)
NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Exceed World, Inc. (the “Company”), was incorporated under the laws of the State of Delaware on November 25, 2014.
On September 26, 2018, e-Learning Laboratory Co., Ltd. (“e-Learning”), a direct wholly owned subsidiary of Force International Holdings Limited, which was incorporated in Hong Kong with limited liability (“Force Holdings”), entered into a share purchase agreement with Force Internationale Limited (“Force Internationale”), the holding company of Force Holdings, in which e-Learning agreed to sell and Force Internationale agreed to purchase 74.5% equity interest of the Company at a consideration of $26,000.
On September 26, 2018, the same date, Force Internationale entered into a share purchase agreement with the Company, in which Force Internationale agreed to sell and the Company agreed to purchase 100% equity interest of Force Holdings. In consideration of the agreement, the Company issued 12,700,000 common stock at US$1 each to Force Internationale. The results of these transactions are that Force Internationale is an 84.4% owner of the Company and the Company is a 100% owner of Force Holdings.
On December 6, 2018, the Company entered into a share contribution agreement with Force Internationale. Under this agreement, the Company transferred 100% of the equity interest of School TV Co., Ltd. ("School TV"), to Force Internationale without consideration. This agreement was approved by the board of directors of the Company, Force Internationale and School TV. Upon the completion of the disposal, School TV was deconsolidated from the Company's consolidated financial statements.
As of December 31, 2020, the Company operates through our wholly owned subsidiaries, which are engaged in provision of the educational services through an internet platform called “Force Club”.
The Company has elected September 30th as its fiscal year end.
The accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year. When used in these notes, the terms "Company", "we", "us" or "our" mean the Company. Certain information and note disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America has been omitted from these statements pursuant to such accounting principles and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our consolidated financial statements for the year ended September 30, 2020, included in our Form 10-K.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. Inter-company accounts and transactions have been eliminated.
USE OF ESTIMATES
The presentation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as the date of the financial statements and the reported amounts of revenue and expenses reported in those financial statements. Certain significant accounting policies that contain subjective management estimates and assumptions include those related to valuation allowance on deferred income tax, write-down in value of inventory, useful lives and impairment of long-lived assets and legal contingencies. The extent to which the COVID-19 pandemic may directly or indirectly impact our business, financial condition, and results of operations is highly uncertain and subject to change. Due to the high uncertainty of the evolving situation, the Company has limited visibility on the full impact brought upon by the COVID-19 pandemic and the related financial impact cannot be estimated at this time. Operating results in the future could vary from the amounts derived from management's estimates and assumptions.
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.
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.
FOREIGN CURRENCY TRANSLATION
The Company maintains its books and records in its local currencies, Japanese YEN (“JPY”) and Hong Kong Dollars (“HK$”) and the United States Dollars (“US$”), which are the functional currencies as being the primary currencies of the economic environment in which their operations are conducted. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statements of operations and comprehensive income.
The reporting currency of the Company is US$ 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. Shareholders’ equity is translated at historical exchange rate at the time of transaction. The gains and losses resulting from translation of financial statements are recorded as a separate component of accumulated other comprehensive income within the consolidated 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:
| December 31, 2020 | December 31, 2019 | ||
| Current JPY: US$1 exchange rate | 103.24 | 108.61 | |
| Average JPY: US$1 exchange rate | 104.44 | 108.71 | |
| Current HK$: US$1 exchange rate | 7.80 | 7.80 | |
| Average HK$: US$1 exchange rate | 7.80 | 7.80 |
REVENUE RECOGNITION
The Company operates and manages multilevel marketing (“MLM”) in operating its businesses as the Force Club Membership and generates revenues primarily by providing the rights to access the Company’s educational content and to recruit new members.
The Company recognizes revenue by applying the following steps in accordance with ASC 606 - Revenue from contracts with Customers. The Company recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for those products or services.
- Identification of the contract, or contracts, with a customer
- Identification of the performance obligations in the contract
- Determination of the transaction price
- Allocation of the transaction price to the performance obligations in the contract
- Recognition of revenue when (or as) we satisfy the performance obligation
Force Club Membership fee
Nature of operation
Our revenue generated from Force Club Membership arrangements accounted for substantially all of our revenues during the three months ended December 31, 2020. Generally, the Company grants Force Club members the rights to access the Company’s educational content. There are two tiers of members, namely standard members and premium members.
