10-Q

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, 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: 000-55377

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 16, 2024, there were approximately 32,700,000 shares of common stock and no 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 - UNAUDITED	F3
	CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED	F4
	NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS	F5-F6
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

ITEM 1 FINANCIAL STATEMENTS

EXCEED WORLD, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited) 

		As of		As of
		December 31, 2023		September 30, 2023
		(Unaudited)
ASSETS
Current Assets
Cash	$	17,963,261	$	18,165,169
Accounts receivable		52,636		49,860
Income tax recoverable		833,260		587,663
Prepaid expenses		154,561		112,363
Inventories		1,689,804		1,759,542
Other current assets		432,482		411,343
TOTAL CURRENT ASSETS		21,126,004		21,085,940
Non-current Assets
Property, plant and equipment, net		314,858		310,943
Software, net		165,162		189,431
Operating lease right-of-use assets		572,263		623,650
Other intangible assets, net		127,635		120,852
Long-term prepaid expenses		35,859		34,527
Deferred tax assets		705,403		675,000
Insurance funds		58,380		53,796
Security deposits		200,273		189,630
TOTAL NON-CURRENT ASSETS		2,179,833		2,197,829
TOTAL ASSETS	$	23,305,837	$	23,283,769
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable	$	824,459	$	642,483
Accrued expenses and other payables		494,885		592,740
Contingency liability		270,125		406,635
Income tax payable		-		436,448
Deferred income		679,985		1,163,548
Finance lease obligations, current		11,379		13,925
Operating lease liabilities, current		281,857		299,947
Due to related parties		1,772,752		1,640,160
Due to director		741,248		741,248
Other current liabilities		589,189		410,106
TOTAL CURRENT LIABILITIES		5,665,879		6,347,240
Non-current Liabilities
Finance lease obligations, non-current		26,805		27,020
Operating lease liabilities, non-current		260,691		295,566
TOTAL NON-CURRENT LIABILITIES		287,496		322,586
TOTAL LIABILITIES		5,953,375		6,669,826
Shareholders' Equity
Preferred stock ($0.0001 par value, 20,000,000 shares authorized; 0 issued and outstanding as of December 31, 2023 and September 30, 2023)		-		-
Common stock ($0.0001 par value, 500,000,000 shares authorized, 32,700,000 shares issued and outstanding as of December 31, 2023 and September 30, 2023)		3,270		3,270
Additional paid-in capital		103,840		103,840
Retained earnings		22,185,202		22,463,148
Accumulated other comprehensive loss		(4,939,850)		(5,956,315)
TOTAL SHAREHOLDERS' EQUITY		17,352,462		16,613,943
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	23,305,837	$	23,283,769

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

-F1-

EXCEED WORLD, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

		Three Months Ended			Three Months Ended
		December 31, 2023			December 31, 2022
Revenues	$	4,827,149	$		6,031,803
Cost of revenues		2,343,572			2,899,252
Gross profit		2,483,577			3,132,551
Operating expenses
Selling and distribution expenses		101,056			384,058
Administrative expenses		2,662,866		2,560,321
Total operating expenses		2,763,922			2,944,379
Income (loss) from operations		(280,345)			188,172
Other income (expense)
Other income		10,063			27,042
Interest expenses		(490)			(508)
Total other income		9,573			26,534
Net income (loss) before tax		(270,772)			214,706
Income tax expense		7,174			122,247
Net income (loss)	$	(277,946)	$		92,459
Comprehensive income (loss)
Net income (loss)	$	(277,946)	$		92,459
Other comprehensive income
Foreign currency translation adjustment		1,016,465			1,825,090
Total comprehensive income	$	738,519	$		1,917,549
Income (loss) per common share
Basic	$	(0.01)	$		0.00
Diluted	$	(0.01)	$		0.00
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-

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, 2022	32,700,000	$	3,270	$	103,840		$	(5,355,011)		$	23,014,895		$	17,766,994
Net income	-		-		-			-			92,459			92,459
Foreign currency translation	-		-		-			1,825,090			-			1,825,090
Balance - December 31, 2022	32,700,000		3,270		103,840			(3,529,921)			23,107,354			19,684,543
Balance - September 30, 2023	32,700,000		3,270		103,840			(5,956,315)			22,463,148			16,613,943
Net loss	-		-		-			-			(277,946)			(277,946)
Foreign currency translation	-		-		-			1,016,465			-			1,016,465
Balance - December 31, 2023	32,700,000	$	3,270	$	103,840		$	(4,939,850)		$	22,185,202		$	17,352,462

