CONSOLIDATED
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2023
(UNAUDITED)
NOTE
1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
World Scan Project, Inc., a Delaware corporation
(“the Company”) was incorporated under the laws of the State of Delaware on October 25, 2019.
On October 25,
2019, Ryohei Uetaki, our officer and director, paid for expenses involved with the incorporation of the Company with personal funds on
behalf of the Company, in exchange for 10,000,000 shares of Common Stock, par value $0.0001 per share and 10,000,000 shares of Series
A Preferred stock, par value $0.0001 per share, which issuance was exempt from the registration provisions of Section 5 of the Securities
Act under Section 4(2) of such same said act. The value of the stock provided to Mr. Uetaki, based on the par value of $.0001 per share
of common stock and Series A Preferred Stock, is valued at $2,000.
On October 25,
2019, Ryohei Uetaki was appointed as Chief Executive Officer, Chief Financial Officer, President, Director, Secretary, and Treasurer.
On November
18, 2019, Yasumasa Ichikawa was appointed as Chief Technology Officer.
On January 25,
2020, the Company entered into and consummated a Share Contribution Agreement with Ryohei Uetaki. Pursuant to this agreement Mr. Uetaki
gifted to the Company, at no cost, 300 shares of common stock of World Scan Project Corporation, a Japan corporation (“WSP Japan”),
which represented all of its issued and outstanding shares. The Company has since gained a 100% interest in the issued and outstanding
shares of WSP Japan’s common stock and WSP Japan is now a wholly owned subsidiary of the Company. The Company and WSP Japan were
under common control at the time of the acquisition.
WSP Japan was
incorporated under the laws of Japan on January 22, 2020. Currently, WSP Japan is headquartered in Tokyo, Japan. The Company’s primary
business is focused on developing and manufacturing of autonomous aerial vehicles including drones.
On February
19, 2020, Ryohei Uetaki gifted 7,000,000 shares of our Common Stock and 10,000,000 shares of our Series A Preferred Stock, which represented
all of our issued and outstanding shares of Preferred Stock at the time, to SKYPR LLC, a Delaware Limited Liability Company (referred
to herein as “SKYPR LLC”). Our CEO Ryohei Uetaki owns and controls 100% of the membership interests in SKYPR LLC.
In September,
2020, the Company entered into subscription agreements with 41 shareholders. Pursuant to these agreements, the Company issued 647,350
shares of common stock in total to these shareholders and received $323,675 as aggregate consideration. At the time of purchase the price
paid per share by each shareholder was the equivalent of about 0.50 USD.
These shares
were sold pursuant to the Company’s effective S-1 Registration Statement deemed effective on August 28, 2020 at 4pm EST.
We operate through
our wholly owned subsidiary, World Scan Project Corporation, a Japanese Company. We are a start-up stage company currently focused on
developing, designing and selling small sized drones which may be used for a variety of purposes.
Our principal
executive offices are located at 2-18-23, Nishiwaseda, Shinjuku-Ku, Tokyo, 169-0051, Japan.
The Company
has elected October 31st as its year end.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles
of Consolidations
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, World Scan Project Corporation,
whose registered address is 2-18-23, Nishiwaseda, Shinjuku-Ku, Tokyo, 162-0051, Japan. All significant intercompany accounts and transactions
have been eliminated.
Basis
of Presentation
This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements. These
accounting policies conform to accounting principles, generally accepted in the United States of America, and have been consistently applied
in the preparation of the financial statements.
Reclassification
Certain amounts
in the prior period have been reclassified to conform to the current period presentation.
Use
of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management,
all adjustments necessary in order to make the financial statements not misleading have been included. Actual results could differ from
those estimates.
Advertising and Promotion
All advertising, promotion and marketing
expenses, including commissions, are expensed when incurred.