The premium members are granted full access to the Company’s educational content and the right to recruit prospect customers to become the Company’s members. Each premium member needs to purchase a premium pack, containing promotional materials aiding the recruiting process, from the Company. The standard members are granted limited access to the Company’s educational content.
Revenue from the premium pack is recognized at a point in time upon delivery. Revenue from the right to access the Company’s educational content is recognized over a period of time ratably over the effective period.
The Company's chief operating decision maker reviews results analyzed by customers and the analysis is only presented at the revenue level with no allocation of direct or indirect costs. The Company determines that it has only one operating segment. Consequently, the Company does not disaggregate revenue recognized from contracts with customers. Substantially all of the Company’s revenue was generated in Japan.
Contract asset and liability
Deferred income is recorded when consideration is received from a member prior to the goods were delivered or the access was granted. As of December 31, 2020, and September 30, 2020, the Company's deferred income was $566,494 and $3,571,723 respectively. During the three months ended December 31, 2020, the Company recognized $3,571,723 of deferred income in the opening balance.
The Company does not have any contract asset.
OPERATING LEASES
The Company recognizes its leases in accordance with ASC 842 - Leases. Under ASC 842, lessees are required to recognize all qualified operating leases at the commencement date including a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use (ROU) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The lease term includes option renewal periods and early termination payments when it is reasonably certain that the Company will exercise those rights. The initial measurement of the ROU asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives.
The Company elected the practical expedient not to separate lease and non-lease components for certain classes of underlying assets and the short-term lease exemption for contracts with lease terms of 12 months or less. The Company recognizes lease expenses for such leases on a straight-line basis over the lease term. In addition, the Company elected the land easement transition practical expedient and did not reassess whether an existing or expired land easement is a lease or contains a lease if it has not historically been accounted for as a lease.
-F5-
NOTE 3 - FAIR VALUE MEASUREMENT
FASB ASC 820, Fair Value Measurements and Disclosures, ("ASC 820") defines fair value 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 820 also establishes a fair value hierarchy that prioritizes the inputs used in valuation methodologies into three levels:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Significant other inputs that are directly or indirectly observable in the marketplace.
Level 3: Significant unobservable inputs which are supported by little or no market activity.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The Company adopted ASU 2018-13 effective October 1, 2020 and determined that the adoption had no material impact to its consolidated financial statements.
The Company considers the carrying amount of its financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, income tax recoverable, prepaid expenses, other current assets, accounts payable, income tax payable, contingency liabilities, deferred income, accrued expenses and other payables, other current liabilities and current portion of operating and finance lease obligations approximate the fair value of the respective assets and liabilities as of December 31, 2020 and September 30, 2020 owing to their short-term or present value nature or present value of the assets and liabilities.
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of December 31, 2020 and September 30, 2020 and indicates the fair value hierarchy of the valuation.
| Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Total Balance | |||||
| Marketable Securities: | ||||||||
| Publicly held equity securities | ||||||||
| As of December 31, 2020 | $ | 632,522 | - | - | 632,522 | |||
| As of September 30, 2020 | $ | 1,123,696 | - | - | 1,123,696 |
NOTE 4 - INCOME TAXES
For the three months ended December 31, 2020 and 2019, the Company had income tax expenses of $186,762 and $227,488 respectively. Effective tax rate was 7.53% and 31.72% for the three months ended December 31, 2020 and 2019, respectively.
Japan
The Company conducts its major businesses in Japan and e-Learning and e-Communications Co., Ltd. (collectively, “Japanese Subsidiaries”) are subject to tax in this jurisdiction. As a result of its business activities, Japanese Subsidiaries file tax returns that are subject to examination by the local tax authority.
Japanese Subsidiaries are subject to a number of income taxes, which, in aggregate, represent a statutory tax rate approximately as follows:
| Company’s assessable profit | ||||||
| For the period ended December 31, | Up to JPY 4 million | Up to JPY 8 million | Over JPY 8 million | |||
| 2020 | 21.42% | 23.20% | 33.80% | |||
| 2021 | 21.42% | 23.20% | 33.80% | |||
Hong Kong
Force Holdings, a direct wholly owned subsidiary of the Company in Hong Kong, is engaged in investment holding. Hong Kong profits tax has been provided at the rate of 16.5% on the estimated assessable profit arising in Hong Kong.