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, 2023		December 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(277,946)	$	92,459
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		46,459		84,517
Loss (gain) on company owned life insurance policies		250		(7,793)
Non-cash lease expense		82,865		87,647
Deferred income taxes		7,174		(152,970)
Changes in operating assets and liabilities:
Accounts receivable		21		(99,069)
Income tax recoverable		(203,944)		-
Prepaid expenses		(34,466)		(23,978)
Inventories		161,619		190,724
Other current assets		1,868		(707)
Long-term prepaid expenses		566		592
Accounts payable		139,967		(2,135,388)
Accrued expenses and other payables		6,419		(424,193)
Contingency liability		(152,834)		12,003
Income tax payable		(442,145)		(1,612,715)
Deferred income		(526,482)		1,022,058
Operating lease liabilities		(82,865)		(87,647)
Other current liabilities		109,384		73,711
Net cash used in operating activities		(1,164,090)		(2,980,749)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of company-owned life insurance policies		(1,750)		(8,416)
Proceed from surrender of company-owned life insurance policies		-		1,011,787
Net cash provided by (used in) investing activities		(1,750)		1,003,371
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of finance lease obligations		(4,244)		(5,302)
Net cash used in financing activities		(4,244)		(5,302)
Net effect of exchange rate changes on cash		968,177		2,040,336
Net change in cash
Cash - beginning of period		18,165,168		23,822,217
Net increase (decrease) in cash		(201,907)		57,656
Cash - end of period	$	17,963,261	$	23,879,873
NON-CASH INVESTING AND FINANCING TRANSACTIONS
Operating expense paid by related parties on behalf of the Company	$	132,592	$	92,599
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	490	$	508
Income taxes paid	$	645,615	$	1,887,932

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, 2023

(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, 2023, 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, 2023, 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 accounting policies that contain subjective management estimates and assumptions include those related to 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”), 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 changes in 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, 2023	December 31, 2022
Current JPY: US$1 exchange rate	141.83	132.70
Average JPY: US$1 exchange rate	147.86	141.38
Current HK$: 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, 2023. Generally, the Company grants Force Club members the rights to access the Company’s educational content. There are three tiers of members, namely standard members, support 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.

To further promote the Company’s business, starting fiscal year 2021, the Company also offers its customers to subscribe and become a support member. Similar to a premium member, the support members are granted full access to the Company’s educational content and the right to recruit prospect customers to become the Company’s members, but the amount of commission entitled to the support member for each recruitment is lower than that to the premium members. The customers subscribing to support membership pay a lower fee for the access to educational content and will receive promotional materials which is substantially lesser in scale as compared to that to a premium member. For the three months ended December 31, 2023 and 2022, the revenue generated from support member subscription is still immaterial.

The support member has the choice to become a premium member by making relevant premium member registration and purchasing the upgrade pack from the Company. The revenue from upgrade pack is accounted for in the same manner as the revenue from the premium pack as described below.

Revenue from the premium pack (including the upgrade pack) is recognized net of discounts and return allowances 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. For sales of premium packs and upgrade packs with return conditions, the Company reasonably estimate the possibility of return based on historical experience. There were no liabilities for return allowances nor assets from the right to recover products from the associated return allowances recorded as of December 31, 2023 and September 30, 2023, as substantially all sales of premium packs (including the upgrade pack) during the periods then ended have reached the end of the return periods.

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, 2023 and September 30, 2023, the Company's deferred income was $679,985 and $1,163,548 respectively. During the three months ended December 31, 2023, the Company recognized $1,163,548 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.

The Company considers the carrying amount of its financial assets and liabilities, which consist primarily of cash, accounts receivable, income tax recoverable, inventories, 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, 2023 and September 30, 2023 owing to their short-term or present value nature or present value of the assets and liabilities.

NOTE 4 - INCOME TAXES

For the three months ended December 31, 2023 and 2022, the Company had income tax expenses of $7,174 and $122,247, respectively. Effective tax rate was (2.65)% and 56.94% for the three months ended December 31, 2023 and 2022, respectively.

The provisions for income taxes for the three months ended December 31, 2023 and 2022 are summarized as follows:

		For the three months ended December 31,
		2023	2022
Current income tax expense	$	-	275,217
Deferred income tax (benefit) expense		7,174	(152,970)
Total	$	7,174	122,247

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
2022		21.87%		23.74%		34.34%
2023		21.87%		23.74%		34.34%

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, 2023 and 2022, 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, 2023, and September 30, 2023, the Company’s due to related parties and director are as follows:

		December 31, 2023		September 30, 2023
Due to director
Tomoo Yoshida, CEO, CFO, sole director and a shareholder of the Company	$	741,248	$	741,248
Total due to director	$	741,248	$	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		1,725,117		1,592,525
Total due to related parties	$	1,772,752	$	1,640,160

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. During the three months ended December 31, 2023 and 2022, Force Internationale paid expenses on behalf of the Company in the amount of $132,592 and $92,599, respectively.

