Forward-Looking Statements
Certain statements, other than purely historical information, including
estimates, projections, statements relating to our business plans, objectives,
and expected operating results, and the assumptions upon which those statements
are based, are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. These
forward-looking statements generally are identified by the words "believes,"
"project," "expects," "anticipates," "estimates," "intends," "strategy," "plan,"
"may," "will," "would," "will be," "will continue," "will likely result," and
similar expressions. We intend such forward-looking statements to be covered by
the safe-harbor provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, and are including this
statement for purposes of complying with those safe-harbor provisions.
Forward-looking statements are based on current expectations and assumptions
that are subject to risks and uncertainties which may cause actual results to
differ materially from the forward-looking statements. Our ability to predict
results or the actual effect of future plans or strategies is inherently
uncertain. Factors which could have a material adverse effect on our operations
and future prospects on a consolidated basis include, but are not limited to:
changes in economic conditions, legislative/regulatory changes, availability of
capital, interest rates, competition, and generally accepted accounting
principles. These risks and uncertainties should also be considered in
evaluating forward-looking statements and undue reliance should not be placed on
such statements.
Any references to "the Company" refer to Exceed World, Inc., which operates
through its wholly owned subsidiaries.
Company Overview
Corporate History
The Company was originally incorporated with the name Brilliant Acquisition,
Inc., under the laws of the State of Delaware on November 25, 2014, with an
objective to acquire, or merge with, an operating business. On January 12, 2016,
Thomas DeNunzio of 780 Reservoir Avenue, #123, Cranston, RI 02910, the sole
shareholder of the Company, entered into a Share Purchase Agreement with
e-Learning Laboratory Co., Ltd., a Japan corporation ("e-Learning"). Pursuant to
the Agreement, Mr. DeNunzio transferred to e-Learning, 20,000,000 shares of our
common stock which represents all of our issued and outstanding shares.
Following the closing of the share purchase transaction, e-Learning gained a
100% interest in the issued and outstanding shares of our common stock and
became the controlling shareholder of the Company.
On January 12, 2016, the Company changed its name to Exceed World, Inc. and
filed with the Delaware Secretary of State, a Certificate of Amendment. On
January 12, 2016, Mr. Thomas DeNunzio resigned as our Chief Executive Officer,
Chief Financial Officer, President, Director, Secretary, and Treasurer. Also, on
January 12, 2016, Mr. Tomoo Yoshida was appointed as our Chief Executive
Officer, Chief Financial Officer, President, Director, Secretary, and Treasurer.
On February 29, 2016, the Company entered into a Stock Purchase Agreement with
Tomoo Yoshida, our Chief Executive Officer, Chief Financial Officer, President,
Director, Secretary, and Treasurer. Pursuant to this Agreement, Tomoo Yoshida
transferred to Exceed World, Inc., 10 shares of the common stock of E&F Co.,
Ltd., a Japan corporation ("E&F"), which represents all of its issued and
outstanding shares in consideration of $4,835 (JPY 500,000). Following the
effective date of the share purchase transaction on February 29, 2016, Exceed
World, Inc. gained a 100% interest in the issued and outstanding shares of E&F's
common stock and E&F became a wholly owned subsidiary of Exceed World. On August
4, 2016, the E&F changed its name to School TV Co., Ltd ("School TV") and filed
with the Legal Affairs Bureau in Osaka, Japan.
On April 1, 2016, e-Learning entered into stock purchase agreements with 7
Japanese individuals. Pursuant to these agreements, e-Learning sold 140,000
shares of common stock in total to these individuals and received $270 as
aggregate consideration. Each paid JPY0.215 per share. At the time of purchase
the price paid per share by each was the equivalent of about $0.002. This sale
of shares was exempt from registration in accordance with Regulation S of the
Securities Act of 1933, as amended ("Regulation S") because the above sales of
the stock were made to non-U.S. persons as defined under Rule 902 section
(k)(2)(i) of Regulation S, pursuant to offshore transactions, and no directed
selling efforts were made in the United States by the issuer, a distributor, any
of their respective affiliates, or any person acting on behalf of any of the
foregoing.
On August 1, 2016, the Company changed its fiscal year end from November 30 to
September 30.
On August 9, 2016, e-Learning entered into stock purchase agreements with 33
Japanese individuals. Pursuant to these agreements, e-Learning sold 3,300 shares
of common stock in total to these individuals and received $330 as aggregate
consideration. Each paid JPY10 per share. At the time of purchase the price paid
per share by each shareholder was the equivalent to about $0.1. These shares
were sold pursuant to the Company's effective S-1 Registration Statement deemed
effective on July 20, 2016 at 4pm EST.
On October 28, 2016, the Company, with the approval of its board of directors
and its majority shareholders by written consent in lieu of a meeting,
authorized the cancellation of shares owned by e-Learning. e-Learning consented
to the cancellation of shares. The total number of shares cancelled was
19,000,000 shares which was comprised of 16,500,000 restricted common shares and
2,500,000 free trading shares.
On October 28, 2016, every one (1) share of common stock, par value $.0001 per
share, of the Company issued and outstanding was automatically reclassified and
changed into twenty (20) shares fully paid and non-assessable shares of common
stock of the Company, par value $.0001 per share. ("20-for-1 Forward Stock
Split") No fractional shares were issued. The authorized number of shares, and
par value per share, of common stock are not affected by the 20-for-1 Forward
Stock Split.
During July 2017 and August 2017, e-Learning entered into stock purchase
agreements with 24 Japanese individuals. Pursuant to these agreements,
e-Learning sold 2,240,000 shares of its common stock in total to these
individuals and received $38,263 as aggregate consideration.
On September 26, 2018, Force Internationale Limited, a Cayman Island limited
company ("Force Internationale") entered into a Share Purchase Agreement with
its wholly-owned subsidiary, e-Learning and 74.5% owner of the Company. Under
this Share Purchase Agreement, e-Learning transferred its 74.5% interest in the
Company to Force Internationale. As consideration for this transfer, Force
Internationale paid $26,000.00 to e-Learning. Immediately subsequent, the
Company entered into a Share Purchase Agreement with Force Internationale, to
acquire 100% of Force Holdings and 100% direct owner of e-Learning. In
consideration of this agreement, the Company issued 12,700,000 common shares to
Force Internationale. The result of these transaction is that Force
Internationale is a 84.4% owner of the Company, the Company is a 100% owner of
Force Holdings, and Force Holdings is a 100% owner of e-Learning. Prior to the
Share Purchase Agreements, Force Internationale was an indirect owner of 74.5%
of the Company and subsequent to the Share Purchase Agreements, Force
Internationale is a direct owner of 84.4% of the Company. The Share Purchase
Agreements were approved by the boards of directors of each of the Company,
Force Internationale, Force Holdings, and e-Learning.
On December 6, 2018, the Company entered into a share contribution agreement
(the "Contribution Agreement") with Force Internationale. Under this Agreement,
the Company transferred 100% of the equity interest of School TV Co., Ltd.
("School TV"), to Force Internationale without consideration. This Contribution
Agreement was approved by the board of directors of the Company, Force
Internationale and School TV. Upon the completion of the disposal, School TV was
deconsolidated from the Company's consolidated financial statements.
Business Information
As of December 31, 2019, we operate through our wholly owned subsidiaries, which
are engaged in provision of the educational services through an internet
platform called "Force Club".
Our principal executive offices are located at 1-1-36, 1-23-38-6F, Esaka-cho,
Suita-shi, Osaka 564-0063, Japan. Our phone number is +81-6-6339-4177.
Liquidity and Capital Resources
As of December 31, 2019 and September 30, 2019, we had cash and cash equivalents
in the amount of 17,766,257 and $20,198,362, respectively. The decrease in cash
is attributed to decrease of deferred income and accounts payable. These
accounts payable were mainly unpaid commissions to Force Club premium members
and these payments were completed as of the date of this report. Currently, our
cash balance is sufficient to fund our operations without the need for
additional funding.
Revenues
We recorded revenue of $5,832,608 for the three months ended December 31, 2019
as opposed to $7,892,164 for the three months ended December 31, 2018. The
decrease in revenue, in our opinion, is attributed to a decrease in recruitment
activities of premium force club members.
Net Income
We recorded net income of $489,753 for the three months ended December 31, 2019
and net loss of $356,822 for the three months ended December 31, 2018. The
increase in net income is attributed to a decrease in operating expenses and
increase of other income from 2018 to 2019.
Cash flow
For the three months ended December 31, 2019, we had negative cash flows from
operations in the amount of $1,863,719. For the three months ended December 31,
2018, we had negative cash flows from operations in the amount of $7,264,873.
The increase in operating cash flow, in our opinion, is attributed to increases
in net income, accounts payable and deferred income.
Working capital
As of December 31, 2019 and September 30, 2019, we had working capital of
$15,555,951 and $15,318,405, respectively. The increase in working capital, in
our opinion, is attributed to decreases in accounts payable and deferred income.
Advertising
Advertising costs are expensed as incurred and included in selling and
distributions expenses. Advertising expenses were $198,825 and $214,513 for the
three months ended December 31, 2019 and 2018, respectively.
Advertising expenses were comprised of, but not limited to, sales events hosted
for sales agents, exhibitions to promote and display company product offerings,
signboards, and public relations activities.
Future Plans
Over the course of the next twelve months, the Company intends to focus on
expanding its sales network in order to strengthen its business activities.
Currently, revenue is derived primarily from sales of the Company's Force Club
premium package. While it is the intention of the Company to maintain this
revenue stream, and to further increase the number of premium users of the Force
Club, the Company also intends to diversify its operations and develop
additional business activities.
In order to do so, the Company intends to focus on development of an online
educational platform on which additional advertising income can be generated. At
present, there are no definitive plans that have been made regarding the
implementation or direction of this future online educational platform. However,
we intend to begin efforts to hire additional personnel with extensive
experience in web marketing in order to assist in the development of our future
platform.
Impact of COVID-19
For the three months ended December 31, 2019, we recorded negative growth
compared to the same period of the last year. The slowdown in sales was mainly
due to a hike in sales tax rate in Japan since October 2019. Despite revenue
decreased, as a result of the Company's cost cutting efforts, operating income
and net income increased for the three months ended December 31, 2019.
However, since the beginning of 2020, the coronavirus disease ("Covid-19") which
first broke out in China, has spread to most countries across the globe
including Japan. In April 2020, Japan declared a state of emergency to curb the
spread of Covid-19. The economy rapidly declined due to limited economic
activity caused by the outbreak of Covid-19. In response to the COVID-19
pandemic and the government's request for self-restraint, the Company
implemented some measures to prevent infection including shortening business
hours and restricting movements of employees. Our Force Club Members'
activities, which is our main sales resources, have also been limited due to
travel restrictions and social distance rules implemented nationwide and
globally. Under such situation, it is expected that the operating results for
2020 will be adversely affected.
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