No provision for the Hong Kong profits tax has been made as Force Holdings has not generated any estimated assessable profits in Hong Kong from its inception.
United States
Exceed World, Inc., which acts as a holding company on a non-consolidated basis, does not plan to engage any business activities and current or future loss will be fully allowed. For the three months ended December 31, 2020 and 2019, respectively, Exceed World, Inc., as a holding company registered in the state of Delaware, has incurred net loss and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry forward has been fully reserved.
NOTE 5 - RELATED-PARTY TRANSACTIONS
As of December 31, 2020, and September 30, 2020, the Company’s due to related parties and directors are as follows:
| December 31, 2020 | September 30, 2020 | |||
| Due to director | ||||
| Tomoo Yoshida, CEO, CFO, sole director and a shareholder of the Company | $ | 741,350 | $ | 741,248 |
| Total due to director | $ | 741,350 | $ | 741,248 |
| Due to related parties | ||||
| Keiichi Koga, a shareholder of the Company and a director of certain subsidiaries of the Company | $ | 47,635 | $ | 47,635 |
| Force Internationale, the Company’s majority shareholder. Tomoo Yoshida is a director of Force Internationale | 800,655 | 713,405 | ||
| Total due to related parties | $ | 848,290 | $ | 761,040 |
The payable balances are unsecured, due on demand, and bear no interest. From time to time, these related parties have advanced to the Company or paid expenses on behalf of the Company, and the Company has also made repayments.
Tomoo Yoshida provided guarantee for the Company’s office leases during the three months ended December 31, 2020 and 2019.
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
| December 31, 2020 | September 30, 2020 | |||
| Building | $ | 255,271 | $ | 249,921 |
| Leasehold improvement | 59,899 | 58,644 | ||
| Equipment | 1,055,460 | 1,028,506 | ||
| Vehicles | 51,080 | 50,009 | ||
| 1,421,710 | 1,387,080 | |||
| Accumulated depreciation | (807,572) | (757,296) | ||
| Total net book value | $ | 614,138 | $ | 629,784 |
The aggregate depreciation expense of property, plant and equipment was $28,793 and $10,727 for the three months ended December 31, 2020 and 2019, respectively.
NOTE 7 – SOFTWARE
The book value of the Company’s software as of December 31, 2020 and September 30, 2020 was as follows:
| December 31, 2020 | September 30, 2020 | |||
| Software | $ | 2,767,984 | $ | 2,718,887 |
| Accumulated amortization | (1,598,540) | (1,451,737) | ||
| 1,169,444 | 1,267,150 |
The aggregate amortization expense related to the software was $123,397 and $181,693 for the three months ended December 31, 2020 and 2019, respectively, included in cost of revenues.
NOTE 8 – COMMITMENTS
As of December 31, 2020, the Company had four finance leases of equipment and vehicles with a gross value of approximately $106,000 and $54,000, respectively, included in property, plant and equipment. The Company also leases its offices under operating lease and short-term lease. The estimated effect of lease renewal and termination options, as applicable, was included in the consolidated financial statements in current period.
The components of lease expense were as follows:
| For the three months ended December 31, | ||
| 2020 | ||
| Operating lease cost | $ | 121,062 |
| Short term lease cost | 3,447 | |
| Finance lease cost: | ||
| Amortization of right-of-use asset | 7,473 | |
| Interest on lease liability | 949 | |
| Total finance lease cost | 8,422 | |
| Total lease cost | $ | 132,931 |
The following table presents the Company’s supplemental information related to operating and finance leases:
| For the three months ended December 31, | ||
| 2020 | ||
| Cash paid for amounts included in the measurement of lease liabilities | ||
| Operating cash flows from finance lease | $ | 949 |
| Operating cash flows from operating lease | $ | 121,062 |
| Financing cash flows from finance lease | $ | 6,609 |
| Weighted Average Remaining Lease Term | ||
| Operating leases | 2.22 years | |
| Finance leases | 3.08 years | |
| Weighted Average Discount Rate | ||
| Operating leases | 1.84% | |
| Finance leases | 3.00% |
The future maturity of lease liabilities as of December 31, 2020 are as follows:
| Year ending September 30 | Finance lease | Operating lease | ||
| 2021 (remaining) | $ | 28,118 | $ | 335,335 |
| 2022 | 37,491 | 370,189 | ||
| 2023 | 57,006 | 177,734 | ||
| 2024 | 16,163 | - | ||
| 2025 | 2,461 | - | ||
| Thereafter | - | - | ||
| Total | $ | 141,239 | $ | 883,258 |
| Less imputed interest | (18,416) | (17,941) | ||
| Total lease liabilities | 122,823 | 865,317 | ||
| Less current portion | (31,130) | (426,392) | ||
| Long-term lease liabilities | $ | 91,693 | $ | 438,925 |
NOTE 9 - CONTINGENCIES
The Company is subject to various claims and legal proceedings in the course of conducting the business related to Force Club Membership and, from time to time, the Company may become involved in additional claims and lawsuits incidental to the businesses. The Company’s legal counsel and management routinely assess the likelihood of adverse judgments and outcomes to these matters, as well as ranges of probable losses; to the extent losses are reasonably estimable. Accruals are recorded for these matters to the extent that management concludes a loss is probable and the financial impact, should an adverse outcome occur, is reasonable estimable.
In the opinion of management, appropriate and adequate accruals for legal matters have been made, and management believes that the probability of a material loss beyond the amounts accrued is remote. Nevertheless, the Company cannot predict the impact of future developments affecting our pending or future claims and lawsuits. The Company expenses legal costs as incurred, and all recorded legal liabilities are adjusted as required as better information becomes available to the Company. The factors the Company considers when recording an accrual for contingencies include, among others: (i) the opinions and views of the Company’s legal counsel; (ii) the Company’s previous experience; and (iii) the decision of our management as to how we intend to respond to the complaints.
For the three months ended December 31, 2020, the Company has settled three cases related to the cancellation of contracts with the amount of approximately JPY6.8 million (approximately $66,000). From balance sheet date to filing date, the Company settled three cases with the amount of approximately JPY4.0 million (approximately $39,000). As of February 22, 2021, the filing date of this 10-Q report, the Company had 20 pending legal cases, claiming a damage of approximately JPY133.6 million (approximately $1.3million) under the same nature. Our legal counsel estimated a probable settlement of these cases with total settlement amount of approximately JPY50.0 million (approximately $484,000). The Company has recorded contingency liability in the amount of JPY54.0 million (approximately $523,000) for cases settled in subsequent period and pending legal cases as of filing date.
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| 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” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. 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.
Any references to “the Company” refer to Exceed World, Inc., which operates through its wholly owned subsidiaries.
Company Overview
Corporate History
The Company was originally incorporated with the name Brilliant Acquisition, Inc., under the laws of the State of Delaware on November 25, 2014, with an objective to acquire, or merge with, an operating business. On January 12, 2016, Thomas DeNunzio of 780 Reservoir Avenue, #123, Cranston, RI 02910, the sole shareholder of the Company, entered into a Share Purchase Agreement with e-Learning Laboratory Co., Ltd., a Japan corporation (“e-Learning”). Pursuant to the Agreement, Mr. DeNunzio transferred to e-Learning, 20,000,000 shares of our common stock which represents all of our issued and outstanding shares. Following the closing of the share purchase transaction, e-Learning gained a 100% interest in the issued and outstanding shares of our common stock and became the controlling shareholder of the Company.
On January 12, 2016, the Company changed its name to Exceed World, Inc. and filed with the Delaware Secretary of State, a Certificate of Amendment. On January 12, 2016, Mr. Thomas DeNunzio resigned as our Chief Executive Officer, Chief Financial Officer, President, Director, Secretary, and Treasurer. Also, on January 12, 2016, Mr. Tomoo Yoshida was appointed as our Chief Executive Officer, Chief Financial Officer, President, Director, Secretary, and Treasurer.
On February 29, 2016, the Company entered into a Stock Purchase Agreement with Tomoo Yoshida, our Chief Executive Officer, Chief Financial Officer, President, Director, Secretary, and Treasurer. Pursuant to this Agreement, Tomoo Yoshida transferred to Exceed World, Inc., 10 shares of the common stock of E&F Co., Ltd., a Japan corporation (“E&F”), which represents all of its issued and outstanding shares in consideration of $4,835 (JPY 500,000). Following the effective date of the share purchase transaction on February 29, 2016, Exceed World, Inc. gained a 100% interest in the issued and outstanding shares of E&F’s common stock and E&F became a wholly owned subsidiary of Exceed World. On August 4, 2016, the E&F changed its name to School TV Co., Ltd (“School TV”) and filed with the Legal Affairs Bureau in Osaka, Japan.
On April 1, 2016, e-Learning entered into stock purchase agreements with 7 Japanese individuals. Pursuant to these agreements, e-Learning sold 140,000 shares of common stock in total to these individuals and received $270 as aggregate consideration. Each paid JPY0.215 per share. At the time of purchase the price paid per share by each was the equivalent of about $0.002. This sale of shares was exempt from registration in accordance with Regulation S of the Securities Act of 1933, as amended ("Regulation S") because the above sales of the stock were made to non-U.S. persons as defined under Rule 902 section (k)(2)(i) of Regulation S, pursuant to offshore transactions, and no directed selling efforts were made in the United States by the issuer, a distributor, any of their respective affiliates, or any person acting on behalf of any of the foregoing.
On August 1, 2016, the Company changed its fiscal year end from November 30 to September 30.
On August 9, 2016, e-Learning entered into stock purchase agreements with 33 Japanese individuals. Pursuant to these agreements, e-Learning sold 3,300 shares of common stock in total to these individuals and received $330 as aggregate consideration. Each paid JPY10 per share. At the time of purchase the price paid per share by each shareholder was the equivalent to about $0.1. These shares were sold pursuant to the Company’s effective S-1 Registration Statement deemed effective on July 20, 2016 at 4pm EST.
On October 28, 2016, the Company, with the approval of its board of directors and its majority shareholders by written consent in lieu of a meeting, authorized the cancellation of shares owned by e-Learning. e-Learning consented to the cancellation of shares. The total number of shares cancelled was 19,000,000 shares which was comprised of 16,500,000 restricted common shares and 2,500,000 free trading shares.
On October 28, 2016, every one (1) share of common stock, par value $.0001 per share, of the Company issued and outstanding was automatically reclassified and changed into twenty (20) shares fully paid and non-assessable shares of common stock of the Company, par value $.0001 per share. (“20-for-1 Forward Stock Split”) No fractional shares were issued. The authorized number of shares, and par value per share, of common stock are not affected by the 20-for-1 Forward Stock Split.
During July 2017 and August 2017, e-Learning entered into stock purchase agreements with 24 Japanese individuals. Pursuant to these agreements, e-Learning sold 2,240,000 shares of its common stock in total to these individuals and received $38,263 as aggregate consideration.
On September 26, 2018, Force Internationale Limited, a Cayman Island limited company (“Force Internationale”) entered into a Share Purchase Agreement with its wholly-owned subsidiary, e-Learning and 74.5% owner of the Company. Under this Share Purchase Agreement, e-Learning transferred its 74.5% interest in the Company to Force Internationale. As consideration for this transfer, Force Internationale paid $26,000.00 to e-Learning. Immediately subsequent, the Company entered into a Share Purchase Agreement with Force Internationale, to acquire 100% of Force Holdings and 100% direct owner of e-Learning. In consideration of this agreement, the Company issued 12,700,000 common shares to Force Internationale. The result of these transaction is that Force Internationale is a 84.4% owner of the Company, the Company is a 100% owner of Force Holdings, and Force Holdings is a 100% owner of e-Learning. Prior to the Share Purchase Agreements, Force Internationale was an indirect owner of 74.5% of the Company and subsequent to the Share Purchase Agreements, Force Internationale is a direct owner of 84.4% of the Company. The Share Purchase Agreements were approved by the boards of directors of each of the Company, Force Internationale, Force Holdings, and e-Learning.
On December 6, 2018, the Company entered into a share contribution agreement (the “Contribution Agreement”) with Force Internationale. Under this Agreement, the Company transferred 100% of the equity interest of School TV Co., Ltd. ("School TV"), to Force Internationale without consideration. This Contribution Agreement was approved by the board of directors of the Company, Force Internationale and School TV. Upon the completion of the disposal, School TV was deconsolidated from the Company's consolidated financial statements.
Business Information
As of December 31, 2020, we operate through our wholly owned subsidiaries, which are engaged in provision of the educational services through an internet platform called “Force Club”.
Our principal executive offices are located at 1-1-36, 1-23-38-6F, Esaka-cho, Suita-shi, Osaka 564-0063, Japan. Our phone number is +81-6-6339-4177.
Liquidity and Capital Resources
As of December 31, 2020, and September 30, 2020, we had cash and cash equivalents in the amount of $20,540,913 and $19,370,086, respectively. The increase in cash is attributed to decrease of inventories, deferred income and accounts payable. These accounts payable were mainly unpaid commissions to Force Club premium members and these payments were completed as of the date of this report. Currently, our cash balance is sufficient to fund our operations without the need for additional funding.
Revenues
We recorded revenue of $10,911,737 for the three months ended December 31, 2020 as opposed to $5,832,608 for the three months ended December 31, 2019. The increase in revenue, in our opinion, is attributed to an increase in recruitment activities of premium Force Club members.
Net Income
We recorded net income of $2,292,093 for the three months ended December 31, 2020 as opposed to net income of $489,753 for the three months ended December 31, 2019. The increase in net income is attributed to an increase in revenues.
Cash flow
For the three months ended December 31, 2020 we had cash flows from operations in the amount of $825,481. For the three months ended December 31, 2019, we had negative cash flows from operations in the amount of $1,863,719. The increase in operating cash flow, in our opinion, is attributed to increase in net income and less payments made to settle account payable.
Working capital
As of December 31, 2020, and September 30, 2020, we had working capital of $16,636,275 and $14,083,699, respectively.
Advertising
Advertising costs are expensed as incurred and included in selling and distributions expenses. Advertising expenses were $91,524 and $198,825 for the three months ended December 31, 2020 and 2019, respectively.
Advertising expenses were comprised of, but not limited to, sales events hosted for sales agents, exhibitions to promote and display company product offerings, signboards, and public relations activities.
Future Plans
Over the course of the next twelve months, the Company intends to focus on expanding its sales network in order to strengthen its business activities. Currently, revenue is derived primarily from sales of the Company’s Force Club premium package. While it is the intention of the Company to maintain this revenue stream, and to further increase the number of premium users of the Force Club, the Company also intends to diversify its operations and develop additional business activities.
In order to do so, the Company intends to focus on development of an online educational platform on which additional advertising income can be generated. At present, there are no definitive plans that have been made regarding the implementation or direction of this future online educational platform. However, we intend to begin efforts to hire additional personnel with extensive experience in web marketing in order to assist in the development of our future platform.
Impact of COVID-19
In the Company’s financial year of 2020, the global outbreak of the coronavirus disease 2019 (“COVID-19”) has significantly affected economy in Japan, where the Company mainly operates its business. Especially since February 2020, the economy has rapidly declined due to limited economic activity caused by COVID-19. The Company implemented some measures to prevent infection including shortening business hours and restricting movements of employees. Our Force Club Members’ activities, which is our main sales resources, have also been limited due to travel restrictions and social distance rules implemented nationwide and globally. Consequently, the COVID-19 pandemic may adversely affect the Company’s business operations, financial condition and operating results for 2020, including but not limited to material negative impact to the Company’s total revenues. Due to the high uncertainty of the evolving situation, the Company has limited visibility on the full impact brought upon by the COVID-19 pandemic and the related financial impact cannot be estimated at this time.
| ITEM 3 | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.
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| 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 December 31, 2020, the end of the fiscal period covered by this report, 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, inadequate segregation of duties consistent with control objectives, lack of well-established procedures to identify, approve and report related party transactions and lack of an audit committee. These material weaknesses were identified by our Chief Executive Officer who also serves as our Chief Financial Officer in connection with the above annual 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 three months ended December 31, 2020, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
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PART II-OTHER INFORMATION
| ITEM 1 | LEGAL PROCEEDINGS |
For the three months ended December 31, 2020, the Company has settled three cases related to the cancellation of contracts with the amount of approximately JPY6.8 million (approximately $66,000). From balance sheet date to filing date, the Company settled three cases with the amount of approximately JPY4.0 million (approximately $39,000). As of February 22, 2021, the filing date of this 10-Q report, the Company had 20 pending legal cases, claiming a damage of approximately JPY133.6 million (approximately $1.3 million) under the same nature. Our legal counsel estimated a probable settlement of these cases with total settlement amount of approximately JPY 50.0 million (approximately $484,000). The Company has recorded contingency liability in the amount of JPY54.0 million (approximately $523,000) for cases settled in subsequent period and pending legal cases as of filing date.