Tomoo Yoshida provided guarantee for the Company’s office leases during the nine months ended December 31, 2023 and 2022.

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

		December 31, 2023		September 30, 2023
Building	$	193,318	$	183,045
Leasehold improvement		43,601		41,284
Equipment		746,441		706,774
Vehicles		34,328		32,504
		1,017,688		963,607
Accumulated depreciation		(702,830)		(652,664)
Total net book value	$	314,858	$	310,943

The aggregate depreciation expense of property, plant and equipment was $12,983 and $28,807 for the three months ended December 31, 2023 and 2022, respectively.

NOTE 7 - SOFTWARE

The book value of the Company’s software as of December 31, 2023 and September 30, 2023 was as follows:

		December 31, 2023		September 30, 2023
Software	$	1,160,389	$	1,098,725
Accumulated amortization		(995,227)		(909,294)
Total net book value	$	165,162	$	189,431

The aggregate amortization expense related to the software was $33,476 and $54,517 for the three months ended December 31, 2023 and 2022, respectively, included in cost of revenues.  

NOTE 8 - COMMITMENTS

As of December 31, 2023, the Company had four finance leases of equipment and vehicles with a gross value of approximately $79,080 and $34,328, 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,
		2023	2022
Operating lease cost	$	85,511	89,430
Short term lease cost		4,044	4,229
Finance lease cost:
Amortization of right-of-use asset		5,167	5,532
Interest on lease liability		611	470
Total finance lease cost		5,778	6,002
Total lease cost	$	95,333	99,661

The following table presents the Company’s supplemental information related to operating and finance leases:

		For the three months ended December 31,
		2023	2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	611	470
Operating cash flows from operating leases	$	85,511	89,430
Financing cash flows from finance leases	$	4,244	5,302
Weighted Average Remaining Lease Term
Operating leases		2.20 years	1.25 years
Finance leases		3.40 years	1.52 years
Weighted Average Discount Rate
Operating leases		1.84%	1.84%
Finance leases		6.40%	3.46%

The future maturity of lease liabilities as of December 31, 2023 are as follows:

Year ending September 30		Finance lease		Operating lease
2024 (remaining)	$	12,386	$	236,346
2025		8,611		187,932
2026		6,819		129,375
2027		6,819		-
2028		14,578		-
Thereafter		-		-
Total	$	49,213	$	553,653
Less imputed interest		(11,029)		(11,105)
Total lease liabilities		38,184		542,548
Less current portion		(11,379)		(281,857)
Long-term lease liabilities	$	26,805	$	260,691

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. 

During the three months ended December 31, 2023, the Company has settled three legal cases in the amount of approximately JPY28.8 million (approximately $203,000) related to the cancellation of contract. As of filing date, the Company had five pending legal cases, claiming a damage of approximately JPY93.9 million (approximately $660,000) related to the cancellation of contracts. The Company’s legal counsel estimated a probable settlement for these cases with total settlement amount of approximately JPY38.3 million (approximately $270,000). The Company accrued a total liability of JPY38.3 million (approximately $270,000) as of December 31, 2023.

-F6-

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, 2023, we operate through our wholly-owned subsidiaries, which are engaged in the 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, Esakacho, Suita-shi, Osaka 564-0063, Japan. Our phone number is +81-6-6339-4177.

Liquidity and Capital Resources 

As of December 31, 2023 and September 30, 2023, we had cash in the amount of $17,963,261 and $18,165,169, respectively. Currently, our cash balance is sufficient to fund our operations without the need for additional funding.

Revenues

We recorded revenue of $4,827,149 for the three months ended December 31, 2023 as opposed to $6,031,803 for the three months ended December 31, 2022. The decrease in revenue, in our opinion, is attributed to a decrease in recruitment activities of premium Force Club members.

Net Income (Loss)

We recorded net loss of $277,946 for the three months ended December 31, 2023 as opposed to net income of $92,459 for the three months ended December 31, 2022. The decrease in net income is attributed to a decrease in revenue.

Cash flow

For the three months ended December 31, 2023, we had negative cash flows from operations in the amount of $1,164,090 as opposed to f $2,980,749 for the three months ended December 31, 2022. The increase in operating cash flow, in our opinion, is mainly attributed to a decrease in settlement of account payable and income tax payable.

Working capital

As of December 31, 2023 and September 30, 2023, we had working capital of $15,460,125 and $14,738,700 respectively.

Advertising

Advertising costs are expensed as incurred and included in selling and distributions expenses. Advertising expenses were $101,056 and $384,058 for the three months ended December 31, 2023 and 2022, 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 will continue to focus on expanding its sales network in order to strengthen its business activities as well as to provide benefits and incentives to premium members as value-added services, in addition to the standard compensation package.

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.

-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 December 31, 2023, 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, 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

During the three months ended December 31, 2023, the Company has settled three legal cases in the amount of approximately JPY28.8 million (approximately $203,000) related to the cancellation of contract. As of filing date, the Company had five pending legal cases, claiming a damage of approximately JPY93.9 million (approximately $660,000) related to the cancellation of contracts. The Company’s legal counsel estimated a probable settlement for these cases with total settlement amount of approximately JPY38.3 million (approximately $270,000). The Company accrued a total liability of JPY38.3 million (approximately $270,000) as of December 31, 2023.

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)
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 (4)
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 (4)
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 Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101)

(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 herewith.

-5-

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.

Exceed World, Inc.

(Registrant)

By: /s/ Tomoo Yoshida 

Name: Tomoo Yoshida

CEO, CFO, President, Director

Dated: February 16, 2024 

-6-

EX-31

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 16, 2024

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 16, 2024

By: /s/ Tomoo Yoshida

Tomoo Yoshida,

Chief Financial Officer

(Principal Financial Officer)

EX-32

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 quarter ended December 31, 2023, 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 16, 2024

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 quarter ended December 31, 2023, 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 16, 2024

By: /s/ Tomoo Yoshida

Tomoo Yoshida,

Chief Financial Officer

(Principal Financial Officer)

XML

Cover - shares	3 Months Ended
	Dec. 31, 2023	Feb. 16, 2024	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2023
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--09-30
Entity File Number	000-55377
Entity Registrant Name	Exceed World, Inc.
Entity Central Index Key	0001634293
Entity Tax Identification Number	98-1339955
Entity Incorporation, State or Country Code	DE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Shell Company	false
Common Stock, Shares, Issued	32,700,000	32,700,000	32,700,000	32,700,000	32,700,000

XML

Consolidated Balance Sheets - USD ($)	Dec. 31, 2023	Sep. 30, 2023
Current Assets
Cash	$ 17,963,261	$ 18,165,169
Accounts receivable	52,636	49,860
Income tax recoverable	833,260	587,663
Prepaid expenses	154,561	112,363
Inventories	1,689,804	1,759,542
Other current assets	432,482	411,343
TOTAL CURRENT ASSETS	21,126,004	21,085,940
Non-current Assets
Property, plant and equipment, net	314,858	310,943
Software, net	165,162	189,431
Operating lease right-of-use assets	572,263	623,650
Other intangible assets, net	127,635	120,852
Long-term prepaid expenses	35,859	34,527
Deferred tax assets	705,403	675,000
Insurance funds	58,380	53,796
Security deposits	200,273	189,630
TOTAL NON-CURRENT ASSETS	2,179,833	2,197,829
TOTAL ASSETS	23,305,837	23,283,769
Current Liabilities
Accounts payable	824,459	642,483
Accrued expenses and other payables	494,885	592,740
Contingency liability	270,125	406,635
Income tax payable		436,448
Deferred income	679,985	1,163,548
Finance lease obligations, current	11,379	13,925
Operating lease liabilities, current	281,857	299,947
Due to related parties	1,772,752	1,640,160
Due to director	741,248	741,248
Other current liabilities	589,189	410,106
TOTAL CURRENT LIABILITIES	5,665,879	6,347,240
Non-current Liabilities
Finance lease obligations, non-current	26,805	27,020
Operating lease liabilities, non-current	260,691	295,566
TOTAL NON-CURRENT LIABILITIES	287,496	322,586
TOTAL LIABILITIES	5,953,375	6,669,826
Preferred stock ($0.0001 par value, 20,000,000 shares authorized; 0 issued and outstanding as of December 31, 2023 and September 30, 2023)
Common stock ($0.0001 par value, 500,000,000 shares authorized, 32,700,000 shares issued and outstanding as of December 31, 2023 and September 30, 2023)	3,270	3,270
Additional paid-in capital	103,840	103,840
Retained earnings	22,185,202	22,463,148
Accumulated other comprehensive loss	(4,939,850)	(5,956,315)
TOTAL SHAREHOLDERS' EQUITY	17,352,462	16,613,943
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 23,305,837	$ 23,283,769

XML

Consolidated Balance Sheets (Parenthetical)	Dec. 31, 2023 $ / shares shares
Statement of Financial Position [Abstract]
preferred par value | $ / shares	$ 0.0001
preferred authorized	20,000,000
preferred issued	0
common par value | $ / shares	$ 0.0001
common authorized	500,000,000
common issued	32,700,000

XML

Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Statement [Abstract]
Revenues	$ 4,827,149	$ 6,031,803
Cost of revenues	2,343,572	2,899,252
Gross profit	2,483,577	3,132,551
Operating expenses
Selling and distribution expenses	101,056	384,058
Administrative expenses	2,662,866	2,560,321
Total operating expenses	2,763,922	2,944,379
Income (loss) from operations	(280,345)	188,172
Other income (expense)
Other income	10,063	27,042
Interest expenses	(490)	(508)
Total other income	9,573	26,534
Net income (loss) before tax	(270,772)	214,706
Income tax expense	7,174	122,247
Net income (loss)	(277,946)	92,459
Comprehensive income (loss)
Foreign currency translation adjustment	1,016,465	1,825,090
Total comprehensive income	$ 738,519	$ 1,917,549
Income (loss) per common share
Basic	$ (0.01)	$ 0.00
Diluted	$ (0.01)	$ 0.00
Weighted average common shares outstanding
Basic	32,700,000	32,700,000
Diluted	32,700,000	32,700,000

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Statements of Changes in Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Comprehensive Income [Member]	Retained Earnings [Member]	Total
Common Stock Issued and Outstanding					32,700,000
Balance - December 31, 2023	$ 3,270	$ 103,840	$ (5,355,011)	$ 23,014,895	$ 17,766,994
Balance - September 30, 2023 at Sep. 30, 2022	3,270	103,840	(5,355,011)	23,014,895	17,766,994
Net loss				92,459	92,459
Foreign currency translation			1,825,090		$ 1,825,090
Common Stock Issued and Outstanding					32,700,000
Balance - December 31, 2023	3,270	103,840	(3,529,921)	23,107,354	$ 19,684,543
Common Stock Issued and Outstanding					32,700,000
Balance - December 31, 2023	3,270	103,840	(5,956,315)	22,463,148	$ 16,613,943
Balance - September 30, 2023 at Sep. 30, 2023	3,270	103,840	(5,956,315)	22,463,148	16,613,943
Net loss				(277,946)	(277,946)
Foreign currency translation			1,016,465		$ 1,016,465
Common Stock Issued and Outstanding					32,700,000
Balance - December 31, 2023	$ 3,270	$ 103,840	$ (4,939,850)	$ 22,185,202	$ 17,352,462

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (277,946)	$ 92,459
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	46,459	84,517
Loss (gain) on company owned life insurance policies	250	(7,793)
Non-cash lease expense	82,865	87,647
Deferred income taxes	7,174	(152,970)
Changes in operating assets and liabilities:
Accounts receivable	21	(99,069)
Income tax recoverable	(203,944)
Prepaid expenses	(34,466)	(23,978)
Inventories	161,619	190,724
Other current assets	1,868	(707)
Long-term prepaid expenses	566	592
Accounts payable	139,967	(2,135,388)
Accrued expenses and other payables	6,419	(424,193)
Contingency liability	(152,834)	12,003
Income tax payable	(442,145)	(1,612,715)
Deferred income	(526,482)	1,022,058
Operating lease liabilities	(82,865)	(87,647)
Other current liabilities	109,384	73,711
Net cash used in operating activities	(1,164,090)	(2,980,749)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of company-owned life insurance policies	(1,750)	(8,416)
Proceed from surrender of company-owned life insurance policies		1,011,787
Net cash provided by (used in) investing activities	(1,750)	1,003,371
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of finance lease obligations	(4,244)	(5,302)
Net cash used in financing activities	(4,244)	(5,302)
Net effect of exchange rate changes on cash	968,177	2,040,336
Net change in cash
Cash - beginning of period	18,165,168	23,822,217
Net increase (decrease) in cash	(201,907)	57,656
Cash - end of period	17,963,261	23,879,873
NON-CASH INVESTING AND FINANCING TRANSACTIONS
Operating expense paid by related parties on behalf of the Company	132,592	92,599
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	490	508
Income taxes paid	$ 645,615	$ 1,887,932

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NOTE 1 - ORGANIZATION, DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

3 Months Ended

Dec. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NOTE 1 - ORGANIZATION, DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

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, 2023, 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, 2023, included in our Form 10-K.

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

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 accounting policies that contain subjective management estimates and assumptions include those related to 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”), 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 changes in 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, 2023	December 31, 2022
Current JPY: US$1 exchange rate	141.83	132.70
Average JPY: US$1 exchange rate	147.86	141.38
Current HK$: 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, 2023. Generally, the Company grants Force Club members the rights to access the Company’s educational content. There are three tiers of members, namely standard members, support 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.

To further promote the Company’s business, starting fiscal year 2021, the Company also offers its customers to subscribe and become a support member. Similar to a premium member, the support members are granted full access to the Company’s educational content and the right to recruit prospect customers to become the Company’s members, but the amount of commission entitled to the support member for each recruitment is lower than that to the premium members. The customers subscribing to support membership pay a lower fee for the access to educational content and will receive promotional materials which is substantially lesser in scale as compared to that to a premium member. For the three months ended December 31, 2023 and 2022, the revenue generated from support member subscription is still immaterial.

The support member has the choice to become a premium member by making relevant premium member registration and purchasing the upgrade pack from the Company. The revenue from upgrade pack is accounted for in the same manner as the revenue from the premium pack as described below.

Revenue from the premium pack (including the upgrade pack) is recognized net of discounts and return allowances 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. For sales of premium packs and upgrade packs with return conditions, the Company reasonably estimate the possibility of return based on historical experience. There were no liabilities for return allowances nor assets from the right to recover products from the associated return allowances recorded as of December 31, 2023 and September 30, 2023, as substantially all sales of premium packs (including the upgrade pack) during the periods then ended have reached the end of the return periods.

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, 2023 and September 30, 2023, the Company's deferred income was $679,985 and $1,163,548 respectively. During the three months ended December 31, 2023, the Company recognized $1,163,548 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-

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NOTE 3 - FAIR VALUE MEASUREMENT

3 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

NOTE 3 - FAIR VALUE MEASUREMENT

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.

The Company considers the carrying amount of its financial assets and liabilities, which consist primarily of cash, accounts receivable, income tax recoverable, inventories, 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, 2023 and September 30, 2023 owing to their short-term or present value nature or present value of the assets and liabilities.

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NOTE 4 - INCOME TAXES

3 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

NOTE 4 - INCOME TAXES

NOTE 4 - INCOME TAXES

For the three months ended December 31, 2023 and 2022, the Company had income tax expenses of $7,174 and $122,247, respectively. Effective tax rate was (2.65)% and 56.94% for the three months ended December 31, 2023 and 2022, respectively.

The provisions for income taxes for the three months ended December 31, 2023 and 2022 are summarized as follows:

		For the three months ended December 31,
		2023	2022
Current income tax expense	$	-	275,217
Deferred income tax (benefit) expense		7,174	(152,970)
Total	$	7,174	122,247

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
2022		21.87%		23.74%		34.34%
2023		21.87%		23.74%		34.34%

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, 2023 and 2022, 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.

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NOTE 5 - RELATED-PARTY TRANSACTIONS

3 Months Ended

Dec. 31, 2023

Related Party Transactions [Abstract]

NOTE 5 - RELATED-PARTY TRANSACTIONS

NOTE 5 - RELATED-PARTY TRANSACTIONS

As of December 31, 2023, and September 30, 2023, the Company’s due to related parties and director are as follows:

		December 31, 2023		September 30, 2023
Due to director
Tomoo Yoshida, CEO, CFO, sole director and a shareholder of the Company	$	741,248	$	741,248
Total due to director	$	741,248	$	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		1,725,117		1,592,525
Total due to related parties	$	1,772,752	$	1,640,160

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. During the three months ended December 31, 2023 and 2022, Force Internationale paid expenses on behalf of the Company in the amount of $132,592 and $92,599, respectively.

Tomoo Yoshida provided guarantee for the Company’s office leases during the nine months ended December 31, 2023 and 2022.

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NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

3 Months Ended

Dec. 31, 2023

Property, Plant and Equipment [Abstract]

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

		December 31, 2023		September 30, 2023
Building	$	193,318	$	183,045
Leasehold improvement		43,601		41,284
Equipment		746,441		706,774
Vehicles		34,328		32,504
		1,017,688		963,607
Accumulated depreciation		(702,830)		(652,664)
Total net book value	$	314,858	$	310,943

The aggregate depreciation expense of property, plant and equipment was $12,983 and $28,807 for the three months ended December 31, 2023 and 2022, respectively.

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NOTE 7 - SOFTWARE

3 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

NOTE 7 - SOFTWARE

NOTE 7 - SOFTWARE

The book value of the Company’s software as of December 31, 2023 and September 30, 2023 was as follows:

		December 31, 2023		September 30, 2023
Software	$	1,160,389	$	1,098,725
Accumulated amortization		(995,227)		(909,294)
Total net book value	$	165,162	$	189,431

The aggregate amortization expense related to the software was $33,476 and $54,517 for the three months ended December 31, 2023 and 2022, respectively, included in cost of revenues.  

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NOTE 9 - CONTINGENCIES

3 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

NOTE 9 - CONTINGENCIES

NOTE 8 - COMMITMENTS

As of December 31, 2023, the Company had four finance leases of equipment and vehicles with a gross value of approximately $79,080 and $34,328, 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,
		2023	2022
Operating lease cost	$	85,511	89,430
Short term lease cost		4,044	4,229
Finance lease cost:
Amortization of right-of-use asset		5,167	5,532
Interest on lease liability		611	470
Total finance lease cost		5,778	6,002
Total lease cost	$	95,333	99,661

The following table presents the Company’s supplemental information related to operating and finance leases:

		For the three months ended December 31,
		2023	2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	611	470
Operating cash flows from operating leases	$	85,511	89,430
Financing cash flows from finance leases	$	4,244	5,302
Weighted Average Remaining Lease Term
Operating leases		2.20 years	1.25 years
Finance leases		3.40 years	1.52 years
Weighted Average Discount Rate
Operating leases		1.84%	1.84%
Finance leases		6.40%	3.46%

The future maturity of lease liabilities as of December 31, 2023 are as follows:

Year ending September 30		Finance lease		Operating lease
2024 (remaining)	$	12,386	$	236,346
2025		8,611		187,932
2026		6,819		129,375
2027		6,819		-
2028		14,578		-
Thereafter		-		-
Total	$	49,213	$	553,653
Less imputed interest		(11,029)		(11,105)
Total lease liabilities		38,184		542,548
Less current portion		(11,379)		(281,857)
Long-term lease liabilities	$	26,805	$	260,691

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. 

During the three months ended December 31, 2023, the Company has settled three legal cases in the amount of approximately JPY28.8 million (approximately $203,000) related to the cancellation of contract. As of filing date, the Company had five pending legal cases, claiming a damage of approximately JPY93.9 million (approximately $660,000) related to the cancellation of contracts. The Company’s legal counsel estimated a probable settlement for these cases with total settlement amount of approximately JPY38.3 million (approximately $270,000). The Company accrued a total liability of JPY38.3 million (approximately $270,000) as of December 31, 2023.

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

PRINCIPLES OF CONSOLIDATION

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

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 accounting policies that contain subjective management estimates and assumptions include those related to 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

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

FOREIGN CURRENCY TRANSLATION 

The Company maintains its books and records in its local currencies, Japanese YEN (“JPY”), 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 changes in 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, 2023	December 31, 2022
Current JPY: US$1 exchange rate	141.83	132.70
Average JPY: US$1 exchange rate	147.86	141.38
Current HK$: US$1 exchange rate	7.80	7.80
Average HK$: US$1 exchange rate	7.80	7.80

REVENUE RECOGNITION

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, 2023. Generally, the Company grants Force Club members the rights to access the Company’s educational content. There are three tiers of members, namely standard members, support 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.

To further promote the Company’s business, starting fiscal year 2021, the Company also offers its customers to subscribe and become a support member. Similar to a premium member, the support members are granted full access to the Company’s educational content and the right to recruit prospect customers to become the Company’s members, but the amount of commission entitled to the support member for each recruitment is lower than that to the premium members. The customers subscribing to support membership pay a lower fee for the access to educational content and will receive promotional materials which is substantially lesser in scale as compared to that to a premium member. For the three months ended December 31, 2023 and 2022, the revenue generated from support member subscription is still immaterial.

The support member has the choice to become a premium member by making relevant premium member registration and purchasing the upgrade pack from the Company. The revenue from upgrade pack is accounted for in the same manner as the revenue from the premium pack as described below.

Revenue from the premium pack (including the upgrade pack) is recognized net of discounts and return allowances 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. For sales of premium packs and upgrade packs with return conditions, the Company reasonably estimate the possibility of return based on historical experience. There were no liabilities for return allowances nor assets from the right to recover products from the associated return allowances recorded as of December 31, 2023 and September 30, 2023, as substantially all sales of premium packs (including the upgrade pack) during the periods then ended have reached the end of the return periods.

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, 2023 and September 30, 2023, the Company's deferred income was $679,985 and $1,163,548 respectively. During the three months ended December 31, 2023, the Company recognized $1,163,548 of deferred income in the opening balance.

The Company does not have any contract asset.

OPERATING LEASES

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.

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

Translation of amounts from the local currency

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

	December 31, 2023	December 31, 2022
Current JPY: US$1 exchange rate	141.83	132.70
Average JPY: US$1 exchange rate	147.86	141.38
Current HK$: US$1 exchange rate	7.80	7.80
Average HK$: US$1 exchange rate	7.80	7.80

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NOTE 4 - INCOME TAXES (Tables)

3 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

provisions for income taxes for the three months ended December 31, 2023 and 2022

The provisions for income taxes for the three months ended December 31, 2023 and 2022 are summarized as follows:

		For the three months ended December 31,
		2023	2022
Current income tax expense	$	-	275,217
Deferred income tax (benefit) expense		7,174	(152,970)
Total	$	7,174	122,247

income taxes, which, in aggregate, represent a statutory tax rate

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
2022		21.87%		23.74%		34.34%
2023		21.87%		23.74%		34.34%

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NOTE 5 - RELATED-PARTY TRANSACTIONS (Tables)

3 Months Ended

Dec. 31, 2023

Related Party Transactions [Abstract]

due to related parties and director

As of December 31, 2023, and September 30, 2023, the Company’s due to related parties and director are as follows:

		December 31, 2023		September 30, 2023
Due to director
Tomoo Yoshida, CEO, CFO, sole director and a shareholder of the Company	$	741,248	$	741,248
Total due to director	$	741,248	$	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		1,725,117		1,592,525
Total due to related parties	$	1,772,752	$	1,640,160

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NOTE 6 - PROPERTY, PLANT AND EQUIPMENT (Tables)

3 Months Ended

Dec. 31, 2023

Property, Plant and Equipment [Abstract]

Property, plant and equipment

Property, plant and equipment consist of the following:

		December 31, 2023		September 30, 2023
Building	$	193,318	$	183,045
Leasehold improvement		43,601		41,284
Equipment		746,441		706,774
Vehicles		34,328		32,504
		1,017,688		963,607
Accumulated depreciation		(702,830)		(652,664)
Total net book value	$	314,858	$	310,943

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NOTE 7 - SOFTWARE (Tables)

3 Months Ended

Dec. 31, 2023

Accounting Policies [Abstract]

book value of the Company’s software

The book value of the Company’s software as of December 31, 2023 and September 30, 2023 was as follows:

		December 31, 2023		September 30, 2023
Software	$	1,160,389	$	1,098,725
Accumulated amortization		(995,227)		(909,294)
Total net book value	$	165,162	$	189,431

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NOTE 9 - CONTINGENCIES (Tables)

3 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

components of lease expense

The components of lease expense were as follows:

		For the three months ended December 31,
		2023	2022
Operating lease cost	$	85,511	89,430
Short term lease cost		4,044	4,229
Finance lease cost:
Amortization of right-of-use asset		5,167	5,532
Interest on lease liability		611	470
Total finance lease cost		5,778	6,002
Total lease cost	$	95,333	99,661

supplemental information related to operating and finance leases

The following table presents the Company’s supplemental information related to operating and finance leases:

		For the three months ended December 31,
		2023	2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance leases	$	611	470
Operating cash flows from operating leases	$	85,511	89,430
Financing cash flows from finance leases	$	4,244	5,302
Weighted Average Remaining Lease Term
Operating leases		2.20 years	1.25 years
Finance leases		3.40 years	1.52 years
Weighted Average Discount Rate
Operating leases		1.84%	1.84%
Finance leases		6.40%	3.46%

future maturity of lease liabilities

The future maturity of lease liabilities as of December 31, 2023 are as follows:

Year ending September 30		Finance lease		Operating lease
2024 (remaining)	$	12,386	$	236,346
2025		8,611		187,932
2026		6,819		129,375
2027		6,819		-
2028		14,578		-
Thereafter		-		-
Total	$	49,213	$	553,653
Less imputed interest		(11,029)		(11,105)
Total lease liabilities		38,184		542,548
Less current portion		(11,379)		(281,857)
Long-term lease liabilities	$	26,805	$	260,691

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NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended
	Dec. 31, 2023	Sep. 30, 2023
Accounting Policies [Abstract]
company's deferred income	$ 679,985	$ 1,163,548
deferred income in the opening balance	$ 1,163,548

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NOTE 4 - INCOME TAXES (Details Narrative) - USD ($)	3 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Tax Disclosure [Abstract]
[custom:IncomeTaxExpenses]	$ 7,174	$ 122,247

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NOTE 5 - RELATED-PARTY TRANSACTIONS (Details Narrative) - USD ($)	3 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Related Party Transactions [Abstract]
[custom:Forceinternationalepaidexpenses]	$ 132,592	$ 92,599

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NOTE 6 - PROPERTY, PLANT AND EQUIPMENT (Details Narrative) - USD ($)	3 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Property, Plant and Equipment [Abstract]
aggregate depreciation	$ 12,983	$ 28,807

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NOTE 7 - SOFTWARE (Details Narrative) - USD ($)	3 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Amortization and Depreciation of Decontaminating and Decommissioning Assets	$ 33,476	$ 54,517

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NOTE 9 - CONTINGENCIES (Details Narrative)	3 Months Ended
	Dec. 31, 2023 USD ($)
Commitments and Contingencies Disclosure [Abstract]
[custom:Financeleasegrossvalue-0]	$ 79,080
[custom:Vehiclefinancelease-0]	34,328
legal cases settled value	203,000
Probable settlement amount of pending legal claims against company	$ 270,000