Leases
The Company
capitalizes all leased assets pursuant to ASU 2016-02, Leases (Topic 842) (“Topic 842”), which requires
lessees to recognize right-of-use (“ROU”) assets and lease liability, initially measured at present value of the lease payments,
on its balance sheet for leases with terms longer than 12 months and classified as either financing or operating leases. The Company
excludes short-term leases having initial terms of 12 months or less from Topic 842 as an accounting policy election and recognizes rent
expense on a straight-line basis over the lease term.
Related
party transaction
A related party
is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the
Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company,
or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be
a related party transaction when there is a transfer of resources or obligations between related parties. The Company conducts business
with its related parties in the ordinary course of business.
Transactions
involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive,
free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related
party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations
can be substantiated.
Cash
and Cash Equivalents
The Company considers all highly liquid investments
with an original maturity of nine months or less when purchased to be cash equivalents.
Accounts
Receivable and Credit Policies
Accounts receivable are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate
for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. If there
is a claim for a defect of product within four days after arrival of goods, the Company shall accept a goods return.
Advance
payments and prepaid expenses
Advance payments and prepaid expenses are
cash paid amounts that represent costs incurred from which a service or benefit is expected to be derived in the future.
Inventory
Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out (“FIFO”)
method, and are valued at the lower of cost or market value. This valuation requires the Company to make judgments, based on currently-available
information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations,
and expected recoverable values of each disposition category.
Fixed
assets and depreciation
Property, plant and equipment are stated at cost less depreciation and impairment loss. The initial cost of the assets comprises its purchase
price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Depreciation
is calculated using the straight-line method over the shorter of the estimated useful life of the respective assets as follows: computer
software developed or acquired for internal use, 2 to 5 years; computer equipment, 2 to 5 years; buildings and improvements, 5 to 15 years;
leasehold improvements, 2 to 10 years; and furniture and equipment, 1 to 5 years.
F-5
Table of
Contents
Foreign
currency translation
The Company
maintains its books and records in its local currency, Japanese YEN (“JPY”), which is a functional currency as being the primary
currency of the economic environment in which its operation is conducted. Transactions denominated in currencies other than the functional
currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets
and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable
exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of operations.
The reporting
currency of the Company is the United States Dollars (“US$”) and the accompanying consolidated financial statements have been
expressed in US$. In accordance with ASC Topic 830-30, “Translation of Financial Statement”, assets and liabilities of the
Company whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and
expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements
are recorded as a separate component of accumulated other comprehensive income within the statements of shareholders’ equity.
Translation
of amounts from the local currency of the Company into US$1 has been made at the following exchange rates:
| |
January 31, 2023 |
| Current JPY: US$1 exchange rate |
130.47 |
| Average JPY: US$1 exchange rate |
136.04 |
Comprehensive
income or loss
ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income or loss, its
components and accumulated balances. Comprehensive income or loss as defined includes all changes in equity during a period from non-owner
sources. Accumulated comprehensive income, as presented in the accompanying consolidated statements of shareholders’ equity consists
of changes in unrealized gains and losses on foreign currency translation.
Revenue
recognition
The Company
adopted ASC 606 – Revenue from contracts with Customers: (1) identify the contract with a customer; (2) identify the performance
obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in
the contract; and (5) recognize revenue when each performance obligation is satisfied.
Revenue amount
represents the invoiced value, net of a value-added tax (“Consumption Tax”) and applicable local government levies. The Consumption
Tax on sales is calculated at 10% of gross sales. The Company is subject to consumption taxes in Japan for the year ended October 31,
2022.
The
following table summarizes our revenue recognized under ASC 606 in our consolidated statements of operations:
| |
|
Three Months Ended |
| |
|
January 31, |
| |
|
2023 |
|
2022 |
| |
|
|
|
|
| Revenues |
|
|
|
|
|
|
| Product sales |
|
$ |
4,344 |
|
$ |
4,906,820 |
| Crypto miners sales, net |
|
|
7,737,907 |
|
|
- |
| