UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of April
Commission File Number:
5-7-11, Ueno, Taito-ku
Tokyo, Japan 110-0005
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
Explanatory Note
Earlyworks Co., Ltd. (the “Company”) is filing this current report on Form 6-K to report its financial results for the six months ended October 31, 2023 and to discuss its recent corporate developments.
Attached as exhibits to this current report on Form 6-K are:
(1) the unaudited interim financial statements and related notes as Exhibit 99.1;
(2) a press release dated April 30, 2024, titled “Earlyworks Co., Ltd. Reports Financial and Operational Performance for the Six Months Ended October 31, 2023” as Exhibit 99.2; and
(3) Interactive Data File disclosure as Exhibit 101 in accordance with Rule 405 of Regulation S-T.
1
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press release titled “Earlyworks Co., Ltd. Reports Financial and Operational Performance for the Six Months Ended October 31, 2023” | |
| 99.2 | The unaudited interim financial statements and related notes for the six months ended October 31, 2023 | |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Earlyworks Co., Ltd. | ||
| Date: April 30, 2024 | By: |
/s/ Satoshi Kobayashi |
| Name: | Satoshi Kobayashi | |
| Title: | Chief Executive Officer and Representative Director (Principal Executive Officer) | |
3
Exhibit 99.1
Earlyworks Co., Ltd. Reports Financial and Operational Performance for the Six Months Ended October 31, 2023.
TOKYO, April 30, 2024. Earlyworks Co., Ltd. (NASDAQ: ELWS) (the “Company”), a Japanese provider of blockchain technology solutions, today announced its financial results for the six months ended October 31, 2023.
For the six months ended October 31, 2023, the Company’s revenue increased by approximately JPY 22,738 thousand, gross profit increased by approximately JPY 39,631 thousand and net loss decreased by approximately JPY 28,393 thousand, as compared to the same period in 2022.
Management Commentary
The six-month period ended October 31, 2023 marks several milestones for the Company.
First, the Company achieved its initial public offering and listing on the NASDAQ in the six months ended October 31, 2023.
Second, the Company has been able to leverage its research and development achievements for business opportunities. In the 2023 fiscal year, the Company was dedicated to the research and development of its proprietary blockchain system (Grid Ledger System, hereinafter “GLS”). This was a strategic decision made by Company’s management to contribute to its future business. During the six months ended October 31, 2023, the Company made significant efforts to promote GLS. As announced in the Company’s previous press releases, the Company’s research and development efforts resulted in the launch of Phase 1 of the System Development Kit package for GLS, and collaborations with large Japanese corporations, including NTT DOCOMO, INC., one of Japan’s largest cell phone operators, have been implemented. The Company is hopeful that these collaborations will contribute to future business growth.
Third, the Company has updated its revenue generation model. The Company’s previous model centered on securing system development contracts using blockchain technology. With the development of GLS, the Company has been able to provide decentralized blockchain solutions based on GLS. Large and venture companies in Japan are currently seeking collaborations to launch new businesses, termed “co-creation new business development.” The Company has sought to take full advantage of opportunities created by the “co-creation new business development” model and establish collaborations as a business partner, rather than a contracting system developer, by leveraging GLS. For example, as announced in the Company’s previous press release, the Company has been selected as a co-creation business partner for MetaMe®, a meta-communication service utilizing technology from NTT DOCOMO, INC. The Company believes this initiative of updating its revenue generation model has redefined the Company’s position and presented new opportunities for recurring income and revenue.
Comparison Between the Six Months Ended October 31, 2023 and 2022
EARLYWORKS CO., LTD.
UNAUDITED INTERIM CONDENSED STATEMENTS OF OPERATIONS
| For the six months ended October 31, 2022 | For the six months ended October 31, 2023 | For the six months ended October 31, 2023 | ||||||||||
| JPY | JPY | USD | ||||||||||
| OPERATING REVENUES | ||||||||||||
| Software and system development services | 11,358,517 | 4,812,000 | 31,771 | |||||||||
| Consulting and solution services | 20,847,940 | 1,267,620 | 8,369 | |||||||||
| Sale of NFTs | — | 48,864,935 | 322,626 | |||||||||
| TOTAL OPERATING REVENUES | 32,206,457 | 54,944,555 | 362,766 | |||||||||
| COST OF REVENUES | (20,229,847 | ) | (3,336,792 | ) | (22,031 | ) | ||||||
| GROSS PROFIT | 11,976,610 | 51,607,763 | 340,735 | |||||||||
| OPERATING EXPENSES: | ||||||||||||
| Selling and marketing expenses | (11,366,838 | ) | (27,077,415 | ) | (178,776 | ) | ||||||
| General and administrative expenses | (162,606,424 | ) | (200,231,599 | ) | (1,322,010 | ) | ||||||
| Share-based compensation expenses | — | (1,616,463 | ) | (10,673 | ) | |||||||
| Research and development expenses | (50,234,955 | ) | (44,821,606 | ) | (295,930 | ) | ||||||
| TOTAL OPERATING EXPENSES | (224,208,217 | ) | (273,747,083 | ) | (1,807,389 | ) | ||||||
| LOSS FROM OPERATIONS | (212,231,607 | ) | (222,139,320 | ) | (1,466,654 | ) | ||||||
| Loss on digital assets | — | (167,879 | ) | (1,108 | ) | |||||||
| Interest expenses, net | (700,617 | ) | (1,789,278 | ) | (11,814 | ) | ||||||
| Foreign exchange gain, net | — | 38,823,264 | 256,327 | |||||||||
| Other (expense) income, net | (213,799 | ) | 129,617 | 856 | ||||||||
| LOSS BEFORE INCOME TAXES | (213,146,023 | ) | (185,143,596 | ) | (1,222,393 | ) | ||||||
| Provision for income (tax) benefit | ||||||||||||
| Current | (145,000 | ) | — | — | ||||||||
| Deferred | (56,966 | ) | 188,496 | 1,245 | ||||||||
| Total provision for income (tax) benefit | (201,966 | ) | 188,496 | 1,245 | ||||||||
| NET LOSS | (213,347,989 | ) | (184,955,100 | ) | (1,221,148 | ) | ||||||
| LOSS PER SHARE | ||||||||||||
| Basic | (15.42 | ) | (12.77 | ) | (0.08 | ) | ||||||
| Diluted | (15.42 | ) | (12.77 | ) | (0.08 | ) | ||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING* | ||||||||||||
| Basic | 13,839,400 | 14,478,530 | 14,478,530 | |||||||||
| Diluted | 13,839,400 | 14,478,530 | 14,478,530 | |||||||||
The accompanying notes are an integral part of these unaudited interim condensed financial statements.
2
EARLYWORKS CO., LTD.
UNAUDITED INTERIM CONDENSED BALANCE SHEETS
| As of April 30, 2023 | As of October 31, 2023 | As of October 31, 2023 | ||||||||||
| JPY | JPY | USD | ||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| ASSETS | ||||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash | 177,886,393 | 701,384,530 | 4,630,824 | |||||||||
| Digital assets | 750,307 | 465,464 | 3,073 | |||||||||
| Accounts receivable, net | 30,934,916 | 10,986,371 | 72,536 | |||||||||
| Prepayments | 2,591,297 | 24,329,264 | 160,632 | |||||||||
| Short-term deposits | 3,096,509 | 3,096,509 | 20,444 | |||||||||
| Income tax receivable | 19,147,994 | 9,635,241 | 63,616 | |||||||||
| Other current assets, net | 275,577 | 2,226,920 | 14,703 | |||||||||
| TOTAL CURRENT ASSETS | 234,682,993 | 752,124,299 | 4,965,828 | |||||||||
| Property and equipment, net | 2,067,013 | 1,752,601 | 11,571 | |||||||||
| Operating lease right-of-use assets | 3,467,368 | 15,781,366 | 104,195 | |||||||||
| Deferred initial public offering (“IPO”) costs | 212,160,121 | — | — | |||||||||
| Long-term deposits | 657,740 | 657,740 | 4,343 | |||||||||
| TOTAL ASSETS | 453,035,235 | 770,316,006 | 5,085,937 | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| CURRENT LIABILITIES: | ||||||||||||
| Bank loans – current portion, net | 123,819,000 | 121,969,000 | 805,289 | |||||||||
| Other payables and accrued liabilities | 47,250,464 | 95,948,571 | 633,491 | |||||||||
| Operating lease liabilities, current | 3,467,368 | 8,173,403 | 53,964 | |||||||||
| Income taxes payable | 145,000 | — | — | |||||||||
| Contract liabilities | 1,397,470 | — | — | |||||||||
| TOTAL CURRENT LIABILITIES | 176,079,302 | 226,090,974 | 1,492,744 | |||||||||
| Bank loans – non-current, net | 68,252,500 | 57,268,000 | 378,106 | |||||||||
| Operating lease liabilities, non-current | — | 6,911,713 | 45,634 | |||||||||
| Deferred tax liabilities – non-current | 188,496 | — | — | |||||||||
| TOTAL LIABILITIES | 244,520,298 | 290,270,687 | 1,916,484 | |||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||
| SHAREHOLDERS’ EQUITY: | ||||||||||||
| Ordinary shares, 55,300,000 shares authorized; 13,839,400 and 15,039,400 shares issued and outstanding as of April 30, 2023 and October 31, 2023, respectively | 100,000,000 | 881,200,000 | 5,818,038 | |||||||||
| Additional paid-in capital | 1,702,120,099 | 1,377,405,581 | 9,094,187 | |||||||||
| Accumulated deficit | (1,593,605,162 | ) | (1,778,560,262 | ) | (11,742,772 | ) | ||||||
| TOTAL SHAREHOLDERS’ EQUITY | 208,514,937 | 480,045,319 | 3,169,453 | |||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 453,035,235 | 770,316,006 | 5,085,937 | |||||||||
3
Total revenue for the six months ended on October 31, 2023, increased by approximately JPY 22,738 thousand from approximately JPY 32,206 thousand in the same period in 2022 to approximately JPY 54,944 thousand. Revenue from software and system development services decreased by approximately JPY 6,547 thousand and revenue from consulting and solution services also decreased by approximately JPY 19,580 thousand, mainly because the timing of certain projects was delayed to the second half of the 2024 fiscal year. Revenue from sales of NFTs increased by approximately JPY 48,865 thousand from zero, due to increased revenue from the NFT trading platform that the Company developed for a business partner, as previously disclosed in the Company’s annual report on Form 20-F for the fiscal year ended April 30, 2023, filed on September 15, 2023.
Cost of revenue decreased by approximately JPY 16,893 thousand from approximately JPY 20,230 thousand in the same period in 2022 to approximately JPY 3,337 thousand, primarily due to the absence of associated costs with the sale of NFTs. The initial cost of approximately JPY 11,550 thousand incurred for designing NFTs was accounted for as research and development expenses in the fiscal year ended April 30, 2023. From May 2023 onwards, minimal cost of revenue has been incurred for the sale of NFTs.
Total operating expenses increased by approximately JPY 49,539 thousand from approximately JPY 224,208 thousand in the same period in 2022 to approximately 273,747 thousand. The main reason contributing to the increase was that general and administrative expenses increased by approximately JPY 37,625 thousand, mainly attributable to the commission fees, consulting fees and listing maintenance costs paid to the Company’s depositary, the Bank of New York Mellon. Selling and marketing expenses also increased by approximately JPY 15,710 thousand from approximately JPY 11,367 thousand in the same period in 2022 to approximately JPY 27,077 thousand, primarily due to increased advertising and promotion expenses.
As of October 31, 2023, the Company had approximately JPY 701,385 thousand in cash and cash equivalents after the initial public offering was completed in July 2023, and the total shareholder’s equity increased by approximately JPY 271,530 thousand compared to the same period in 2022.
About Earlyworks Co., Ltd.
Earlyworks Co., Ltd. is a Japanese company operating its proprietary private blockchain technology, GLS, to leverage blockchain technology in various applications in a wide range of industries. GLS is a hybrid blockchain that combines the technical advantages of blockchain and database technology. GLS features high-speed processing, which can reach 0.016 seconds per transaction, tamper-resistance, security, zero server downtime, and versatile applications. The applicability of GLS is verified in multiple domains, including real estate, advertisement, telecommunications, metaverse, and financial services. The Company’s mission is to keep updating GLS and make it an infrastructure in the coming Web3/metaverse-like data society.
For more information, please visit the Company’s website: https://ir.e-arly.works/.
For inquiries about this release, please contact:
Earlyworks Co., Ltd.
Contact E-MAIL: ew-ir@e-arly.works
Forward-Looking Statements
Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may,” or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the U.S. Securities and Exchange Commission.
4
Exhibit 99.2
EARLYWORKS CO., LTD.
INDEX TO UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
TABLE OF CONTENTS
F-1
EARLYWORKS CO., LTD.
UNAUDITED INTERIM CONDENSED BALANCE SHEETS
| As of April 30, 2023 | As of October 31, 2023 | As of October 31, 2023 | ||||||||||
| JPY | JPY | USD | ||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| ASSETS | ||||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash | ||||||||||||
| Digital assets | ||||||||||||
| Accounts receivable, net | ||||||||||||
| Prepayments | ||||||||||||
| Short-term deposits | ||||||||||||
| Income tax receivable | ||||||||||||
| Other current assets, net | ||||||||||||
| TOTAL CURRENT ASSETS | ||||||||||||
| Property and equipment, net | ||||||||||||
| Operating lease right-of-use assets | ||||||||||||
| Deferred initial public offering (“IPO”) costs | ||||||||||||
| Long-term deposits | ||||||||||||
| TOTAL ASSETS | ||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| CURRENT LIABILITIES: | ||||||||||||
| Bank loans – current portion, net | ||||||||||||
| Other payables and accrued liabilities | ||||||||||||
| Operating lease liabilities, current | ||||||||||||
| Income taxes payable | ||||||||||||
| Contract liabilities | ||||||||||||
| TOTAL CURRENT LIABILITIES | ||||||||||||
| Bank loans – non-current, net | ||||||||||||
| Operating lease liabilities, non-current | ||||||||||||
| Deferred tax liabilities – non-current | ||||||||||||
| TOTAL LIABILITIES | ||||||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||
| SHAREHOLDERS’ EQUITY: | ||||||||||||
| Ordinary shares, | ||||||||||||
| Additional paid-in capital | ||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||
| TOTAL SHAREHOLDERS’ EQUITY | ||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed financial statements.
F-2
EARLYWORKS CO., LTD.
UNAUDITED INTERIM CONDENSED STATEMENTS OF OPERATIONS
| For the six months ended October 31, 2022 | For the six months ended October 31, 2023 | For the six months ended October 31, 2023 | ||||||||||
| JPY | JPY | USD | ||||||||||
| OPERATING REVENUES | ||||||||||||
| Software and system development services | ||||||||||||
| Consulting and solution services | ||||||||||||
| Sale of NFTs | ||||||||||||
| TOTAL OPERATING REVENUES | ||||||||||||
| COST OF REVENUES | ( | ) | ( | ) | ( | ) | ||||||
| GROSS PROFIT | ||||||||||||
| OPERATING EXPENSES: | ||||||||||||
| Selling and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Share-based compensation expenses | ( | ) | ( | ) | ||||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||
| TOTAL OPERATING EXPENSES | ( | ) | ( | ) | ( | ) | ||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ||||||
| Loss on digital assets | ( | ) | ( | ) | ||||||||
| Interest expenses, net | ( | ) | ( | ) | ( | ) | ||||||
| Foreign exchange gain, net | ||||||||||||
| Other (expense) income, net | ( | ) | ||||||||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ||||||
| Provision for income (tax) benefit | ||||||||||||
| Current | ( | ) | ||||||||||
| Deferred | ( | ) | ||||||||||
| Total provision for income (tax) benefit | ( | ) | ||||||||||
| NET LOSS | ( | ) | ( | ) | ( | ) | ||||||
| LOSS PER SHARE | ||||||||||||
| Basic | ( | ) | ( | ) | ( | ) | ||||||
| Diluted | ( | ) | ( | ) | ( | ) | ||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING* | ||||||||||||
| Basic | ||||||||||||
| Diluted | ||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed financial statements.
F-3
EARLYWORKS CO., LTD.
UNAUDITED INTERIM CONDNSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
| Ordinary shares | Additional Paid-in | Accumulated | Total Shareholders’ | Total Shareholders’ | ||||||||||||||||||||
| Share | Amount | Capital | Deficit | Equity | Equity | |||||||||||||||||||
| JPY | JPY | JPY | JPY | USD | ||||||||||||||||||||
| Balance, April 30, 2022 | ( | ) | ||||||||||||||||||||||
| Capital reduction to cover deficit | — | ( | ) | |||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Balance, October 31, 2022 | ( | ) | ||||||||||||||||||||||
| Ordinary shares | Additional Paid-in | Accumulated | Total Shareholders’ | Total Shareholders’ | ||||||||||||||||||||
| Share | Amount | Capital | Deficit | Equity | Equity | |||||||||||||||||||
| JPY | JPY | JPY | JPY | USD | ||||||||||||||||||||
| Balance, April 30, 2023 | ( | ) | ||||||||||||||||||||||
| Issuance of ordinary shares for cash | ( | ) | ||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Share based compensation | — | |||||||||||||||||||||||
| Balance, October 31, 2023 | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed financial statements.
F-4
EARLYWORKS CO., LTD.
UNAUDITED INTERIM CONDENSED STATEMENTS OF CASH FLOWS
| For the six months ended October 31, 2022 | For the six months ended October 31, 2023 | For the six months ended October 31, 2023 | ||||||||||
| JPY | JPY | USD | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| Adjustment to reconcile net loss to net cash generated from operating activities: | ||||||||||||
| Depreciation expense | ||||||||||||
| Loan origination fee | ||||||||||||
| Deferred tax expense | ( | ) | ( | ) | ||||||||
| Foreign currency exchange gain | ( | ) | ( | ) | ||||||||
| Loss on digital assets | ||||||||||||
| Share-based compensation expense | ||||||||||||
| Changes in assets and liabilities | ||||||||||||
| Accounts receivable | ||||||||||||
| Prepayments | ( | ) | ( | ) | ( | ) | ||||||
| Short-term deposits | ( | ) | ||||||||||
| Digital assets | ||||||||||||
| Other current assets, net | ( | ) | ( | ) | ( | ) | ||||||
| Long-term deposits | ( | ) | ||||||||||
| Income taxes, net | ( | ) | ||||||||||
| Contract liabilities | ( | ) | ( | ) | ||||||||
| Other payables and accrued liabilities | ( | ) | ||||||||||
| Lease obligations net cash | ( | ) | ( | ) | ( | ) | ||||||
| NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ( | ) | ||||||
| NET CASH USED IN INVESTING ACTIVITIES | ( | ) | ( | ) | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
| Issuance of ordinary shares for cash | ||||||||||||
| Proceeds from loans | ||||||||||||
| Repayment of loans | ( | ) | ( | ) | ( | ) | ||||||
| Payments on initial public offering (“IPO”) costs | ( | ) | ( | ) | ( | ) | ||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||||||
| EFFECT OF EXCHANGE RATE | ||||||||||||
| CHANGE IN CASH | ( | ) | ||||||||||
| CASH, AT BEGINNING OF PERIOD | ||||||||||||
| CASH, AT PERIOD END | ||||||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||
| Cash paid (refunded) for: | ||||||||||||
| Interest | ||||||||||||
| Income taxes | ( | ) | ( | ) | ||||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||
| Operating lease right-of-use assets obtained in exchange for operating lease liabilities | ||||||||||||
The accompanying notes are an integral part of these unaudited interim condensed financial statements.
F-5
EARLYWORKS CO., LTD.
NOTES TO UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS
Note 1 – Nature of business and organization
Earlyworks Co., Ltd. (the “Company”) is a stock company incorporated in Japan pursuant to the laws of Japan on May 1, 2018. The Company builds products, delivers services, and develops solutions based on its proprietary Grid Ledger System to leverage blockchain technology in various business settings, including advertisement tracking, online visitor management, and sales of non-fungible tokens. The Company primarily generates revenue from software and system development services, consulting and solution services, and sale of NFTs.
Note 2 – Liquidity and going concern
In accordance with Accounting Standards Update
(“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40),
the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the
Company’s ability to continue as a going concern within
The Company’s accounts have been prepared assuming that the company will continue as a going concern basis. The going concern basis assumes that assets are realized and liabilities are extinguished in the ordinary course of business at amounts disclosed in the financial statements. The Company’s ability to continue as a going concern depends upon aligning its sources of funding (debt and equity) with the expenditure requirements of the Company and repayment of the short-term debt facilities as and when they fall due.
The Company has considered whether there is a
substantial doubt about its ability to continue as a going concern. Cash flow from operations and capital contributions and loans from
shareholders have been utilized to finance the working capital requirements of the Company. For the six months ended October 31, 2023,
the Company has negative cash flow from operating activities of JPY
To sustain its ability to support the Company’s operating activities, the Company considered supplementing its sources of funding through the following:
The Company closed its initial public offering
on July 27, 2023 and received aggregate gross proceeds of $
Management has commenced a strategy to raise debt and equity. However, there can be no certainty that these additional financings will be available on acceptable terms or at all. If management is unable to execute this plan, there would likely be a material adverse effect on the Company’s business. All of these factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements for the six months ended October 31, 2022 and 2023, and for the year ended April 30, 2023 have been prepared on a going concern basis and do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
F-6
Note 3 – Summary of significant accounting policies
Basis of presentation
The unaudited interim condensed financial statements do not include all the information and footnotes required by the U.S. GAAP for complete financial statements. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with the U.S. GAAP have been condensed or omitted consistent with Article 10 of Regulation S-X. In the opinion of the Company’s management, the unaudited interim condensed financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, in normal recurring nature, as necessary for the fair statement of the Company’s financial position as of October 31, 2023, and results of operations and cash flows for the six-month periods ended October 31, 2022 and 2023. The unaudited interim condensed balance sheets as of October 31, 2023 have been derived from the audited financial statements at that date but do not include all the information and footnotes required by the U.S. GAAP. Interim results of operations are not necessarily indicative of the results expected for the full fiscal year or for any future period. These financial statements should be read in conjunction with the audited financial statements as of and for the years ended April 30, 2022 and 2023, and related notes included in the Company’s audited financial statements.
Use of estimates and assumptions
The preparation of unaudited interim condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and revenues and expenses during the reporting periods. Significant accounting estimates reflected in the Company’s unaudited interim condensed financial statements include, but not limited to, estimates for useful lives and impairment of property and equipment, impairment of long-lived assets, allowance for credit losses, revenue recognition, and deferred taxes. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the unaudited interim condensed financial statements.
Foreign currency translation and transaction
The Company uses Japanese yen (“JPY”) as its reporting currency. The functional currency of the Company which is incorporated in Japan is JPY, which is its respective local currency based on the criteria of ASC 830, “Foreign Currency Matters”.
Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rates at the balance sheet dates. Net gains and losses resulting from foreign exchange transactions are included in foreign exchange gain, net on the statements of operations.
Convenience Translation
Translations of balances in the balance sheets,
statements of operations, statements of changes in shareholders’ equity and statements of cash flows from JPY into USD as of October
31, 2023 are solely for the convenience of the readers and are calculated at the rate of USD
Reclassifications
Certain reclassifications to previously reported financial information have been made to conform to the current period presentation.
Cash
Cash includes currency on hand and deposits held
by banks that can be added or withdrawn without limitation. The Company maintains its bank accounts in Japan and the United States. Cash
balances in bank accounts in Japan are insured by the Deposit Insurance Corporation of Japan subject to certain limitations. Cash balances
in bank accounts in the United States are insured by the Federal Deposit Insurance Corporation up to $
F-7
Digital assets
Digital assets such as Ethereum, Binance Coin and Polygon are included in current assets in the balance sheets as an indefinite live intangible asset. Digital assets are initially recognized based on the fair value of the digital assets on the date of receipt. The Company recognized realized gains or losses when digital assets are sold for other digital assets, or for cash consideration using a first-in first-out method of accounting and the Company accounts for received and disbursements as cash flows from operating activities.
An intangible asset with an indefinite useful life is not amortized but assessed for impairment whenever events or changes in circumstances occur indicating that it is more likely than not that the indefinite-life asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital assets in the principal market at the time its fair value is being measured, and the Company recognized an impairment loss in an amount equal to that excess. The Company monitors and evaluates the quality and relevance of the available information, such as pricing information from the asset’s principal (or most advantageous) market or from other digital asset exchanges or markets, to determine whether such information is indicative of a potential impairment. The Company recognizes an impairment loss at any time the fair value of the digital asset is below its carrying value. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.
Accounts receivable include trade accounts due from clients. Accounts are considered overdue after 90 days. Management reviews its receivables on a regular basis to determine if the allowance for credit losses is adequate and provides allowance when necessary. The Company considers various factors in establishing, monitoring, and adjusting its allowance for credit losses including the aging of receivables and aging trends, customer creditworthiness and specific exposures related to particular customers. The Company also monitors other risk factors and forward-looking information, such as country specific risks and economic factors that may affect a customer’s ability to pay in establishing and adjusting its allowance for credit losses. Account balances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is not probable. As of April 30, 2023 and October 31, 2023, the Company made and allowance for expected credit losses for accounts receivable, respectively.
Prepayments
Prepayments are mainly payments made to vendors or services providers for future services that have not been provided. These amounts are refundable and bear no interest. Management reviews its prepayments on a regular basis to determine if the allowance is adequate and adjusts the allowance when necessary. As of April 30, 2023 and October 31, 2023, no allowance was deemed necessary.
Deferred initial public offering (“IPO”) costs
Pursuant to ASC 340-10-S99-1, IPO costs directly
attributable to an offering of equity securities were deferred and charged against the gross proceeds of the offering as a reduction of
additional paid-in capital upon completion of the IPO. These costs included legal fees, consulting fees, underwriting fees, the SEC filing
and printing expenses related to the IPO. On July 27, 2023, the Company closed its IPO and gross proceeds of JPY
F-8
Short-term deposits and long-term deposits
Short-term deposits and long-term deposits are mainly for rent and money deposited with certain service providers. These amounts are refundable and bear no interest. The short-term deposits usually have one year term and are refundable upon contract termination. The long-term deposits are refunded from service providers when term and conditions set forth in the agreements have been satisfied.
Other current assets, net
Other current assets, net, primarily consists of other receivables from third parties. These other receivables are unsecured and are reviewed periodically to determine whether their carrying value has become impaired.
Property and equipment, net
| Leasehold improvements | lesser of lease term or expected useful life | |
| Office furniture and fixtures |
The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statements of operations. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized.
Impairment for long-lived assets
Long-lived assets, including property and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. We assess the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, we would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. For the six months ended October 31, 2022 and 2023, no impairment of long-lived assets was recognized.
Fair value of financial instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| ● | Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| ● | Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. |
| ● | Level 3 – inputs to the valuation methodology are unobservable. |
Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, prepayments, short-term deposits, income tax receivable and other current assets, current portion of long-term bank loans, other payables and accrued liabilities, and current operating lease liabilities, approximate the fair value of the respective assets and liabilities as of April 30, 2023 and October 31, 2023 based upon the short-term nature of the assets and liabilities.
F-9
Revenue recognition
The Company recognizes revenue as it satisfies a performance obligation when its client obtains control of promised services, in an amount that reflects the consideration that the entity expects to receive in exchange for those services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the services it transfers to the client.
The Company applied practical expedient when sales taxes were collected from clients, meaning sales tax is recorded net of revenue, instead of cost of revenue, which are subsequently remitted to governmental authorities and are excluded from the transaction price. The Company does not offer rights of refund of previously paid or delivered amounts, rebates, rights of return or price protection. In all instances, the Company limits the amount of revenue recognized to the amounts for which it has the right to bill its’ clients.
The Company is a principal and records revenue on a gross basis when the Company is primarily responsible for fulfilling the service, has discretion in establishing pricing and controls the promised service before transferring that service to clients. Otherwise, the Company is an agent and records revenue on a net basis.
The Company derives its revenues from three sources: (1) revenue from software and system development services, (2) revenue from consulting and solution services, and (3) sale of NFTs. All of the Company’s contracts with clients do not contain cancellable and refund-type provisions.
(1) Software and system development services
The contract is typically fixed priced and does not provide any post contract client support or upgrades. The Company designs software and system based on clients’ specific needs which require the Company to perform services including design, development, and integration. These services also require significant customization. Upon delivery of the services, client acceptance is generally required. The Company assesses that software and system development services is considered as one performance obligation as the clients do not obtain benefit for each separate service. The duration of the development period is short, usually less than one year.
The Company’s software and system development service revenue is generated primarily from contracts with medium and large-sized enterprises. The contracts contain negotiated billing terms which generally include multiple payment phases throughout the contract term and a portion of contract amount usually is billed upon the completion of the related projects. Pursuant to the contract terms, the Company has enforceable right on payments for the work performed.
The Company’s revenue from software and system development contracts is generally recognized over time as the Company’s performance creates or enhances the project controlled by the clients and the control is transferred continuously to the Company’s clients. The Company uses an input method based on cost incurred as the Company believes that this method most accurately reflects the Company’s progress toward satisfaction of the performance obligation, which usually takes less than one year. Under this method, the Company could appropriately measure the fulfillment of a performance obligation. Assumptions, risks and uncertainties inherent in the estimates used to measure progress could affect the amount of revenues, receivables and deferred revenues at each reporting period.
Incurred costs include all direct material, labor and subcontract costs, and those indirect costs related to application development performance, such as indirect labor, supplies, and tools. Cost-based input method requires the Company to make estimates of revenues and costs to complete the service. In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the application development, including materials, labor, and other system costs. The Company’s estimates are based upon the professional knowledge and experience of the Company’s engineers and project managers to assess the contract’s schedule, performance, and technical matters. The Company has adequate cost history and estimating experience, and with respect to which management believes it can reasonably estimate total development costs. If the estimated costs are greater than the related revenues, the Company recognizes the entire estimated loss in the period the loss becomes known and can be reasonably estimated. Changes in estimates for software development services include but are not limited to cost forecast changes and change orders. The cumulative effect of changes in estimates is recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. To date, the Company has not incurred a material loss on any contracts. However, as a policy, provisions for estimated losses on such engagements will be made during the period in which a loss becomes probable and can be reasonably estimated. If contract modifications result in additional goods or services that are distinct from those transferred before the modification, they are accounted for prospectively as if the Company entered into a new contract. If the goods or services in the modification are not distinct from those in the original contract, sales and gross profit are adjusted using the cumulative catch-up method for revisions in estimated total contract costs and contract values.
F-10
(2) Consulting and solution services
Revenue from consulting and solution services is primarily comprised of fixed-fee contracts, which require the Company to provide professional consulting and solution services over contract terms beginning on the commencement date of each contract, which is the date its service is made available to clients. Billings to the clients are generally on a monthly or quarterly basis over the contract term, which is typically 1 to 12 months. The consulting and solution services contracts typically include a single performance obligation. The revenue from consulting and solution services is recognized over the contract term as clients receive and consume benefits of such services as provided.
Revenue includes reimbursements of travel and out-of-pocket expense, with equivalent amounts of expense recorded in cost of revenue.
(3) Sale of NFTs
The Company engages in sale of NFTs, or non-fungible tokens. NFTs are assets that have been tokenized via a blockchain and are assigned unique identification codes and metadata that distinguish them from other tokens. The Company typically enters into contracts with its customers where the rights of the parties, including payment terms, are identified and sales prices to the customers are fixed with no separate sales rebate, discount, or other incentive and no right of return exists on sales of NFTs. The Company’s performance obligation is to deliver products according to contract specifications. The Company recognizes product revenue at a time when the control of products is transferred to customers.
Contract liabilities
Contract liabilities are recorded when consideration
is received from a customer prior to transferring the services to the customer or other conditions under the terms of a sales contract.
As of April 30, 2023 and October 31, 2023, the Company recorded contract liabilities of JPY
Operating leases
The Company determines if an arrangement is a lease at inception. Leases are classified as operating or finance leases in accordance with the recognition criteria in ASC 842-20-25. The Company’s leases do not contain any material residual value guarantees or material restrictive covenants.
At the commencement date of a lease, the Company determines the classification of the lease based on the relevant factors present and records a right-of-use (“ROU”) asset and lease liability for operating lease. ROU assets acquired through lease represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are calculated as the present value of the lease payments not yet paid. If the rate implicit in the Company’s leases is not readily available, the Company uses an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. This incremental borrowing rate reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. ROU assets include any lease prepayments and are reduced by lease incentives. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease terms are based on the non-cancellable term of the lease.
Leases with an initial lease term of 12 months or less are not recorded on the balance sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term.
Cost of revenues
Cost of revenues mainly consist of salaries and benefits of our staff and outsourced staff, and related expenses including telecommunication cost and rental costs.
Selling and marketing expenses
Selling and marketing expenses mainly consist of payroll, promotion expenses, and related expenses for personnel engaged in selling and marketing activities.
F-11
Advertising expenses
Advertising costs are expensed as incurred and
included in selling, general, and administrative expenses in the statements of operations. Advertising expenses amounted to JPY
Research and development expenses
Research and development costs are expensed as incurred. These costs primarily consist of payroll, outsourced development cost, and related expenses for personnel engaged in research and development activities.
Income taxes
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
Earnings (Loss) per share
Basic earnings (loss) per share is computed by dividing net income attributable to the holders of ordinary shares by the weighted average number of ordinary shares outstanding during the period presented. Diluted income per share is calculated by dividing net income attributable to the holders of ordinary shares as adjusted for the effect of dilutive ordinary share equivalents, if any, by the weighted average number of ordinary shares and dilutive ordinary share equivalents outstanding during the period. However, ordinary share equivalents are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive, such as in a period in which a net loss is recorded.
F-12
Share-based compensation
The Company applies ASC 718, Compensation – Stock Compensation (“ASC 718”), to account for its employee share-based payments. In accordance with ASC 718, the Company determines whether an award should be classified and accounted for as a liability award or equity award. All the Company’s share-based awards to employees were classified as equity awards and are recognized in the financial statements based on their grant date fair values. In accordance with ASC 718, the Company recognizes share-based compensation cost for equity awards to employees with a performance condition based on the probable outcome of that performance condition. Compensation cost is recognized using the accelerated method if it is probable that the performance condition will be achieved. The Company accounts for forfeitures as they occur in accordance with ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting.