During the past ten (10) years, none of our directors, persons nominated to become directors, executive officers, promoters or control persons was involved in any of the legal proceedings listen in Item 401 (f) of Regulation S-K.
| ITEM 1A | RISK FACTORS |
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.
| ITEM 2 | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
None.
| 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) |
| 3.3 | Amendment to the Articles of Incorporation of the Company (2) |
| 3.4 | Amendment to the Articles of Incorporation of the Company (3) |
| 3.5 | Articles of Association of Force Holdings (4) |
| 3.6 | Articles of Incorporation of e-Learning (4) |
| 10.1 | Share Purchase Agreement dated September 26, 2018 by and among Force Internationale and e-Learning (4) |
| 10.2 | Share Purchase Agreement dated September 26, 2018 by and among Force Internationale and Exceed World (4) |
| 10.3 | Share Contribution Agreement dated December 6, 2018 by and among Force Internationale and Exceed World (5) |
| 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-K (6) |
| 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 (6) |
| 101.INS | XBRL Instance Document (7) |
| 101.SCH | XBRL Taxonomy Extension Schema (7) |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase (7) |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase (7) |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase (7) |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase (7) |
| (1) | Filed as an exhibit to the Company's Registration Statement on Form 10, as filed with the SEC on February 19, 2015, and incorporated herein by this reference. |
| (2) | Filed as an exhibit to the Company's Current Report on Form 8-K as filed with the SEC on January 12, 2016, and incorporated herein by this reference. |
| (3) | Filed as an exhibit to the Company's Current Report on Form 8-K as filed with the SEC on November 1, 2016, and incorporated herein by this reference. |
| (4) | Filed as an exhibit to the Company's Current Report on Form 8-K as filed with the SEC on October 2, 2018, and incorporated herein by this reference. |
| (5) | Filed as an exhibit to the Company's Current Report on Form 8-K as filed with the SEC on December 12, 2018, and incorporated herein by this reference. |
| (6) | Filed herewith. |
| (7) | Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or Annual Report for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Exchange Act of 1934 and otherwise are not subject to liability. |
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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.
Exceed World, Inc.
(Registrant)
By: /s/ Tomoo Yoshida
Name: Tomoo Yoshida
CEO, President, Director
Dated: February 22, 2021
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EXHIBIT 31.1
Exceed World, INC.
OFFICER'S CERTIFICATE PURSUANT TO SECTION 302
I, Tomoo Yoshida, certify that:
1. I have reviewed this report on Form 10-Q of Exceed World, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4. The small business issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The small business owner’s other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small issuer's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
Dated: February 22, 2021
By: /s/ Tomoo Yoshida
Tomoo Yoshida,
Chief Executive Officer
(Principal Executive Officer)
EXHIBIT 31.2
Exceed World, INC.
OFFICER'S CERTIFICATE PURSUANT TO SECTION 302
I, Tomoo Yoshida, certify that:
1. I have reviewed this report on Form 10-Q of Exceed World, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4. The small business issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The small business owner’s other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small issuer's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
Dated: February 22, 2021
By: /s/ Tomoo Yoshida
Tomoo Yoshida,
Chief Financial Officer
(Principal Financial Officer)
EXHIBIT 32.1
Exceed World, INC.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Exceed World, Inc. (the Company) on Form 10-Q for the quarterly period ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Tomoo Yoshida, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to Tomoo Yoshida and will be retained by Exceed World, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Dated: February 22, 2021
By: /s/ Tomoo Yoshida
Tomoo Yoshida,
Chief Executive Officer
(Principal Executive Officer)
EXHIBIT 32.2
Exceed World, INC.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Exceed World, Inc. (the Company) on Form 10-Q for the quarterly period ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Tomoo Yoshida, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to Tomoo Yoshida and will be retained by Exceed World, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Dated: February 22, 2021
By: /s/ Tomoo Yoshida
Tomoo Yoshida,
Chief Financial Officer
(Principal Financial Officer)