Segment reporting
ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major clients in financial statements for detailing the Company’s business segments. Based on the criteria established by ASC 280, the Company’s chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer, who reviews results when making decisions about allocating resources and assessing performance of the Company. As a whole and hence, the Company has only one reportable segment. The Company does not distinguish between markets or segments for the purpose of internal reporting. As the Company’s long-lived assets are substantially located in Japan, no geographical segments are presented.
Related party transactions
A related party is generally defined as (i) any person and or their immediate family who hold 10% or more of the company’s securities (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. Related parties may be individuals or corporate entities.
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. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature.
Commitments and Contingencies
In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical performance and the specific facts and circumstances of each matter.
F-13
Risks and uncertainties
Political and economic risk
All of the Company’s assets were located in Japan and all of the Company’s revenue was generated in Japan. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in Japan, as well as by the general state of Japan economy. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in Japan. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations, including its organization and structure disclosed in Note 1, such experience may not be indicative of future results.
Credit risk
As of April 30, 2023 and October 31, 2023, JPY
Accounts receivables are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risks. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances.
Concentration of credit risk
Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and account receivable. The Company places its cash with financial institutions with high-credit ratings and quality.
Accounts receivable primarily comprise of amounts receivable from the service clients. To reduce credit risk, the Company performs on-going credit evaluations of the financial condition of these service clients. The Company establishes a provision for credit losses based upon estimates, factors surrounding the credit risk of specific service clients and other information.
Concentration of demand
As of April 30, 2023 and October 31, 2023, one
client accounted for
For the six months ended October 31, 2022, three
major clients accounted for
Concentration of supply
As of April 30, 2023, three vendors accounted
for
For the six months ended October 31, 2022, two
vendors accounted for
Foreign currency exchange risk
Our foreign currency exchange risk relates to bank accounts held in USD. Our results of operations and cash flow are exposed to changes in foreign currency exchange rates between JPY and USD and may be adversely affected in the future due to changes in foreign currency exchange rates.
To date, we have not engaged in hedging our foreign currency exchange risk. In the future, we may enter into formal currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates. These measures, however, may not adequately protect us from the adverse effects of such fluctuations.
F-14
Recent accounting pronouncements
The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging growth company, or EGC, and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.
In June 2016, the FASB amended guidance related to the impairment of financial instruments as part of ASU2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which will be effective January 1, 2020. The guidance replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, which clarified that receivables from operating leases are not within the scope of Topic 326 and instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842. On May 15, 2019, the FASB issued ASU 2019-05, which provides transition relief for entities adopting the Board’s credit losses standard, ASU 2016-13. Specifically, ASU 2019-05 amends ASU 2016-13 to allow companies to irrevocably elect, upon adoption of ASU 2016-13, the fair value option for financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of the credit losses guidance in ASC 326-20, (3) are eligible for the fair value option under ASC 825-10, and (4) are not held-to-maturity debt securities. For entities that have adopted ASU 2016-13, the amendments in ASU 2019-05 are effective for fiscal years beginning after December 15, 2019, including interim periods therein. An entity may early adopt the ASU in any interim period after its issuance if the entity has adopted ASU 2016-13. For all other entities, the effective date will be the same as the effective date of ASU 2016-13. In November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” ASU 2019-11 is an accounting pronouncement that amends ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU 2019-11 amendment provides clarity and improves the codification to ASU 2016-03. The pronouncement would be effective concurrently with the adoption of ASU 2016-03. The pronouncement is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. In February 2020, the FASB issued ASU No. 2020-02, which provides clarifying guidance and minor updates to ASU No. 2016-13 – Financial Instruments – Credit Loss (Topic 326) (“ASU 2016-13”) and related to ASU No. 2016-02 – Leases (Topic 842). ASU 2020-02 amends the effective date of ASU 2016-13, such that ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022. The Company adopted this update on May 1, 2023. The adoption of this update had no material impact on the Company’s results of operations and financial position.
On December 18, 2019, the FASB issued ASU No. 2019-12, Income taxes (Topic 740), Simplifying the Accounting for Income Taxes. This guidance amends ASC Topic 740 and addresses several aspects including 1) evaluation of step-up tax basis of goodwill when there is not a business combination, 2) policy election to not allocate taxes on a separate entity basis to entities not subject to income tax, 3) accounting for tax law changes or rates during interim periods, 4) ownership changes from equity method investment to subsidiary or vice versa, 5) elimination of exception to intrapetrous allocation when there is gain in discontinued operations and a loss from continuing operations, and 6) treatment of franchise taxes that are partially based on income. The amendments in this Update are effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company adopted this update on May 1, 2022. The adoption of this update had no material impact on the Company’s results of operations and financial position.
In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs. The amendments in this Update represent changes to clarify the Codification. The amendments make the Codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. ASU 2020-08 is effective for the Company for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. All entities should apply the amendments in this Update on a prospective basis as of the beginning of the period of adoption for existing or newly purchased callable debt securities. These amendments do not change the effective dates for Update 2017-08. The Company adopted this update on May 1, 2022. The adoption of this update had no material impact on the Company’s results of operations and financial position.
F-15
In October 2020, the FASB issued ASU 2020-10, Codification Improvements. The amendments in this Update represent changes to clarify the Codification or correct unintended application of guidance that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments in this Update affect a wide variety of Topics in the Codification and apply to all reporting entities within the scope of the affected accounting guidance. ASU 2020-10 is effective for the Company for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. The amendments in this Update should be applied retrospectively. The Company adopted this update on May 1, 2022. The adoption of this update had no material impact on the Company’s results of operations and financial position.
In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and other – crypto assets (Subtopic 350-60): Accounting for and disclosure of crypto assets. This guidance addresses the accounting and disclosure requirements for certain crypto assets. The new guidance requires entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in net income in each reporting period. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. The ASU’s amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those years. Early adoption is permitted. The Company is currently evaluating the impact this ASU will have on its financial statements and related disclosures.
The Company has reviewed all other recently issued accounting pronouncements and concluded that they are either not applicable or not expected to have a material impact on the Company’s financial statements.
Note 4 – Revenues
For the six October 31, | For the six months ended October 31, 2023 | |||||||||||
| JPY | JPY | USD | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| OPERATING REVENUES | ||||||||||||
| Software and system development services | ||||||||||||
| Consulting and solution services | ||||||||||||
| Sale of NFTs | ||||||||||||
| TOTAL OPERATING REVENUES | ||||||||||||
Note 5 – Accounts receivable, net
As of April 30, | As of October 31, | |||||||||||
| JPY | JPY | USD | ||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Accounts receivable | ||||||||||||
| Less: Allowance for expected credit loss | ||||||||||||
| Add: Consumption tax receivable | ||||||||||||
| Accounts receivable, net | ||||||||||||
F-16
Note 6 – Property and equipment, net
As of April 30, | As of October 31, | |||||||||||
| JPY | JPY | USD | ||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| At cost: | ||||||||||||
| Office equipment | ||||||||||||
| Total | ||||||||||||
| Accumulated depreciation | ( | ) | ( | ) | ( | ) | ||||||
| Property and equipment, net | ||||||||||||
Depreciation expense for the six months ended
October 31, 2022 and 2023 amounted to JPY
Note 7 – Other payables and accrued expenses
As of April 30, | As of October 31, | |||||||||||
| JPY | JPY | USD | ||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Salary and benefit payables | ||||||||||||
| Outsourced development costs | ||||||||||||
| Communication costs | ||||||||||||
| Professional service fee | ||||||||||||
| Withholding tax | ||||||||||||
| Resident tax for employees | ||||||||||||
| Corporate business tax | ||||||||||||
| Sales proceeds temporarily received for others | ||||||||||||
| Others | ||||||||||||
Others mainly consist of other payables related to operating activities including outsourced design costs and handling fee.
F-17
Note 8 – Loans
| As of April 30, 2023 | Balance | Balance | Maturity Date |
Effective Interest Rate |
Collateral/Guarantee | |||||||||||
| JPY | USD | |||||||||||||||
| Kiraboshi Bank | % | |||||||||||||||
| Kiraboshi Bank | % | |||||||||||||||
| Resona Bank | % | |||||||||||||||
| Shoko Chukin Bank | % | |||||||||||||||
| Total loans | ||||||||||||||||
| Less: Loan origination fee | ( |
) | ( |
) | ||||||||||||
| Current portion of long – term loan | ( |
) | ( |
) | ||||||||||||
| Long-term loan – due over one year | ||||||||||||||||
| As of October 31, 2023 | Balance | Balance | Maturity Date |
Effective Interest Rate |
Collateral/Guarantee | |||||||||||
| JPY | USD | |||||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Kiraboshi Bank | % | |||||||||||||||
| Kiraboshi Bank | % | |||||||||||||||
| Resona Bank | % | |||||||||||||||
| Shoko Chukin Bank | % | |||||||||||||||
| Total loans | ||||||||||||||||
| Less: Loan origination fee | ( |
) | ( |
) | ||||||||||||
| Current portion of long – term loan | ( |
) | ( |
) | ||||||||||||
| Long-term loan – due over one year | ||||||||||||||||
| JPY | USD | |||||||
| Remainder of 2024 | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| Thereafter | ||||||||
| Total | ||||||||
F-18
Note 9 – Commitments and contingencies
Lease commitments
The Company entered into an operating lease agreement for office space. The minimum lease payment commitments under the operating lease as of October 31, 2023 are set forth in the Note 11 – Operating leases – right-of-use assets.
Litigation
Certain shareholders of the Company filed a lawsuit in the Tokyo District Court against
the Company and Mr. Satoshi Kobayashi, the Company’s Chief Executive Officer and Representative Director. The complaint, which is
dated December 18, 2023, was served on the Company and Mr. Kobayashi on January 12, 2024. The plaintiffs alleged that Mr. Kobayashi violated
Article 709 of the Japanese Civil Code by intentionally delaying or misrepresenting the procedures necessary for the sale of shares, thereby
unfairly depriving the plaintiffs of the opportunity to sell their shares on the Nasdaq market at a higher price following the Company’s
initial public offering, and that the Company shall be liable for damages caused by Mr. Kobayashi in the discharge of his duties as the
Company’s Representative Director under Article 350 of the Japanese Companies Act. The plaintiffs sought monetary damages in the
total amount of $
Note 10 – Income taxes
(a) Corporate Income Taxes
The Company is in Japan and is subject to Japanese
national and local income taxes, inhabitant tax, and enterprise tax, which, in the aggregate, represent a statutory income tax rate of
approximately
The effective tax rate for the six months ended
October 31, 2022 and 2023 were approximately
For the six months ended October 31, | For the six months ended October 31, 2023 | |||||||||||
| JPY | JPY | USD | ||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||
| Current income tax expense | ||||||||||||
| Deferred tax (benefit) expense | ( | ) | ( | ) | ||||||||
| TOTAL OPERATING REVENUES | ( | ) | ( | ) | ||||||||
F-19
| As of April 30, 2023 | As of October 31, 2023 | |||||||||||
| JPY | JPY | USD | ||||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Net operating loss carry forward | ||||||||||||
| Write off of other receivable | ||||||||||||
| Lease liabilities | ||||||||||||
| Research and development costs - capitalized for tax purposes | ||||||||||||
| Temporary difference in depreciation | ||||||||||||
| Write off of guarantee money deposited | ||||||||||||
| Bonus accrual | ||||||||||||
| Others | ||||||||||||
| Valuation allowance | ( | ) | ( | ) | ( | ) | ||||||
| Deferred tax assets | ||||||||||||
| Right-of-use assets – operating lease | ( | ) | ( | ) | ( | ) | ||||||
| Accrued business tax receivable | ( | ) | ||||||||||
| Others | ( | ) | ( | ) | ( | ) | ||||||
| Deferred tax liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Total | ( | ) | ||||||||||
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the cumulative earnings and projected future taxable income in making this assessment. Recovery of substantially all of the Company’s deferred tax assets is dependent upon the generation of future income, exclusive of reversing taxable temporary differences.
(b) Consumption tax
Consumption tax collected and remitted to tax
authorities is excluded from revenue, cost of sales, and expenses in the statements of operations. The Company has been subject to the
applicable consumption tax rate of
Note 11 – Operating leases – right-of-use assets
The Company entered into an operating lease agreement for office space. None of the amounts disclosed below for these leases contain variable payments, residual value guarantees or options that were recognized as part of the right-of-use assets and lease liabilities. As the Company’s leases did not provide an implicit discount rate, the Company used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
As of April 30, 2023, the Company had operating
lease liabilities, including current and noncurrent, in the amount of JPY
As of October 31, 2023, the Company had operating
lease liabilities, including current and noncurrent, in the amount of JPY
Operating lease costs for the six months ended
October 31, 2022 and 2023 was JPY
F-20
Lease commitments
| Operating Leases | ||||||||
| JPY | USD | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Remainder of 2024 | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| Total lease payment | ||||||||
| Less imputed interest | ( | ) | ( | ) | ||||
| Present value of operating lease liabilities | ||||||||
| Less: current obligation | ( | ) | ( | ) | ||||
| Long-term obligation at October 31, 2023 | ||||||||
|
For the October 31, |
||||||
| JPY | USD | |||||
| (Unaudited) | (Unaudited) | |||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||
| Operating cash flows for operating leases | ||||||
| Weighted average remaining lease term of operating leases | ||||||
| Weighted average discount rate of operating leases | ||||||
Note 12 – Shareholders’ equity
Ordinary shares
The Company is a stock company incorporated in Japan pursuant to the laws of Japan on May 1, 2018.
As of April 30, 2023 and October 31, 2023, the
number of outstanding shares is
Note 13. Share-based compensation
Share option plan (the “2019 Plan”)
On February 5, 2019, the shareholders and Board
of Directors of the Company approved the 2019 Plan, which is administered by the Board of Directors and has a term of
The options granted under the 2019 Plan have a
contractual term of
The fair value of each option award is estimated
on the grant date using the Black-Scholes option-pricing model with the following assumptions: risk-free interest rate of -
F-21
| Number of options* | Weighted- average exercise price | Weighted- average grant-date fair value | Weighted- average remaining contractual term | Aggregate intrinsic Value | ||||||||||||||||
| JPY | JPY | Years | JPY | |||||||||||||||||
| Outstanding, April 30, 2022 | ||||||||||||||||||||
| Granted | — | |||||||||||||||||||
| Forfeited | — | |||||||||||||||||||
| Outstanding, October 31, 2022 | ||||||||||||||||||||
| Vested at October 31, 2022 | ||||||||||||||||||||
| Exercisable at October 31, 2022 | ||||||||||||||||||||
| Number of options* | Weighted- average exercise price | Weighted- average grant-date fair value | Weighted- average remaining contractual term | Aggregate intrinsic Value | ||||||||||||||||
| USD | USD | Years | US$ | |||||||||||||||||
| Outstanding, April 30, 2023 | ||||||||||||||||||||
| Granted | — | |||||||||||||||||||
| Forfeited | — | |||||||||||||||||||
| Outstanding, October 31, 2023 | ||||||||||||||||||||
| Vested at October 31, 2023 | ||||||||||||||||||||
| Exercisable at October 31, 2023 | ||||||||||||||||||||
| Number of options* | Weighted- average exercise price | Weighted- average grant-date fair value | Weighted- average remaining contractual term | Aggregate intrinsic Value | ||||||||||||||||
| JPY | JPY | Years | JPY | |||||||||||||||||
| Outstanding, April 30, 2023 | ||||||||||||||||||||
| Granted | — | |||||||||||||||||||
| Forfeited | — | |||||||||||||||||||
| Outstanding, October 31, 2023 | ||||||||||||||||||||
| Vested at October 31, 2023 | ||||||||||||||||||||
| Exercisable at October 31, 2023 | ||||||||||||||||||||
| * |
The aggregate intrinsic value in the table above represents the difference between the fair value of the Company’s ordinary share as of fiscal year end and the option’s respective exercise price.
For the six months ended October 31, 2023, the
Company recognized share-based compensation expense of JPY
F-22
Trust-Type Share Option Plan (the “2019 Trust-Type Plan”)
On July 1, 2019, the shareholders and Board of
Directors of the Company approved the 2019 Trust-Type Share Option Plan (the “2019 Trust-Type Plan”); 2019 Trust-Type Plan
is administered by the Board of Directors, and has a term of
The trust-type share option (trust for market value-issue stock acquisition rights) is a scheme of where the option holder is granted the right to acquire the Company’s stock in the open market at pre-determined price, which can be lower than the fair market value; therefore, generating immediate benefit to the holder to option. The trust type plan was initiated and created by the trustor (Mr. Kobayashi, the Company’s Chief Executive Officer) when he deposited funds into the trust with the intention to reward the beneficiaries of the plan. The trustee is entrusted with the responsibility to grant to beneficiaries (officers and employees, etc.) the options.
The fair value of each option award is estimated
on the grant date using the Black-Scholes option-pricing model with the following assumptions: risk-free interest rate of -
For the six months ended October 31, 2022 and 2023, the Company recognized an expense of and , respectively.
Note 14 – Subsequent events
On April 26, 2024, the Company’s shareholders approved an amendment
to its equity structure whereby the Company reduced capital associated with ordinary shares with a corresponding increase to additional
paid-in capital of JPY
The Company has assessed all events from October 31, 2023 up through April 30, 2024, which is the date that these financial statements are available to be issued, and, except as disclosed above, there are not any material subsequent events that require disclosure in these financial statements.
F-23
Document And Entity Information |
6 Months Ended |
|---|---|
Oct. 31, 2023 | |
| Document Information Line Items | |
| Entity Registrant Name | Earlyworks Co., Ltd. |
| Document Type | 6-K |
| Current Fiscal Year End Date | --04-30 |
| Amendment Flag | false |
| Entity Central Index Key | 0001944399 |
| Document Period End Date | Oct. 31, 2023 |
| Document Fiscal Year Focus | 2024 |
| Document Fiscal Period Focus | Q2 |
| Entity File Number | 001-41752 |
Unaudited Interim Condensed Balance Sheets (Parentheticals) - shares |
Oct. 31, 2023 |
Apr. 30, 2023 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Ordinary shares, shares authorized | 55,300,000 | 55,300,000 |
| Ordinary shares, shares issued | 15,039,400 | 13,839,400 |
| Ordinary shares, shares outstanding | 15,039,400 | 13,839,400 |
Unaudited Interim Condensed Statements of Operations |
6 Months Ended | |||
|---|---|---|---|---|
|
Oct. 31, 2023
JPY (¥)
¥ / shares
shares
|
Oct. 31, 2023
USD ($)
$ / shares
shares
|
Oct. 31, 2022
JPY (¥)
¥ / shares
shares
|
Oct. 31, 2022
USD ($)
shares
|
|
| OPERATING REVENUES | ||||
| TOTAL OPERATING REVENUES | ¥ 54,944,555 | $ 362,766 | ¥ 32,206,457 | |
| COST OF REVENUES | (3,336,792) | (22,031) | (20,229,847) | |
| GROSS PROFIT | 51,607,763 | 340,735 | 11,976,610 | |
| OPERATING EXPENSES: | ||||
| Selling and marketing expenses | (27,077,415) | (178,776) | (11,366,838) | |
| General and administrative expenses | (200,231,599) | (1,322,010) | (162,606,424) | |
| Share-based compensation expenses | (1,616,463) | (10,673) | ||
| Research and development expenses | (44,821,606) | (295,930) | (50,234,955) | |
| TOTAL OPERATING EXPENSES | (273,747,083) | (1,807,389) | (224,208,217) | |
| LOSS FROM OPERATIONS | (222,139,320) | (1,466,654) | (212,231,607) | |
| Loss on digital assets | (167,879) | (1,108) | ||
| Interest expenses, net | (1,789,278) | (11,814) | (700,617) | |
| Foreign exchange gain, net | 38,823,264 | 256,327 | ||
| Other (expense) income, net | 129,617 | 856 | (213,799) | |
| LOSS BEFORE INCOME TAXES | (185,143,596) | (1,222,393) | (213,146,023) | |
| Provision for income (tax) benefit | ||||
| Current | (145,000) | |||
| Deferred | 188,496 | 1,245 | (56,966) | |
| Total provision for income (tax) benefit | 188,496 | 1,245 | (201,966) | |
| NET LOSS | ¥ (184,955,100) | $ (1,221,148) | ¥ (213,347,989) | $ (1,408,609) |
| LOSS PER SHARE | ||||
| Basic (in Yen per share and Dollars per share) | (per share) | ¥ (12.77) | $ (0.08) | ¥ (15.42) | |
| Diluted (in Yen per share and Dollars per share) | (per share) | ¥ (12.77) | $ (0.08) | ¥ (15.42) | |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING* | ||||
| Basic (in Shares) | 14,478,530 | 14,478,530 | 13,839,400 | 13,839,400 |
| Diluted (in Shares) | 14,478,530 | 14,478,530 | 13,839,400 | 13,839,400 |
| Software and system development services | ||||
| OPERATING REVENUES | ||||
| TOTAL OPERATING REVENUES | ¥ 4,812,000 | $ 31,771 | ¥ 11,358,517 | |
| Consulting and solution services | ||||
| OPERATING REVENUES | ||||
| TOTAL OPERATING REVENUES | 1,267,620 | 8,369 | 20,847,940 | |
| Sale of NFTs | ||||
| OPERATING REVENUES | ||||
| TOTAL OPERATING REVENUES | ¥ 48,864,935 | $ 322,626 | ||
Unaudited Interim Condnsed Statements of Changes in Shareholders’ Equity |
Ordinary shares
JPY (¥)
shares
|
Additional Paid-in Capital
JPY (¥)
|
Accumulated Deficit
JPY (¥)
|
JPY (¥)
shares
|
USD ($)
shares
|
|---|---|---|---|---|---|
| Balance at Apr. 30, 2022 | ¥ 334,575,200 | ¥ 1,524,575,200 | ¥ (1,268,330,424) | ¥ 590,819,976 | $ 3,900,832 |
| Balance (in Shares) at Apr. 30, 2022 | 13,839,400 | ||||
| Capital reduction to cover deficit | ¥ (234,575,200) | 177,544,899 | 57,030,301 | ||
| Net loss | (213,347,989) | (213,347,989) | (1,408,609) | ||
| Balance at Oct. 31, 2022 | ¥ 100,000,000 | 1,702,120,099 | (1,424,648,112) | 377,471,987 | 2,492,223 |
| Balance (in Shares) at Oct. 31, 2022 | 13,839,400 | ||||
| Balance at Apr. 30, 2023 | ¥ 100,000,000 | 1,702,120,099 | (1,593,605,162) | ¥ 208,514,937 | $ 1,376,700 |
| Balance (in Shares) at Apr. 30, 2023 | 13,839,400 | 13,839,400 | 13,839,400 | ||
| Issuance of ordinary shares for cash | ¥ 781,200,000 | (326,330,981) | ¥ 454,869,019 | $ 3,003,228 | |
| Issuance of ordinary shares for cash (in Shares) | 1,200,000 | ||||
| Net loss | (184,955,100) | (184,955,100) | (1,221,148) | ||
| Share based compensation | 1,616,463 | 1,616,463 | 10,673 | ||
| Balance at Oct. 31, 2023 | ¥ 881,200,000 | ¥ 1,377,405,581 | ¥ (1,778,560,262) | ¥ 480,045,319 | $ 3,169,453 |
| Balance (in Shares) at Oct. 31, 2023 | 15,039,400 | 15,039,400 | 15,039,400 |
Nature of Business and Organization |
6 Months Ended |
|---|---|
Oct. 31, 2023 | |
| Nature of Business and Organization [Abstract] | |
| Nature of business and organization | Note 1 – Nature of business and organization
Earlyworks Co., Ltd. (the “Company”) is a stock company incorporated in Japan pursuant to the laws of Japan on May 1, 2018. The Company builds products, delivers services, and develops solutions based on its proprietary Grid Ledger System to leverage blockchain technology in various business settings, including advertisement tracking, online visitor management, and sales of non-fungible tokens. The Company primarily generates revenue from software and system development services, consulting and solution services, and sale of NFTs. |
Liquidity and Going Concern |
6 Months Ended |
|---|---|
Oct. 31, 2023 | |
| Liquidity and Going Concern [Abstract] | |
| Liquidity and going concern | Note 2 – Liquidity and going concern
In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
The Company’s accounts have been prepared assuming that the company will continue as a going concern basis. The going concern basis assumes that assets are realized and liabilities are extinguished in the ordinary course of business at amounts disclosed in the financial statements. The Company’s ability to continue as a going concern depends upon aligning its sources of funding (debt and equity) with the expenditure requirements of the Company and repayment of the short-term debt facilities as and when they fall due.
The Company has considered whether there is a substantial doubt about its ability to continue as a going concern. Cash flow from operations and capital contributions and loans from shareholders have been utilized to finance the working capital requirements of the Company. For the six months ended October 31, 2023, the Company has negative cash flow from operating activities of JPY163,374,972 (US$1,078,667). The Company’s working capital was JPY526,033,325 (US$3,473,084) as of October 31, 2023. And the Company had JPY701,384,530 (US$4,630,824) in cash, which is unrestricted as to withdrawal and use as of October 31, 2023. The management believes the cash balance as of October 31, 2023 is sufficient to meet its capital needs of the Company for at least 12 months from the issuance date of the financial statements. However, in view of these circumstances, the management of the Company has given additional consideration to the future liquidity and performance of the Company and its available sources of finance in assessing whether the Company will have sufficient financial resources to continue as a going concern.
To sustain its ability to support the Company’s operating activities, the Company considered supplementing its sources of funding through the following:
The Company closed its initial public offering on July 27, 2023 and received aggregate gross proceeds of $6 million from the offering, before deducting underwriting discounts and other related expenses. If necessary, the Company will consider additional financings through the issuance of ordinary shares or debt financings and look into refinancing the Company’s existing debt obligations. However, there can be no assurances that the Company will be successful in securing any debt on terms favorable to the Company, or at all, and it is not possible to predict whether any financing efforts will be successful or if the Company will obtain the necessary financing.
Management has commenced a strategy to raise debt and equity. However, there can be no certainty that these additional financings will be available on acceptable terms or at all. If management is unable to execute this plan, there would likely be a material adverse effect on the Company’s business. All of these factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements for the six months ended October 31, 2022 and 2023, and for the year ended April 30, 2023 have been prepared on a going concern basis and do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business. |
Summary of Significant Accounting Policies |
6 Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | ||||||||||||||||
| Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||
| Summary of significant accounting policies | Note 3 – Summary of significant accounting policies
Basis of presentation
The unaudited interim condensed financial statements do not include all the information and footnotes required by the U.S. GAAP for complete financial statements. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with the U.S. GAAP have been condensed or omitted consistent with Article 10 of Regulation S-X. In the opinion of the Company’s management, the unaudited interim condensed financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, in normal recurring nature, as necessary for the fair statement of the Company’s financial position as of October 31, 2023, and results of operations and cash flows for the six-month periods ended October 31, 2022 and 2023. The unaudited interim condensed balance sheets as of October 31, 2023 have been derived from the audited financial statements at that date but do not include all the information and footnotes required by the U.S. GAAP. Interim results of operations are not necessarily indicative of the results expected for the full fiscal year or for any future period. These financial statements should be read in conjunction with the audited financial statements as of and for the years ended April 30, 2022 and 2023, and related notes included in the Company’s audited financial statements.
Use of estimates and assumptions
The preparation of unaudited interim condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and revenues and expenses during the reporting periods. Significant accounting estimates reflected in the Company’s unaudited interim condensed financial statements include, but not limited to, estimates for useful lives and impairment of property and equipment, impairment of long-lived assets, allowance for credit losses, revenue recognition, and deferred taxes. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the unaudited interim condensed financial statements.
Foreign currency translation and transaction
The Company uses Japanese yen (“JPY”) as its reporting currency. The functional currency of the Company which is incorporated in Japan is JPY, which is its respective local currency based on the criteria of ASC 830, “Foreign Currency Matters”.
Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rates at the balance sheet dates. Net gains and losses resulting from foreign exchange transactions are included in foreign exchange gain, net on the statements of operations.
Convenience Translation
Translations of balances in the balance sheets, statements of operations, statements of changes in shareholders’ equity and statements of cash flows from JPY into USD as of October 31, 2023 are solely for the convenience of the readers and are calculated at the rate of USD 1.00=JPY151.46, representing the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on November 6, 2023. No representation is made that the JPY amounts could have been, or could be, converted, realized or settled into USD at such rate, or at any other rate.
Reclassifications
Certain reclassifications to previously reported financial information have been made to conform to the current period presentation.
Cash
Cash includes currency on hand and deposits held by banks that can be added or withdrawn without limitation. The Company maintains its bank accounts in Japan and the United States. Cash balances in bank accounts in Japan are insured by the Deposit Insurance Corporation of Japan subject to certain limitations. Cash balances in bank accounts in the United States are insured by the Federal Deposit Insurance Corporation up to $250,000 per insured bank. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. As of April 30, 2023 and October 31, 2023, the Company did not have any cash equivalents.
Digital assets
Digital assets such as Ethereum, Binance Coin and Polygon are included in current assets in the balance sheets as an indefinite live intangible asset. Digital assets are initially recognized based on the fair value of the digital assets on the date of receipt. The Company recognized realized gains or losses when digital assets are sold for other digital assets, or for cash consideration using a first-in first-out method of accounting and the Company accounts for received and disbursements as cash flows from operating activities.
An intangible asset with an indefinite useful life is not amortized but assessed for impairment whenever events or changes in circumstances occur indicating that it is more likely than not that the indefinite-life asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital assets in the principal market at the time its fair value is being measured, and the Company recognized an impairment loss in an amount equal to that excess. The Company monitors and evaluates the quality and relevance of the available information, such as pricing information from the asset’s principal (or most advantageous) market or from other digital asset exchanges or markets, to determine whether such information is indicative of a potential impairment. The Company recognizes an impairment loss at any time the fair value of the digital asset is below its carrying value. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. Accounts receivable and allowance for expected credit losses accounts
Accounts receivable include trade accounts due from clients. Accounts are considered overdue after 90 days. Management reviews its receivables on a regular basis to determine if the allowance for credit losses is adequate and provides allowance when necessary. The Company considers various factors in establishing, monitoring, and adjusting its allowance for credit losses including the aging of receivables and aging trends, customer creditworthiness and specific exposures related to particular customers. The Company also monitors other risk factors and forward-looking information, such as country specific risks and economic factors that may affect a customer’s ability to pay in establishing and adjusting its allowance for credit losses. Account balances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is not probable. As of April 30, 2023 and October 31, 2023, the Company made and allowance for expected credit losses for accounts receivable, respectively.
Prepayments
Prepayments are mainly payments made to vendors or services providers for future services that have not been provided. These amounts are refundable and bear no interest. Management reviews its prepayments on a regular basis to determine if the allowance is adequate and adjusts the allowance when necessary. As of April 30, 2023 and October 31, 2023, no allowance was deemed necessary.
Deferred initial public offering (“IPO”) costs
Pursuant to ASC 340-10-S99-1, IPO costs directly attributable to an offering of equity securities were deferred and charged against the gross proceeds of the offering as a reduction of additional paid-in capital upon completion of the IPO. These costs included legal fees, consulting fees, underwriting fees, the SEC filing and printing expenses related to the IPO. On July 27, 2023, the Company closed its IPO and gross proceeds of JPY781,200,000 (USD 5,157,797) were recorded in ordinary shares and the accumulated deferred IPO costs of JPY326,330,981 (USD 2,154,568), consisting of JPY212,160,121 (USD 1,400,766) incurred through April 30, 2023 and JPY114,170,860 (USD 753,802) incurred in the six months ended October, 31, 2023, were charged against additional paid-in capital in the balance sheet.
Short-term deposits and long-term deposits
Short-term deposits and long-term deposits are mainly for rent and money deposited with certain service providers. These amounts are refundable and bear no interest. The short-term deposits usually have one year term and are refundable upon contract termination. The long-term deposits are refunded from service providers when term and conditions set forth in the agreements have been satisfied.
Other current assets, net
Other current assets, net, primarily consists of other receivables from third parties. These other receivables are unsecured and are reviewed periodically to determine whether their carrying value has become impaired.
Property and equipment, net
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:
The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statements of operations. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized.
Impairment for long-lived assets
Long-lived assets, including property and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. We assess the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, we would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. For the six months ended October 31, 2022 and 2023, no impairment of long-lived assets was recognized.
Fair value of financial instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, prepayments, short-term deposits, income tax receivable and other current assets, current portion of long-term bank loans, other payables and accrued liabilities, and current operating lease liabilities, approximate the fair value of the respective assets and liabilities as of April 30, 2023 and October 31, 2023 based upon the short-term nature of the assets and liabilities.
Revenue recognition
The Company recognizes revenue as it satisfies a performance obligation when its client obtains control of promised services, in an amount that reflects the consideration that the entity expects to receive in exchange for those services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the services it transfers to the client.
The Company applied practical expedient when sales taxes were collected from clients, meaning sales tax is recorded net of revenue, instead of cost of revenue, which are subsequently remitted to governmental authorities and are excluded from the transaction price. The Company does not offer rights of refund of previously paid or delivered amounts, rebates, rights of return or price protection. In all instances, the Company limits the amount of revenue recognized to the amounts for which it has the right to bill its’ clients.
The Company is a principal and records revenue on a gross basis when the Company is primarily responsible for fulfilling the service, has discretion in establishing pricing and controls the promised service before transferring that service to clients. Otherwise, the Company is an agent and records revenue on a net basis.
The Company derives its revenues from three sources: (1) revenue from software and system development services, (2) revenue from consulting and solution services, and (3) sale of NFTs. All of the Company’s contracts with clients do not contain cancellable and refund-type provisions.
(1) Software and system development services
The contract is typically fixed priced and does not provide any post contract client support or upgrades. The Company designs software and system based on clients’ specific needs which require the Company to perform services including design, development, and integration. These services also require significant customization. Upon delivery of the services, client acceptance is generally required. The Company assesses that software and system development services is considered as one performance obligation as the clients do not obtain benefit for each separate service. The duration of the development period is short, usually less than one year.
The Company’s software and system development service revenue is generated primarily from contracts with medium and large-sized enterprises. The contracts contain negotiated billing terms which generally include multiple payment phases throughout the contract term and a portion of contract amount usually is billed upon the completion of the related projects. Pursuant to the contract terms, the Company has enforceable right on payments for the work performed.
The Company’s revenue from software and system development contracts is generally recognized over time as the Company’s performance creates or enhances the project controlled by the clients and the control is transferred continuously to the Company’s clients. The Company uses an input method based on cost incurred as the Company believes that this method most accurately reflects the Company’s progress toward satisfaction of the performance obligation, which usually takes less than one year. Under this method, the Company could appropriately measure the fulfillment of a performance obligation. Assumptions, risks and uncertainties inherent in the estimates used to measure progress could affect the amount of revenues, receivables and deferred revenues at each reporting period.
Incurred costs include all direct material, labor and subcontract costs, and those indirect costs related to application development performance, such as indirect labor, supplies, and tools. Cost-based input method requires the Company to make estimates of revenues and costs to complete the service. In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the application development, including materials, labor, and other system costs. The Company’s estimates are based upon the professional knowledge and experience of the Company’s engineers and project managers to assess the contract’s schedule, performance, and technical matters. The Company has adequate cost history and estimating experience, and with respect to which management believes it can reasonably estimate total development costs. If the estimated costs are greater than the related revenues, the Company recognizes the entire estimated loss in the period the loss becomes known and can be reasonably estimated. Changes in estimates for software development services include but are not limited to cost forecast changes and change orders. The cumulative effect of changes in estimates is recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. To date, the Company has not incurred a material loss on any contracts. However, as a policy, provisions for estimated losses on such engagements will be made during the period in which a loss becomes probable and can be reasonably estimated. If contract modifications result in additional goods or services that are distinct from those transferred before the modification, they are accounted for prospectively as if the Company entered into a new contract. If the goods or services in the modification are not distinct from those in the original contract, sales and gross profit are adjusted using the cumulative catch-up method for revisions in estimated total contract costs and contract values.
(2) Consulting and solution services
Revenue from consulting and solution services is primarily comprised of fixed-fee contracts, which require the Company to provide professional consulting and solution services over contract terms beginning on the commencement date of each contract, which is the date its service is made available to clients. Billings to the clients are generally on a monthly or quarterly basis over the contract term, which is typically 1 to 12 months. The consulting and solution services contracts typically include a single performance obligation. The revenue from consulting and solution services is recognized over the contract term as clients receive and consume benefits of such services as provided.
Revenue includes reimbursements of travel and out-of-pocket expense, with equivalent amounts of expense recorded in cost of revenue.
(3) Sale of NFTs
The Company engages in sale of NFTs, or non-fungible tokens. NFTs are assets that have been tokenized via a blockchain and are assigned unique identification codes and metadata that distinguish them from other tokens. The Company typically enters into contracts with its customers where the rights of the parties, including payment terms, are identified and sales prices to the customers are fixed with no separate sales rebate, discount, or other incentive and no right of return exists on sales of NFTs. The Company’s performance obligation is to deliver products according to contract specifications. The Company recognizes product revenue at a time when the control of products is transferred to customers.
Contract liabilities
Contract liabilities are recorded when consideration is received from a customer prior to transferring the services to the customer or other conditions under the terms of a sales contract. As of April 30, 2023 and October 31, 2023, the Company recorded contract liabilities of JPY1,397,470 and , respectively, which was presented as contract liabilities on the accompanying balance sheets.
Operating leases
The Company determines if an arrangement is a lease at inception. Leases are classified as operating or finance leases in accordance with the recognition criteria in ASC 842-20-25. The Company’s leases do not contain any material residual value guarantees or material restrictive covenants.
At the commencement date of a lease, the Company determines the classification of the lease based on the relevant factors present and records a right-of-use (“ROU”) asset and lease liability for operating lease. ROU assets acquired through lease represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are calculated as the present value of the lease payments not yet paid. If the rate implicit in the Company’s leases is not readily available, the Company uses an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. This incremental borrowing rate reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. ROU assets include any lease prepayments and are reduced by lease incentives. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease terms are based on the non-cancellable term of the lease.
Leases with an initial lease term of 12 months or less are not recorded on the balance sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term.
Cost of revenues
Cost of revenues mainly consist of salaries and benefits of our staff and outsourced staff, and related expenses including telecommunication cost and rental costs.
Selling and marketing expenses
Selling and marketing expenses mainly consist of payroll, promotion expenses, and related expenses for personnel engaged in selling and marketing activities.
Advertising expenses
Advertising costs are expensed as incurred and included in selling, general, and administrative expenses in the statements of operations. Advertising expenses amounted to JPY427,095 and JPY11,088,923 (US$73,214) for the six months ended October 31, 2022 and 2023, respectively.
Research and development expenses
Research and development costs are expensed as incurred. These costs primarily consist of payroll, outsourced development cost, and related expenses for personnel engaged in research and development activities.
Income taxes
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes were incurred during the six months ended October 31, 2022 and 2023. The Company does not believe there was any uncertain tax provision as of April 30, 2023 and October 31, 2023. The Company does not expect that its assessment regarding unrecognized tax positions will materially change over the next 12 months.
Earnings (Loss) per share
Basic earnings (loss) per share is computed by dividing net income attributable to the holders of ordinary shares by the weighted average number of ordinary shares outstanding during the period presented. Diluted income per share is calculated by dividing net income attributable to the holders of ordinary shares as adjusted for the effect of dilutive ordinary share equivalents, if any, by the weighted average number of ordinary shares and dilutive ordinary share equivalents outstanding during the period. However, ordinary share equivalents are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive, such as in a period in which a net loss is recorded.
Share-based compensation
The Company applies ASC 718, Compensation – Stock Compensation (“ASC 718”), to account for its employee share-based payments. In accordance with ASC 718, the Company determines whether an award should be classified and accounted for as a liability award or equity award. All the Company’s share-based awards to employees were classified as equity awards and are recognized in the financial statements based on their grant date fair values. In accordance with ASC 718, the Company recognizes share-based compensation cost for equity awards to employees with a performance condition based on the probable outcome of that performance condition. Compensation cost is recognized using the accelerated method if it is probable that the performance condition will be achieved. The Company accounts for forfeitures as they occur in accordance with ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting.
Segment reporting
ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major clients in financial statements for detailing the Company’s business segments. Based on the criteria established by ASC 280, the Company’s chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer, who reviews results when making decisions about allocating resources and assessing performance of the Company. As a whole and hence, the Company has only one reportable segment. The Company does not distinguish between markets or segments for the purpose of internal reporting. As the Company’s long-lived assets are substantially located in Japan, no geographical segments are presented.
Related party transactions
A related party is generally defined as (i) any person and or their immediate family who hold 10% or more of the company’s securities (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. Related parties may be individuals or corporate entities.
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. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature.
Commitments and Contingencies
In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical performance and the specific facts and circumstances of each matter.
Risks and uncertainties
Political and economic risk
All of the Company’s assets were located in Japan and all of the Company’s revenue was generated in Japan. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in Japan, as well as by the general state of Japan economy. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in Japan. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations, including its organization and structure disclosed in Note 1, such experience may not be indicative of future results.
Credit risk
As of April 30, 2023 and October 31, 2023, JPY177,886,393 and JPY701,384,530 (US$4,630,824) of the Company’s cash was on deposit at financial institutions in Japan and the United States, respectively, which were insured by the Deposit Insurance Corporation of Japan and the Federal Deposit Insurance Corporation subject to certain limitations. The Company has not experienced any losses in such accounts.
Accounts receivables are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risks. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances.
Concentration of credit risk
Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and account receivable. The Company places its cash with financial institutions with high-credit ratings and quality.
Accounts receivable primarily comprise of amounts receivable from the service clients. To reduce credit risk, the Company performs on-going credit evaluations of the financial condition of these service clients. The Company establishes a provision for credit losses based upon estimates, factors surrounding the credit risk of specific service clients and other information.
Concentration of demand
As of April 30, 2023 and October 31, 2023, one client accounted for 97.7% and 95.4% of the Company’s total accounts receivable, respectively.
For the six months ended October 31, 2022, three major clients accounted for 62.1%, 15.2% and 11.6% of the Company’s total revenues, respectively. For the six months ended October 31, 2023, one major client accounted for 70.1% of the Company’s total revenues.
Concentration of supply
As of April 30, 2023, three vendors accounted for 15.2%, 15.0% and 10.6% of the Company’s total account payable. As of October 31, 2023, two vendors accounted for 48.8% and 17.3% of the Company’s total account payable.
For the six months ended October 31, 2022, two vendors accounted for 74.5% and 22.5% of the Company’s total purchases, respectively. For the six months ended October 31, 2023, two vendors accounted for 86.1% and 12.0% of the Company’s total purchases, respectively.
Foreign currency exchange risk
Our foreign currency exchange risk relates to bank accounts held in USD. Our results of operations and cash flow are exposed to changes in foreign currency exchange rates between JPY and USD and may be adversely affected in the future due to changes in foreign currency exchange rates.
To date, we have not engaged in hedging our foreign currency exchange risk. In the future, we may enter into formal currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates. These measures, however, may not adequately protect us from the adverse effects of such fluctuations.
Recent accounting pronouncements
The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging growth company, or EGC, and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.
In June 2016, the FASB amended guidance related to the impairment of financial instruments as part of ASU2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which will be effective January 1, 2020. The guidance replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, which clarified that receivables from operating leases are not within the scope of Topic 326 and instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842. On May 15, 2019, the FASB issued ASU 2019-05, which provides transition relief for entities adopting the Board’s credit losses standard, ASU 2016-13. Specifically, ASU 2019-05 amends ASU 2016-13 to allow companies to irrevocably elect, upon adoption of ASU 2016-13, the fair value option for financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of the credit losses guidance in ASC 326-20, (3) are eligible for the fair value option under ASC 825-10, and (4) are not held-to-maturity debt securities. For entities that have adopted ASU 2016-13, the amendments in ASU 2019-05 are effective for fiscal years beginning after December 15, 2019, including interim periods therein. An entity may early adopt the ASU in any interim period after its issuance if the entity has adopted ASU 2016-13. For all other entities, the effective date will be the same as the effective date of ASU 2016-13. In November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” ASU 2019-11 is an accounting pronouncement that amends ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU 2019-11 amendment provides clarity and improves the codification to ASU 2016-03. The pronouncement would be effective concurrently with the adoption of ASU 2016-03. The pronouncement is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. In February 2020, the FASB issued ASU No. 2020-02, which provides clarifying guidance and minor updates to ASU No. 2016-13 – Financial Instruments – Credit Loss (Topic 326) (“ASU 2016-13”) and related to ASU No. 2016-02 – Leases (Topic 842). ASU 2020-02 amends the effective date of ASU 2016-13, such that ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022. The Company adopted this update on May 1, 2023. The adoption of this update had no material impact on the Company’s results of operations and financial position.
On December 18, 2019, the FASB issued ASU No. 2019-12, Income taxes (Topic 740), Simplifying the Accounting for Income Taxes. This guidance amends ASC Topic 740 and addresses several aspects including 1) evaluation of step-up tax basis of goodwill when there is not a business combination, 2) policy election to not allocate taxes on a separate entity basis to entities not subject to income tax, 3) accounting for tax law changes or rates during interim periods, 4) ownership changes from equity method investment to subsidiary or vice versa, 5) elimination of exception to intrapetrous allocation when there is gain in discontinued operations and a loss from continuing operations, and 6) treatment of franchise taxes that are partially based on income. The amendments in this Update are effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company adopted this update on May 1, 2022. The adoption of this update had no material impact on the Company’s results of operations and financial position.
In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs. The amendments in this Update represent changes to clarify the Codification. The amendments make the Codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. ASU 2020-08 is effective for the Company for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. All entities should apply the amendments in this Update on a prospective basis as of the beginning of the period of adoption for existing or newly purchased callable debt securities. These amendments do not change the effective dates for Update 2017-08. The Company adopted this update on May 1, 2022. The adoption of this update had no material impact on the Company’s results of operations and financial position.
In October 2020, the FASB issued ASU 2020-10, Codification Improvements. The amendments in this Update represent changes to clarify the Codification or correct unintended application of guidance that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments in this Update affect a wide variety of Topics in the Codification and apply to all reporting entities within the scope of the affected accounting guidance. ASU 2020-10 is effective for the Company for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. The amendments in this Update should be applied retrospectively. The Company adopted this update on May 1, 2022. The adoption of this update had no material impact on the Company’s results of operations and financial position.
In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and other – crypto assets (Subtopic 350-60): Accounting for and disclosure of crypto assets. This guidance addresses the accounting and disclosure requirements for certain crypto assets. The new guidance requires entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in net income in each reporting period. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. The ASU’s amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those years. Early adoption is permitted. The Company is currently evaluating the impact this ASU will have on its financial statements and related disclosures.
The Company has reviewed all other recently issued accounting pronouncements and concluded that they are either not applicable or not expected to have a material impact on the Company’s financial statements. |
Revenues |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | Note 4 – Revenues
The following table presents the Company’s revenues disaggregated by service lines for the six months ended October 31, 2022 and 2023:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Receivable, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts receivable, net | Note 5 – Accounts receivable, net
Accounts receivable, net consist of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, Net |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and equipment, net | Note 6 – Property and equipment, net
Property and equipment, net consist of the following:
Depreciation expense for the six months ended October 31, 2022 and 2023 amounted to JPY324,216 and JPY546,638 (USD 3,610), respectively. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Payables and Accrued Expenses |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Payables and Accrued Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other payables and accrued expenses | Note 7 – Other payables and accrued expenses
The components of other payables and accrued expenses are as follows:
Others mainly consist of other payables related to operating activities including outsourced design costs and handling fee. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans | Note 8 – Loans
Outstanding balances of loans consist of the following:
Interest expense for the six months ended October 31, 2022 and 2023 amounted to JPY588,049 and JPY1,559,270 (USD 10,295), respectively. As of October 31, 2023, the Company’s future loan obligations according to the terms of the loan agreement are as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and contingencies |
6 Months Ended |
|---|---|
Oct. 31, 2023 | |
| Commitments and contingencies [Abstract] | |
| Commitments and contingencies | Note 9 – Commitments and contingencies
Lease commitments
The Company entered into an operating lease agreement for office space. The minimum lease payment commitments under the operating lease as of October 31, 2023 are set forth in the Note 11 – Operating leases – right-of-use assets.
Litigation
Certain shareholders of the Company filed a lawsuit in the Tokyo District Court against the Company and Mr. Satoshi Kobayashi, the Company’s Chief Executive Officer and Representative Director. The complaint, which is dated December 18, 2023, was served on the Company and Mr. Kobayashi on January 12, 2024. The plaintiffs alleged that Mr. Kobayashi violated Article 709 of the Japanese Civil Code by intentionally delaying or misrepresenting the procedures necessary for the sale of shares, thereby unfairly depriving the plaintiffs of the opportunity to sell their shares on the Nasdaq market at a higher price following the Company’s initial public offering, and that the Company shall be liable for damages caused by Mr. Kobayashi in the discharge of his duties as the Company’s Representative Director under Article 350 of the Japanese Companies Act. The plaintiffs sought monetary damages in the total amount of $2,925,747, plus interest and costs. The Company believes the complaint is without merit. The Company intends to vigorously defend the case. However, litigation is inherently uncertain and there can be no assurance regarding the outcome of this matter. In light of the fact that this lawsuit is in an early stage, the Company cannot predict the ultimate outcome of the lawsuit and cannot reasonably estimate the potential loss or range of loss that the Company may incur. |
Income Taxes |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income taxes | Note 10 – Income taxes
(a) Corporate Income Taxes
The Company is in Japan and is subject to Japanese national and local income taxes, inhabitant tax, and enterprise tax, which, in the aggregate, represent a statutory income tax rate of approximately 30.6% for the six months ended October 31, 2022 and 2023.
The effective tax rate for the six months ended October 31, 2022 and 2023 were approximately 0.1% and -0.1%, respectively. The effective income tax rate is different from the statutory tax rate for the six months ended October 31, 2022 primarily due to changes in valuation allowance and capitalized IPO related costs. The effective income tax rate is different from the statutory tax rate for the six months ended October 31, 2023 primarily due to changes in valuation allowance, capitalized IPO related costs, and share based compensation.
Significant components of the provision for income taxes are as follows:
For the purpose of presentation in the balance sheets, deferred income tax assets and liabilities have been offset. Significant component of deferred tax assets and liabilities are as follows:
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the cumulative earnings and projected future taxable income in making this assessment. Recovery of substantially all of the Company’s deferred tax assets is dependent upon the generation of future income, exclusive of reversing taxable temporary differences.
(b) Consumption tax
Consumption tax collected and remitted to tax authorities is excluded from revenue, cost of sales, and expenses in the statements of operations. The Company has been subject to the applicable consumption tax rate of 10%, with an 8% rate applicable to a limited number of exceptions based on the new Japanese tax law. For overseas sales, the Company is exempted from paying consumption tax. The Company can deduct all its qualified input consumption tax paid when purchasing from suppliers, against the output consumption tax derived from domestic sales. The Company is eligible for consumption tax refund from the tax authorities for excess input consumption tax, which is recorded as consumption tax receivable in the prepaid expenses and other current assets on the balance sheets. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Leases – Right-of-Use Assets |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Leases – Right-of-Use Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating leases – right-of-use assets | Note 11 – Operating leases – right-of-use assets
The Company entered into an operating lease agreement for office space. None of the amounts disclosed below for these leases contain variable payments, residual value guarantees or options that were recognized as part of the right-of-use assets and lease liabilities. As the Company’s leases did not provide an implicit discount rate, the Company used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
As of April 30, 2023, the Company had operating lease liabilities, including current and noncurrent, in the amount of JPY3,467,368 and the corresponding operating lease right-of-use assets of JPY3,467,368.
As of October 31, 2023, the Company had operating lease liabilities, including current and noncurrent, in the amount of JPY15,085,116 (USD 99,598) and corresponding operating lease right-of-use assets of JPY15,781,366 (USD 104,195).
Operating lease costs for the six months ended October 31, 2022 and 2023 was JPY4,177,500 and JPY4,177,500 (US$27,582), respectively.
Lease commitments
The Company’s maturity analysis of operating lease liabilities as of October 31, 2023 is as follows:
Supplemental disclosure related to operating leases were as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity |
6 Months Ended |
|---|---|
Oct. 31, 2023 | |
| Shareholders' Equity [Abstract] | |
| Shareholders’ equity | Note 12 – Shareholders’ equity
Ordinary shares
The Company is a stock company incorporated in Japan pursuant to the laws of Japan on May 1, 2018.
As of April 30, 2023 and October 31, 2023, the number of outstanding shares is 13,839,400 and 15,039,400, respectively. |
Share-Based Compensation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | Note 13. Share-based compensation
Share option plan (the “2019 Plan”)
On February 5, 2019, the shareholders and Board of Directors of the Company approved the 2019 Plan, which is administered by the Board of Directors and has a term of 10 years from the date of adoption. Under the 2019 Plan, the Company has set aside options that are exercisable into 1,095,000 ordinary shares (retrospectively restated the share split of 50-for-1 and 100-for-1 on July 16, 2019 and October 25, 2021) of the Company to eligible employees, officers, directors or any other individual as deemed appropriate by the board of directors. The purpose of the 2019 Plan is to attract and retain exceptionally talented and qualified individuals, and to motivate them to exercise their best efforts on behalf of the Company through valuable incentives and awards.
The options granted under the 2019 Plan have a contractual term of 10 years. The share options vested on the day before the listing date. The grantees can exercise vested options after the commencement date of exercise and before the earlier of: 1) its contractual term (i.e. 10 years after its grant date); or 2) upon the grantee terminates their employment if the vested option has not been exercised. The commencement date of exercise is upon the completion of the Company’s IPO.
The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions: risk-free interest rate of - 0.14%, dividend yield of 0.00%; estimated volatility of 69.10%, and expected lives of options of 10 years. Expected volatilities are based on historical volatilities of the Company’s peer group averages.
A summary of the employee equity award activity under the 2019 Plan is stated below:
The aggregate intrinsic value in the table above represents the difference between the fair value of the Company’s ordinary share as of fiscal year end and the option’s respective exercise price.
For the six months ended October 31, 2023, the Company recognized share-based compensation expense of JPY1,616,463 (USD10,) when a performance condition was met upon closing of the Company’s IPO on July 27, 2023.
Trust-Type Share Option Plan (the “2019 Trust-Type Plan”)
On July 1, 2019, the shareholders and Board of Directors of the Company approved the 2019 Trust-Type Share Option Plan (the “2019 Trust-Type Plan”); 2019 Trust-Type Plan is administered by the Board of Directors, and has a term of 10 years from the date of adoption. Under the “2019 Trust-type Plan”, the Company deposited into the trust a set of options that are exercisable into a total of 2,000,000 ordinary shares (retrospectively restated for the share split of 50-for-1 and 100-for-1 on July 16, 2019 and October 25, 2021, respectively) of the Company. The board of directors and the trustee of the 2019 Trust-Type Plan, in their discretion, may designate and distribute these options to individuals, including but not limited to employees, officers, and directors. The purpose of the “2019 Trust-type Plan” is to attract and retain exceptionally qualified and talented individuals and to motivate them to exercise their best efforts on behalf of the Group through valuable incentives and awards.
The trust-type share option (trust for market value-issue stock acquisition rights) is a scheme of where the option holder is granted the right to acquire the Company’s stock in the open market at pre-determined price, which can be lower than the fair market value; therefore, generating immediate benefit to the holder to option. The trust type plan was initiated and created by the trustor (Mr. Kobayashi, the Company’s Chief Executive Officer) when he deposited funds into the trust with the intention to reward the beneficiaries of the plan. The trustee is entrusted with the responsibility to grant to beneficiaries (officers and employees, etc.) the options.
The fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions: risk-free interest rate of - 0.14%, dividend yield of 0.00%; estimated volatility of 69.10%, and expected lives of options of 10 years. Expected volatilities are based on historical volatilities of the Company’s peer group averages.
For the six months ended October 31, 2022 and 2023, the Company recognized an expense of and , respectively. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent Events |
6 Months Ended |
|---|---|
Oct. 31, 2023 | |
| Subsequent Events [Abstract] | |
| Subsequent events | Note 14 – Subsequent events
On April 26, 2024, the Company’s shareholders approved an amendment to its equity structure whereby the Company reduced capital associated with ordinary shares with a corresponding increase to additional paid-in capital of JPY832,158,125 (USD 5,494,244) with an effective date of April 30, 2024 in order to lessen the Company’s tax and administrative costs and ensuring the Company maintains flexibility in its capital structure. There was no net effect in the Company’s net assets as a result of this transaction.
The Company has assessed all events from October 31, 2023 up through April 30, 2024, which is the date that these financial statements are available to be issued, and, except as disclosed above, there are not any material subsequent events that require disclosure in these financial statements. |
Accounting Policies, by Policy (Policies) |
6 Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | ||||||||||
| Summary of Significant Accounting Policies [Abstract] | ||||||||||
| Basis of presentation | Basis of presentation The unaudited interim condensed financial statements do not include all the information and footnotes required by the U.S. GAAP for complete financial statements. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with the U.S. GAAP have been condensed or omitted consistent with Article 10 of Regulation S-X. In the opinion of the Company’s management, the unaudited interim condensed financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, in normal recurring nature, as necessary for the fair statement of the Company’s financial position as of October 31, 2023, and results of operations and cash flows for the six-month periods ended October 31, 2022 and 2023. The unaudited interim condensed balance sheets as of October 31, 2023 have been derived from the audited financial statements at that date but do not include all the information and footnotes required by the U.S. GAAP. Interim results of operations are not necessarily indicative of the results expected for the full fiscal year or for any future period. These financial statements should be read in conjunction with the audited financial statements as of and for the years ended April 30, 2022 and 2023, and related notes included in the Company’s audited financial statements. |
|||||||||
| Use of estimates and assumptions | Use of estimates and assumptions The preparation of unaudited interim condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and revenues and expenses during the reporting periods. Significant accounting estimates reflected in the Company’s unaudited interim condensed financial statements include, but not limited to, estimates for useful lives and impairment of property and equipment, impairment of long-lived assets, allowance for credit losses, revenue recognition, and deferred taxes. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the unaudited interim condensed financial statements. |
|||||||||
| Foreign currency translation and transaction | Foreign currency translation and transaction The Company uses Japanese yen (“JPY”) as its reporting currency. The functional currency of the Company which is incorporated in Japan is JPY, which is its respective local currency based on the criteria of ASC 830, “Foreign Currency Matters”. Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rates at the balance sheet dates. Net gains and losses resulting from foreign exchange transactions are included in foreign exchange gain, net on the statements of operations. |
|||||||||
| Convenience Translation | Convenience Translation Translations of balances in the balance sheets, statements of operations, statements of changes in shareholders’ equity and statements of cash flows from JPY into USD as of October 31, 2023 are solely for the convenience of the readers and are calculated at the rate of USD 1.00=JPY151.46, representing the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on November 6, 2023. No representation is made that the JPY amounts could have been, or could be, converted, realized or settled into USD at such rate, or at any other rate. |
|||||||||
| Reclassifications | Reclassifications Certain reclassifications to previously reported financial information have been made to conform to the current period presentation. |
|||||||||
| Cash | Cash Cash includes currency on hand and deposits held by banks that can be added or withdrawn without limitation. The Company maintains its bank accounts in Japan and the United States. Cash balances in bank accounts in Japan are insured by the Deposit Insurance Corporation of Japan subject to certain limitations. Cash balances in bank accounts in the United States are insured by the Federal Deposit Insurance Corporation up to $250,000 per insured bank. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. As of April 30, 2023 and October 31, 2023, the Company did not have any cash equivalents.
|
|||||||||
| Digital assets | Digital assets Digital assets such as Ethereum, Binance Coin and Polygon are included in current assets in the balance sheets as an indefinite live intangible asset. Digital assets are initially recognized based on the fair value of the digital assets on the date of receipt. The Company recognized realized gains or losses when digital assets are sold for other digital assets, or for cash consideration using a first-in first-out method of accounting and the Company accounts for received and disbursements as cash flows from operating activities. An intangible asset with an indefinite useful life is not amortized but assessed for impairment whenever events or changes in circumstances occur indicating that it is more likely than not that the indefinite-life asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital assets in the principal market at the time its fair value is being measured, and the Company recognized an impairment loss in an amount equal to that excess. The Company monitors and evaluates the quality and relevance of the available information, such as pricing information from the asset’s principal (or most advantageous) market or from other digital asset exchanges or markets, to determine whether such information is indicative of a potential impairment. The Company recognizes an impairment loss at any time the fair value of the digital asset is below its carrying value. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. |
|||||||||
| Accounts receivable and allowance for expected credit losses accounts | Accounts receivable and allowance for expected
credit losses accounts Accounts receivable include trade accounts due from clients. Accounts are considered overdue after 90 days. Management reviews its receivables on a regular basis to determine if the allowance for credit losses is adequate and provides allowance when necessary. The Company considers various factors in establishing, monitoring, and adjusting its allowance for credit losses including the aging of receivables and aging trends, customer creditworthiness and specific exposures related to particular customers. The Company also monitors other risk factors and forward-looking information, such as country specific risks and economic factors that may affect a customer’s ability to pay in establishing and adjusting its allowance for credit losses. Account balances are charged off against the allowance after all means of collection have been exhausted and the likelihood of collection is not probable. As of April 30, 2023 and October 31, 2023, the Company made and allowance for expected credit losses for accounts receivable, respectively. |
|||||||||
| Prepayments | Prepayments Prepayments are mainly payments made to vendors or services providers for future services that have not been provided. These amounts are refundable and bear no interest. Management reviews its prepayments on a regular basis to determine if the allowance is adequate and adjusts the allowance when necessary. As of April 30, 2023 and October 31, 2023, no allowance was deemed necessary. |
|||||||||
| Deferred initial public offering (“IPO”) costs | Deferred initial public offering (“IPO”) costs Pursuant to ASC 340-10-S99-1, IPO costs directly attributable to an offering of equity securities were deferred and charged against the gross proceeds of the offering as a reduction of additional paid-in capital upon completion of the IPO. These costs included legal fees, consulting fees, underwriting fees, the SEC filing and printing expenses related to the IPO. On July 27, 2023, the Company closed its IPO and gross proceeds of JPY781,200,000 (USD 5,157,797) were recorded in ordinary shares and the accumulated deferred IPO costs of JPY326,330,981 (USD 2,154,568), consisting of JPY212,160,121 (USD 1,400,766) incurred through April 30, 2023 and JPY114,170,860 (USD 753,802) incurred in the six months ended October, 31, 2023, were charged against additional paid-in capital in the balance sheet.
|
|||||||||
| Short-term deposits and long-term deposits | Short-term deposits and long-term deposits Short-term deposits and long-term deposits are mainly for rent and money deposited with certain service providers. These amounts are refundable and bear no interest. The short-term deposits usually have one year term and are refundable upon contract termination. The long-term deposits are refunded from service providers when term and conditions set forth in the agreements have been satisfied. |
|||||||||
| Other current assets, net | Other current assets, net Other current assets, net, primarily consists of other receivables from third parties. These other receivables are unsecured and are reviewed periodically to determine whether their carrying value has become impaired. |
|||||||||
| Property and equipment, net | Property and equipment, net Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful lives are as follows:
The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statements of operations. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized. |
|||||||||
| Impairment for long-lived assets | Impairment for long-lived assets Long-lived assets, including property and equipment and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value of an asset may not be recoverable. We assess the recoverability of the assets based on the undiscounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, we would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. For the six months ended October 31, 2022 and 2023, no impairment of long-lived assets was recognized. |
|||||||||
| Fair value of financial instruments | Fair value of financial instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, prepayments, short-term deposits, income tax receivable and other current assets, current portion of long-term bank loans, other payables and accrued liabilities, and current operating lease liabilities, approximate the fair value of the respective assets and liabilities as of April 30, 2023 and October 31, 2023 based upon the short-term nature of the assets and liabilities.
|
|||||||||
| Revenue recognition | Revenue recognition The Company recognizes revenue as it satisfies a performance obligation when its client obtains control of promised services, in an amount that reflects the consideration that the entity expects to receive in exchange for those services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the services it transfers to the client. The Company applied practical expedient when sales taxes were collected from clients, meaning sales tax is recorded net of revenue, instead of cost of revenue, which are subsequently remitted to governmental authorities and are excluded from the transaction price. The Company does not offer rights of refund of previously paid or delivered amounts, rebates, rights of return or price protection. In all instances, the Company limits the amount of revenue recognized to the amounts for which it has the right to bill its’ clients. The Company is a principal and records revenue on a gross basis when the Company is primarily responsible for fulfilling the service, has discretion in establishing pricing and controls the promised service before transferring that service to clients. Otherwise, the Company is an agent and records revenue on a net basis. The Company derives its revenues from three sources: (1) revenue from software and system development services, (2) revenue from consulting and solution services, and (3) sale of NFTs. All of the Company’s contracts with clients do not contain cancellable and refund-type provisions. (1) Software and system development services The contract is typically fixed priced and does not provide any post contract client support or upgrades. The Company designs software and system based on clients’ specific needs which require the Company to perform services including design, development, and integration. These services also require significant customization. Upon delivery of the services, client acceptance is generally required. The Company assesses that software and system development services is considered as one performance obligation as the clients do not obtain benefit for each separate service. The duration of the development period is short, usually less than one year. The Company’s software and system development service revenue is generated primarily from contracts with medium and large-sized enterprises. The contracts contain negotiated billing terms which generally include multiple payment phases throughout the contract term and a portion of contract amount usually is billed upon the completion of the related projects. Pursuant to the contract terms, the Company has enforceable right on payments for the work performed. The Company’s revenue from software and system development contracts is generally recognized over time as the Company’s performance creates or enhances the project controlled by the clients and the control is transferred continuously to the Company’s clients. The Company uses an input method based on cost incurred as the Company believes that this method most accurately reflects the Company’s progress toward satisfaction of the performance obligation, which usually takes less than one year. Under this method, the Company could appropriately measure the fulfillment of a performance obligation. Assumptions, risks and uncertainties inherent in the estimates used to measure progress could affect the amount of revenues, receivables and deferred revenues at each reporting period. Incurred costs include all direct material, labor and subcontract costs, and those indirect costs related to application development performance, such as indirect labor, supplies, and tools. Cost-based input method requires the Company to make estimates of revenues and costs to complete the service. In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the application development, including materials, labor, and other system costs. The Company’s estimates are based upon the professional knowledge and experience of the Company’s engineers and project managers to assess the contract’s schedule, performance, and technical matters. The Company has adequate cost history and estimating experience, and with respect to which management believes it can reasonably estimate total development costs. If the estimated costs are greater than the related revenues, the Company recognizes the entire estimated loss in the period the loss becomes known and can be reasonably estimated. Changes in estimates for software development services include but are not limited to cost forecast changes and change orders. The cumulative effect of changes in estimates is recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. To date, the Company has not incurred a material loss on any contracts. However, as a policy, provisions for estimated losses on such engagements will be made during the period in which a loss becomes probable and can be reasonably estimated. If contract modifications result in additional goods or services that are distinct from those transferred before the modification, they are accounted for prospectively as if the Company entered into a new contract. If the goods or services in the modification are not distinct from those in the original contract, sales and gross profit are adjusted using the cumulative catch-up method for revisions in estimated total contract costs and contract values.
(2) Consulting and solution services Revenue from consulting and solution services is primarily comprised of fixed-fee contracts, which require the Company to provide professional consulting and solution services over contract terms beginning on the commencement date of each contract, which is the date its service is made available to clients. Billings to the clients are generally on a monthly or quarterly basis over the contract term, which is typically 1 to 12 months. The consulting and solution services contracts typically include a single performance obligation. The revenue from consulting and solution services is recognized over the contract term as clients receive and consume benefits of such services as provided. Revenue includes reimbursements of travel and out-of-pocket expense, with equivalent amounts of expense recorded in cost of revenue. (3) Sale of NFTs The Company engages in sale of NFTs, or non-fungible tokens. NFTs are assets that have been tokenized via a blockchain and are assigned unique identification codes and metadata that distinguish them from other tokens. The Company typically enters into contracts with its customers where the rights of the parties, including payment terms, are identified and sales prices to the customers are fixed with no separate sales rebate, discount, or other incentive and no right of return exists on sales of NFTs. The Company’s performance obligation is to deliver products according to contract specifications. The Company recognizes product revenue at a time when the control of products is transferred to customers. |
|||||||||
| Contract liabilities | Contract liabilities Contract liabilities are recorded when consideration is received from a customer prior to transferring the services to the customer or other conditions under the terms of a sales contract. As of April 30, 2023 and October 31, 2023, the Company recorded contract liabilities of JPY1,397,470 and , respectively, which was presented as contract liabilities on the accompanying balance sheets. |
|||||||||
| Operating leases | Operating leases The Company determines if an arrangement is a lease at inception. Leases are classified as operating or finance leases in accordance with the recognition criteria in ASC 842-20-25. The Company’s leases do not contain any material residual value guarantees or material restrictive covenants. At the commencement date of a lease, the Company determines the classification of the lease based on the relevant factors present and records a right-of-use (“ROU”) asset and lease liability for operating lease. ROU assets acquired through lease represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities are calculated as the present value of the lease payments not yet paid. If the rate implicit in the Company’s leases is not readily available, the Company uses an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. This incremental borrowing rate reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. ROU assets include any lease prepayments and are reduced by lease incentives. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease terms are based on the non-cancellable term of the lease. Leases with an initial lease term of 12 months or less are not recorded on the balance sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term. |
|||||||||
| Cost of revenues | Cost of revenues Cost of revenues mainly consist of salaries and benefits of our staff and outsourced staff, and related expenses including telecommunication cost and rental costs. |
|||||||||
| Selling and marketing expenses | Selling and marketing expenses Selling and marketing expenses mainly consist of payroll, promotion expenses, and related expenses for personnel engaged in selling and marketing activities.
|
|||||||||
| Advertising expenses | Advertising expenses Advertising costs are expensed as incurred and included in selling, general, and administrative expenses in the statements of operations. Advertising expenses amounted to JPY427,095 and JPY11,088,923 (US$73,214) for the six months ended October 31, 2022 and 2023, respectively. |
|||||||||
| Research and development expenses | Research and development expenses Research and development costs are expensed as incurred. These costs primarily consist of payroll, outsourced development cost, and related expenses for personnel engaged in research and development activities. |
|||||||||
| Income taxes | Income taxes The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes were incurred during the six months ended October 31, 2022 and 2023. The Company does not believe there was any uncertain tax provision as of April 30, 2023 and October 31, 2023. |
|||||||||
| Earnings (Loss) per share | Earnings (Loss) per share Basic earnings (loss) per share is computed by dividing net income attributable to the holders of ordinary shares by the weighted average number of ordinary shares outstanding during the period presented. Diluted income per share is calculated by dividing net income attributable to the holders of ordinary shares as adjusted for the effect of dilutive ordinary share equivalents, if any, by the weighted average number of ordinary shares and dilutive ordinary share equivalents outstanding during the period. However, ordinary share equivalents are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive, such as in a period in which a net loss is recorded.
|
|||||||||
| Share-based compensation | Share-based compensation The Company applies ASC 718, Compensation – Stock Compensation (“ASC 718”), to account for its employee share-based payments. In accordance with ASC 718, the Company determines whether an award should be classified and accounted for as a liability award or equity award. All the Company’s share-based awards to employees were classified as equity awards and are recognized in the financial statements based on their grant date fair values. In accordance with ASC 718, the Company recognizes share-based compensation cost for equity awards to employees with a performance condition based on the probable outcome of that performance condition. Compensation cost is recognized using the accelerated method if it is probable that the performance condition will be achieved. The Company accounts for forfeitures as they occur in accordance with ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting. |
|||||||||
| Segment reporting | Segment reporting ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major clients in financial statements for detailing the Company’s business segments. Based on the criteria established by ASC 280, the Company’s chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer, who reviews results when making decisions about allocating resources and assessing performance of the Company. As a whole and hence, the Company has only one reportable segment. The Company does not distinguish between markets or segments for the purpose of internal reporting. As the Company’s long-lived assets are substantially located in Japan, no geographical segments are presented. |
|||||||||
| Related party transactions | Related party transactions A related party is generally defined as (i) any person and or their immediate family who hold 10% or more of the company’s securities (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. Related parties may be individuals or corporate entities. 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. It is not, however, practical to determine the fair value of amounts due from/to related parties due to their related party nature. |
|||||||||
| Commitments and Contingencies | Commitments and Contingencies In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical performance and the specific facts and circumstances of each matter.
|
|||||||||
| Risks and uncertainties | Risks and uncertainties Political and economic risk All of the Company’s assets were located in Japan and all of the Company’s revenue was generated in Japan. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in Japan, as well as by the general state of Japan economy. The Company’s results may be adversely affected by changes in the political, regulatory, and social conditions in Japan. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations, including its organization and structure disclosed in Note 1, such experience may not be indicative of future results. Credit risk As of April 30, 2023 and October 31, 2023, JPY177,886,393 and JPY701,384,530 (US$4,630,824) of the Company’s cash was on deposit at financial institutions in Japan and the United States, respectively, which were insured by the Deposit Insurance Corporation of Japan and the Federal Deposit Insurance Corporation subject to certain limitations. The Company has not experienced any losses in such accounts. Accounts receivables are typically unsecured and derived from revenue earned from customers, thereby exposed to credit risks. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances. Concentration of credit risk Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and account receivable. The Company places its cash with financial institutions with high-credit ratings and quality. Accounts receivable primarily comprise of amounts receivable from the service clients. To reduce credit risk, the Company performs on-going credit evaluations of the financial condition of these service clients. The Company establishes a provision for credit losses based upon estimates, factors surrounding the credit risk of specific service clients and other information. Concentration of demand As of April 30, 2023 and October 31, 2023, one client accounted for 97.7% and 95.4% of the Company’s total accounts receivable, respectively. For the six months ended October 31, 2022, three major clients accounted for 62.1%, 15.2% and 11.6% of the Company’s total revenues, respectively. For the six months ended October 31, 2023, one major client accounted for 70.1% of the Company’s total revenues. Concentration of supply As of April 30, 2023, three vendors accounted for 15.2%, 15.0% and 10.6% of the Company’s total account payable. As of October 31, 2023, two vendors accounted for 48.8% and 17.3% of the Company’s total account payable. For the six months ended October 31, 2022, two vendors accounted for 74.5% and 22.5% of the Company’s total purchases, respectively. For the six months ended October 31, 2023, two vendors accounted for 86.1% and 12.0% of the Company’s total purchases, respectively. Foreign currency exchange risk Our foreign currency exchange risk relates to bank accounts held in USD. Our results of operations and cash flow are exposed to changes in foreign currency exchange rates between JPY and USD and may be adversely affected in the future due to changes in foreign currency exchange rates. To date, we have not engaged in hedging our foreign currency exchange risk. In the future, we may enter into formal currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates. These measures, however, may not adequately protect us from the adverse effects of such fluctuations.
|
|||||||||
| Recent accounting pronouncements | Recent accounting pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging growth company, or EGC, and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies. In June 2016, the FASB amended guidance related to the impairment of financial instruments as part of ASU2016-13 Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which will be effective January 1, 2020. The guidance replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, which clarified that receivables from operating leases are not within the scope of Topic 326 and instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842. On May 15, 2019, the FASB issued ASU 2019-05, which provides transition relief for entities adopting the Board’s credit losses standard, ASU 2016-13. Specifically, ASU 2019-05 amends ASU 2016-13 to allow companies to irrevocably elect, upon adoption of ASU 2016-13, the fair value option for financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of the credit losses guidance in ASC 326-20, (3) are eligible for the fair value option under ASC 825-10, and (4) are not held-to-maturity debt securities. For entities that have adopted ASU 2016-13, the amendments in ASU 2019-05 are effective for fiscal years beginning after December 15, 2019, including interim periods therein. An entity may early adopt the ASU in any interim period after its issuance if the entity has adopted ASU 2016-13. For all other entities, the effective date will be the same as the effective date of ASU 2016-13. In November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” ASU 2019-11 is an accounting pronouncement that amends ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU 2019-11 amendment provides clarity and improves the codification to ASU 2016-03. The pronouncement would be effective concurrently with the adoption of ASU 2016-03. The pronouncement is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. In February 2020, the FASB issued ASU No. 2020-02, which provides clarifying guidance and minor updates to ASU No. 2016-13 – Financial Instruments – Credit Loss (Topic 326) (“ASU 2016-13”) and related to ASU No. 2016-02 – Leases (Topic 842). ASU 2020-02 amends the effective date of ASU 2016-13, such that ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022. The Company adopted this update on May 1, 2023. The adoption of this update had no material impact on the Company’s results of operations and financial position. On December 18, 2019, the FASB issued ASU No. 2019-12, Income taxes (Topic 740), Simplifying the Accounting for Income Taxes. This guidance amends ASC Topic 740 and addresses several aspects including 1) evaluation of step-up tax basis of goodwill when there is not a business combination, 2) policy election to not allocate taxes on a separate entity basis to entities not subject to income tax, 3) accounting for tax law changes or rates during interim periods, 4) ownership changes from equity method investment to subsidiary or vice versa, 5) elimination of exception to intrapetrous allocation when there is gain in discontinued operations and a loss from continuing operations, and 6) treatment of franchise taxes that are partially based on income. The amendments in this Update are effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company adopted this update on May 1, 2022. The adoption of this update had no material impact on the Company’s results of operations and financial position. In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs. The amendments in this Update represent changes to clarify the Codification. The amendments make the Codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. ASU 2020-08 is effective for the Company for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. All entities should apply the amendments in this Update on a prospective basis as of the beginning of the period of adoption for existing or newly purchased callable debt securities. These amendments do not change the effective dates for Update 2017-08. The Company adopted this update on May 1, 2022. The adoption of this update had no material impact on the Company’s results of operations and financial position.
In October 2020, the FASB issued ASU 2020-10, Codification Improvements. The amendments in this Update represent changes to clarify the Codification or correct unintended application of guidance that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments in this Update affect a wide variety of Topics in the Codification and apply to all reporting entities within the scope of the affected accounting guidance. ASU 2020-10 is effective for the Company for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. The amendments in this Update should be applied retrospectively. The Company adopted this update on May 1, 2022. The adoption of this update had no material impact on the Company’s results of operations and financial position. In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and other – crypto assets (Subtopic 350-60): Accounting for and disclosure of crypto assets. This guidance addresses the accounting and disclosure requirements for certain crypto assets. The new guidance requires entities to subsequently measure certain crypto assets at fair value, with changes in fair value recorded in net income in each reporting period. In addition, entities are required to provide additional disclosures about the holdings of certain crypto assets. The ASU’s amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those years. Early adoption is permitted. The Company is currently evaluating the impact this ASU will have on its financial statements and related disclosures. The Company has reviewed all other recently issued accounting pronouncements and concluded that they are either not applicable or not expected to have a material impact on the Company’s financial statements. |
Summary of Significant Accounting Policies (Tables) |
6 Months Ended | ||||||
|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | |||||||
| Summary of Significant Accounting Policies [Abstract] | |||||||
| Schedule of Property and Equipment | Property and equipment are stated at cost less
accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated
useful lives are as follows:
|
Revenues (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Revenues Disaggregated by Service Lines | The following table presents the Company’s
revenues disaggregated by service lines for the six months ended October 31, 2022 and 2023:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Receivable, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accounts Receivable, Net | Accounts receivable, net consist of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property and Equipment, Net | Property and equipment, net consist of the following:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Payables and Accrued Expenses (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Payables and Accrued Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Other Payables and Accrued Expenses | The components of other payables and accrued expenses are as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Outstanding Balances of Loans | Outstanding balances of loans consist of the following:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Future Loan Obligations According to the Terms of the Loan | Interest expense for the six months ended October
31, 2022 and 2023 amounted to JPY588,049 and JPY1,559,270 (USD 10,295), respectively. As of October 31, 2023, the Company’s future
loan obligations according to the terms of the loan agreement are as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Provision for Income Taxes | Significant components of the provision for income
taxes are as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Deferred Tax Assets and Liabilities | For the purpose of presentation in the balance
sheets, deferred income tax assets and liabilities have been offset. Significant component of deferred tax assets and liabilities are
as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Leases – Right-of-Use Assets (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Leases – Right-of-Use Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Maturity Analysis of Operating Lease Liabilities | The Company’s maturity analysis of operating
lease liabilities as of October 31, 2023 is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Supplemental Disclosure Related to Operating Leases | Supplemental disclosure related to operating leases were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Award Activity | A summary of the employee equity award activity under the 2019 Plan
is stated below:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liquidity and Going Concern (Details) |
1 Months Ended | 6 Months Ended | |||||
|---|---|---|---|---|---|---|---|
|
Jul. 27, 2023
USD ($)
|
Oct. 31, 2023
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Oct. 31, 2022
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Apr. 30, 2023
JPY (¥)
|
Apr. 30, 2023
USD ($)
|
|
| Liquidity and Going Concern [Line Items] | |||||||
| Financial statements are issued going concern | one | one | |||||
| Net cash provided by (used in) operating activities | ¥ (163,374,972) | $ (1,078,667) | ¥ (213,413,362) | ||||
| Working capital | 526,033,325 | 3,473,084 | |||||
| Cash | 701,384,530 | $ 4,630,824 | ¥ 177,886,393 | $ 177,886,393 | |||
| Aggregate gross proceeds | $ 753,802 | ||||||
| Initial Public Offering [Member] | |||||||
| Liquidity and Going Concern [Line Items] | |||||||
| Aggregate gross proceeds | $ 6,000,000 | ¥ 114,170,860 | |||||
Summary of Significant Accounting Policies (Details) |
1 Months Ended | 6 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Oct. 31, 2022 |
Jul. 27, 2023
USD ($)
|
Jul. 24, 2023
JPY (¥)
|
Jul. 24, 2023
USD ($)
|
Oct. 31, 2023
JPY (¥)
¥ / shares
|
Oct. 31, 2023
USD ($)
$ / shares
|
Oct. 31, 2022
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Apr. 30, 2023
JPY (¥)
|
Apr. 30, 2023
USD ($)
|
|
| Summary of Significant Accounting Policies [Line Items] | ||||||||||
| Translation, description | Convenience TranslationTranslations of balances in the balance sheets, statements of operations, statements of changes in shareholders’ equity and statements of cash flows from JPY into USD as of October 31, 2023 are solely for the convenience of the readers and are calculated at the rate of USD 1.00=JPY151.46, representing the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on November 6, 2023. No representation is made that the JPY amounts could have been, or could be, converted, realized or settled into USD at such rate, or at any other rate. | Convenience TranslationTranslations of balances in the balance sheets, statements of operations, statements of changes in shareholders’ equity and statements of cash flows from JPY into USD as of October 31, 2023 are solely for the convenience of the readers and are calculated at the rate of USD 1.00=JPY151.46, representing the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on November 6, 2023. No representation is made that the JPY amounts could have been, or could be, converted, realized or settled into USD at such rate, or at any other rate. | ||||||||
| Currency exchange rate | (per share) | ¥ 151.46 | $ 1 | ||||||||
| Insured amount (in Dollars) | $ 250,000 | |||||||||
| Credit losses for accounts receivabl (in Dollars) | ||||||||||
| Ordinary shares | $ 2,154,568 | ¥ 454,869,019 | $ 3,003,228 | |||||||
| Accumulated deferred costs | 1,400,766 | |||||||||
| Initial public offering charges | 753,802 | |||||||||
| Contract liabilities (in Yen) | ¥ 1,397,470 | |||||||||
| Advertising expenses | ¥ 11,088,923 | $ 73,214 | ¥ 427,095 | |||||||
| Tax benefit | 50.00% | 50.00% | ||||||||
| Cash deposit | ¥ 701,384,530 | $ 4,630,824 | ¥ 177,886,393 | $ 177,886,393 | ||||||
| Total revenues | 95.40% | 95.40% | 97.70% | 97.70% | ||||||
| IPO [Member] | ||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||
| Gross proceeds | ¥ 781,200,000 | $ 5,157,797 | ||||||||
| Ordinary shares | ¥ | ¥ 326,330,981 | |||||||||
| Accumulated deferred costs | ¥ | ¥ 212,160,121 | |||||||||
| Initial public offering charges | $ 6,000,000 | ¥ 114,170,860 | ||||||||
| Maximum [Member] | ||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||
| Purchase percent | 86.10% | 86.10% | ||||||||
| Minimum [Member] | ||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||
| Purchase percent | 12.00% | 12.00% | ||||||||
| One Major Clients [Member] | ||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||
| Revenue rate percentage | 62.10% | 70.10% | 62.10% | 70.10% | ||||||
| Two Major Clients [Member] | ||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||
| Revenue rate percentage | 15.20% | 15.20% | ||||||||
| Three Major Clients [Member] | ||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||
| Revenue rate percentage | 11.60% | 11.60% | ||||||||
| One Vendor [Member] | ||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||
| Total account payable rate | 48.80% | 48.80% | 15.20% | 15.20% | ||||||
| Total purchases | 74.50% | |||||||||
| Two Vendor [Member] | ||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||
| Total account payable rate | 17.30% | 17.30% | 15.00% | 15.00% | ||||||
| Total purchases | 22.50% | |||||||||
| Three Vendor [Member] | ||||||||||
| Summary of Significant Accounting Policies [Line Items] | ||||||||||
| Total account payable rate | 10.60% | 10.60% | ||||||||
Summary of Significant Accounting Policies (Details) - Schedule of Property and Equipment |
Oct. 31, 2023 |
|---|---|
| Minimum [Member] | |
| Public Utility, Property, Plant and Equipment [Line Items] | |
| Office furniture and fixtures | 2 years |
| Maximum [Member] | |
| Public Utility, Property, Plant and Equipment [Line Items] | |
| Office furniture and fixtures | 4 years |
Revenues (Details) - Schedule of Revenues Disaggregated by Service Lines |
6 Months Ended | ||
|---|---|---|---|
|
Oct. 31, 2023
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Oct. 31, 2022
JPY (¥)
|
|
| Schedule of Revenues Disaggregated [Abstract] | |||
| TOTAL OPERATING REVENUES | ¥ 54,944,555 | $ 362,766 | ¥ 32,206,457 |
| Software and system development services [Member] | |||
| Schedule of Revenues Disaggregated [Abstract] | |||
| TOTAL OPERATING REVENUES | 4,812,000 | 31,771 | 11,358,517 |
| Consulting and solution services [Member] | |||
| Schedule of Revenues Disaggregated [Abstract] | |||
| TOTAL OPERATING REVENUES | 1,267,620 | 8,369 | 20,847,940 |
| Sale of NFTs [Member] | |||
| Schedule of Revenues Disaggregated [Abstract] | |||
| TOTAL OPERATING REVENUES | ¥ 48,864,935 | $ 322,626 | |
Accounts Receivable, Net (Details) - Schedule of Accounts Receivable, Net |
Oct. 31, 2023
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Apr. 30, 2023
JPY (¥)
|
|---|---|---|---|
| Schedule of Accounts Receivable Net [Abstract] | |||
| Accounts receivable | ¥ 5,047,702 | $ 33,327 | ¥ 6,351,818 |
| Less: Allowance for expected credit loss | |||
| Add: Consumption tax receivable | 5,938,669 | 39,209 | 24,583,098 |
| Accounts receivable, net | ¥ 10,986,371 | $ 72,536 | ¥ 30,943,916 |
Property and Equipment, Net (Details) |
6 Months Ended | ||
|---|---|---|---|
|
Oct. 31, 2023
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Oct. 31, 2022
JPY (¥)
|
|
| Property and Equipment, Net [Abstract] | |||
| Depreciation expense | ¥ 546,638 | $ 3,610 | ¥ 324,216 |
Property and Equipment, Net (Details) - Schedule of Property and Equipment, Net |
Oct. 31, 2023
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Apr. 30, 2023
JPY (¥)
|
|---|---|---|---|
| Schedule of Property and Equipment, Net [Line Items] | |||
| Property and equipment, gross | ¥ 3,455,291 | $ 22,813 | ¥ 3,223,064 |
| Accumulated depreciation | (1,702,690) | (11,242) | (1,156,051) |
| Property and equipment, net | 1,752,601 | 11,571 | 2,067,013 |
| Office Equipment [Member] | |||
| Schedule of Property and Equipment, Net [Line Items] | |||
| Property and equipment, gross | ¥ 3,455,291 | $ 22,813 | ¥ 3,223,064 |
Other Payables and Accrued Expenses (Details) - Schedule of Other Payables and Accrued Expenses |
Oct. 31, 2023
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Apr. 30, 2023
JPY (¥)
|
|---|---|---|---|
| Schedule of Other Payables and Accrued Expenses [Abstract] | |||
| Salary and benefit payables | ¥ 19,710,236 | $ 130,135 | ¥ 23,307,275 |
| Outsourced development costs | 2,334,750 | 15,415 | 6,276,121 |
| Communication costs | 3,658,114 | 24,152 | 3,934,950 |
| Professional service fee | 43,516,529 | 287,314 | 8,880,909 |
| Withholding tax | 1,170,550 | 7,728 | 1,657,172 |
| Resident tax for employees | 374,700 | 2,474 | 687,400 |
| Corporate business tax | 4,079,900 | 26,937 | |
| Sales proceeds temporarily received for others | 19,969,731 | 131,848 | 929,201 |
| Others | 1,134,061 | 7,488 | 1,577,436 |
| Other payables and accrued expenses | ¥ 95,948,571 | $ 633,491 | ¥ 47,250,464 |
Loans (Details) |
6 Months Ended | ||
|---|---|---|---|
|
Oct. 31, 2023
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Oct. 31, 2022
JPY (¥)
|
|
| Loans [Abstract] | |||
| Interest expenses | ¥ 1,559,270 | $ 10,295 | ¥ 588,049 |
Loans (Details) - Schedule of Outstanding Balances of Loans |
6 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
|
Oct. 31, 2023
JPY (¥)
|
Apr. 30, 2023
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Apr. 30, 2023
USD ($)
|
|
| Schedule of Outstanding Balances of Loans [Line Items] | ||||
| Total loans | ¥ 179,468,000 | ¥ 192,418,000 | $ 1,184,920 | $ 1,414,943 |
| Less: Loan origination fee | (231,000) | (346,500) | (1,525) | (2,548) |
| Current portion of long – term loan | (121,969,000) | (123,819,000) | (805,289) | (910,501) |
| Long-term loan – due over one year | 57,268,000 | 68,252,500 | 378,106 | 501,894 |
| Kiraboshi Bank [Member] | ||||
| Schedule of Outstanding Balances of Loans [Line Items] | ||||
| Balance | ¥ 7,599,000 | ¥ 11,680,000 | 50,172 | 85,889 |
| Maturity Date | Nov. 12, 2024 | Nov. 12, 2024 | ||
| Effective Interest Rate | 1.60% | 1.60% | ||
| Collateral/Guarantee | Guaranteed by Mr. Satoshi Kobayashi and Tokyo guarantee | Guaranteed by Mr. Satoshi Kobayashi and Tokyo guarantee | ||
| Kiraboshi Bank One [Member] | ||||
| Schedule of Outstanding Balances of Loans [Line Items] | ||||
| Balance | ¥ 32,069,000 | ¥ 34,988,000 | 211,732 | 257,284 |
| Maturity Date | Mar. 31, 2030 | Mar. 31, 2030 | ||
| Effective Interest Rate | 1.60% | 1.60% | ||
| Collateral/Guarantee | Guaranteed by Mr. Satoshi Kobayashi | Guaranteed by Mr. Satoshi Kobayashi | ||
| Resona Bank [Member] | ||||
| Schedule of Outstanding Balances of Loans [Line Items] | ||||
| Balance | ¥ 100,000,000 | ¥ 100,000,000 | 660,240 | 735,348 |
| Maturity Date | Apr. 26, 2024 | Apr. 26, 2024 | ||
| Effective Interest Rate | 1.48% | 1.48% | ||
| Collateral/Guarantee | Guaranteed by Mr. Satoshi Kobayashi | Guaranteed by Mr. Satoshi Kobayashi | ||
| Shoko Chukin Bank [Member] | ||||
| Schedule of Outstanding Balances of Loans [Line Items] | ||||
| Balance | ¥ 39,800,000 | ¥ 45,750,000 | $ 262,776 | $ 336,422 |
| Maturity Date | Sep. 30, 2027 | Sep. 30, 2027 | ||
| Effective Interest Rate | 2.69% | 2.69% |
Loans (Details) - Schedule of Future Loan Obligations According to the Terms of the Loan - Oct. 31, 2023 |
JPY (¥) |
USD ($) |
|---|---|---|
| Schedule of Future Loan Obligations According to the Terms of the Loan [Abstract] | ||
| Remainder of 2024 | ¥ 111,100,000 | $ 733,527 |
| 2025 | 19,305,000 | 127,459 |
| 2026 | 15,204,000 | 100,383 |
| 2027 | 15,204,000 | 100,383 |
| 2028 | 8,687,000 | 57,355 |
| Thereafter | 9,968,000 | 65,813 |
| Total | ¥ 179,468,000 | $ 1,184,920 |
Commitments and contingencies (Details) |
Jul. 25, 2023
USD ($)
|
|---|---|
| Commitments and contingencies [Abstract] | |
| Litigation total amount | $ 2,925,747 |
Income Taxes (Details) |
6 Months Ended | |
|---|---|---|
Oct. 31, 2023 |
Oct. 31, 2022 |
|
| Income Taxes [Line Items] | ||
| Percentage of statutory income tax | 30.60% | 30.60% |
| Effective tax rate | (0.10%) | 0.10% |
| Maximum [Member] | ||
| Income Taxes [Line Items] | ||
| Consumption tax rate | 10.00% | |
| Minimum [Member] | ||
| Income Taxes [Line Items] | ||
| Consumption tax rate | 8.00% | |
Income Taxes (Details) - Schedule of Provision for Income Taxes |
6 Months Ended | ||
|---|---|---|---|
|
Oct. 31, 2023
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Oct. 31, 2022
JPY (¥)
|
|
| Schedule of Provision for Income Taxes [Abstract] | |||
| Current income tax expense | ¥ 145,000 | ||
| Deferred tax (benefit) expense | (188,496) | (1,245) | 56,966 |
| TOTAL OPERATING REVENUES | ¥ (188,496) | $ (1,245) | ¥ 201,966 |
Income Taxes (Details) - Schedule of Deferred Tax Assets and Liabilities |
Oct. 31, 2023
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Apr. 30, 2023
JPY (¥)
|
|---|---|---|---|
| Schedule of Deferred Tax Assets and Liabilities [Abstract] | |||
| Net operating loss carry forward | ¥ 265,545,808 | $ 1,753,241 | ¥ 198,703,446 |
| Write off of other receivable | 13,282,990 | 87,700 | 15,005,181 |
| Lease liabilities | 4,619,063 | 30,497 | 1,199,363 |
| Research and development costs - capitalized for tax purposes | 3,511,429 | 23,184 | 3,966,700 |
| Temporary difference in depreciation | 2,650,511 | 17,500 | 2,781,224 |
| Write off of guarantee money deposited | 2,359,963 | 15,581 | 2,665,941 |
| Bonus accrual | 2,057,357 | 13,584 | 1,010,374 |
| Others | 308,604 | 2,037 | 212,039 |
| Valuation allowance | (287,930,064) | (1,901,030) | (222,921,425) |
| Deferred tax assets | 6,405,661 | 42,294 | 2,622,843 |
| Right-of-use assets – operating lease | (4,619,063) | (30,497) | (1,199,363) |
| Accrued business tax receivable | (1,421,684) | ||
| Others | (1,786,598) | (11,797) | (190,292) |
| Deferred tax liabilities | (6,405,661) | (42,294) | (2,811,339) |
| Total | ¥ (188,496) |
Operating Leases – Right-of-Use Assets (Details) |
6 Months Ended | ||||
|---|---|---|---|---|---|
|
Oct. 31, 2023
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Oct. 31, 2022
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Apr. 30, 2023
JPY (¥)
|
|
| Operating Leases - Right-of-Use Assets [Abstract] | |||||
| Operating lease liabilities | ¥ 15,085,116 | $ 99,598 | ¥ 3,467,368 | ||
| Operating lease right of use assets | 15,781,366 | $ 104,195 | ¥ 3,467,368 | ||
| Rent expense | ¥ 4,177,500 | $ 27,582 | ¥ 4,177,500 | ||
Operating Leases – Right-of-Use Assets (Details) - Schedule of Maturity Analysis of Operating Lease Liabilities |
Oct. 31, 2023
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Apr. 30, 2023
JPY (¥)
|
|---|---|---|---|
| Schedule of Maturity Analysis of Operating Lease Liabilities [Abstract] | |||
| Remainder of 2024 | ¥ 4,177,500 | $ 27,582 | |
| 2025 | 8,355,000 | 55,163 | |
| 2026 | 2,785,000 | 18,387 | |
| Total lease payment | 15,317,500 | 101,132 | |
| Less imputed interest | (232,384) | (1,534) | |
| Present value of operating lease liabilities | 15,085,116 | 99,598 | ¥ 3,467,368 |
| Less: current obligation | (8,173,403) | (53,964) | (3,467,368) |
| Long-term obligation at October 31, 2023 | ¥ 6,911,713 | $ 45,634 |
Operating Leases – Right-of-Use Assets (Details) - Schedule of Supplemental Disclosure Related to Operating Leases |
6 Months Ended | |
|---|---|---|
|
Oct. 31, 2023
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
|
| Cash paid for amounts included in the measurement of lease liabilities | ||
| Operating cash flows for operating leases | ¥ 4,177,500 | $ 27,582 |
| Weighted average remaining lease term of operating leases | 1 year 11 months 1 day | 1 year 11 months 1 day |
| Weighted average discount rate of operating leases | 1.60% | 1.60% |
Shareholders' Equity (Details) - shares |
Oct. 31, 2023 |
Apr. 30, 2023 |
|---|---|---|
| Shareholders' Equity [Abstract] | ||
| Number of outstanding shares | 15,039,400 | 13,839,400 |
Share-Based Compensation (Details) |
6 Months Ended | ||||
|---|---|---|---|---|---|
|
Jul. 01, 2019
shares
|
Feb. 05, 2019
shares
|
Oct. 31, 2023
JPY (¥)
|
Oct. 31, 2023
USD ($)
|
Oct. 31, 2022
USD ($)
|
|
| Share-Based Compensation [Line Items] | |||||
| Contractual term | 5 years 3 months 18 days | 5 years 3 months 18 days | |||
| Exercisable shares (in Shares) | shares | 2,000,000 | 1,095,000 | |||
| Share based compensation terms, description | 1) its contractual term (i.e. 10 years after its grant date); or 2) upon the grantee terminates their employment if the vested option has not been exercised. The commencement date of exercise is upon the completion of the Company’s IPO. | 1) its contractual term (i.e. 10 years after its grant date); or 2) upon the grantee terminates their employment if the vested option has not been exercised. The commencement date of exercise is upon the completion of the Company’s IPO. | |||
| Risk free interest rate | 0.14% | 0.14% | |||
| Dividend yield | 0.00% | 0.00% | |||
| Expected volatility | 69.10% | 69.10% | |||
| Unrecognized share based compensation expense | ¥ 1,616,463 | $ 10,673 | |||
| Recognized expense (in Dollars) | $ | |||||
| Share Option Plan [Member] | |||||
| Share-Based Compensation [Line Items] | |||||
| Contractual term | 10 years | 10 years | 10 years | ||
| Expected lives | 10 years | 10 years | 10 years | ||
| Minimum [Member] | |||||
| Share-Based Compensation [Line Items] | |||||
| Ordinary shares reverse split | 50-for-1 | 50-for-1 | |||
| Maximum [Member] | |||||
| Share-Based Compensation [Line Items] | |||||
| Ordinary shares reverse split | 100-for-1 | 100-for-1 | |||
| Two Thousand Nineteen Trust-Type Plan [Member] | |||||
| Share-Based Compensation [Line Items] | |||||
| Risk free interest rate | 0.14% | 0.14% | |||
| Dividend yield | 0.00% | 0.00% | |||
| Expected volatility | 69.10% | 69.10% | |||
| Expected lives | 10 years | 10 years | |||
Subsequent Events (Details) - Apr. 26, 2024 |
JPY (¥) |
USD ($) |
|---|---|---|
| Forecast [Member] | ||
| Subsequent Events (Details) [Line Items] | ||
| Additional paid in capital | ¥ 832,158,125 | $ 5,494,244 |
M*=2"]ZNBNTU14Q:HQT+<\/J5U30'Y2*5AB&U9\GK-
M*7?\.:F5]D!Z[>&S*1.T3I2L-N4 =%W22 8J.T3D%2R%U2>;>O+":*#O\*F$
M5,H"_419)'GEMSHI%:"F)E 3IK!3$*92&!94,'8.>8$J>8'T\J(7C$ ^SR@9
MP8UE;C&GY'H2RD]"M[2ETIP"(9&K916JF%,P<3Q9IP5*5&*YU*HLZXY7<@$1
M[7Q13*Y"48'AY[M!H'3?4#5>$F02S3>*%IA"JP]%I3N07G? B 1_Q:L9JY_'\W#2V;D9"OU;,#^C%HB5C\9?LSIMJ(D)T#>"2H1^7"
M 1I%_;3LBW#]'0*!2JH]3$ V$0(9%(J&G2Q^'\JU1CU<%PD,$DK6]+DA].AY6*
M-@TT!I'-R/-3#91)>8S%UXF0Y2=.]W4F7N)[CA//U+>F. V#IEJ;?O0^)*E=
M#5JC-C,.,QE8;CH+G_*GBBI%#9<_A]F]0-)J57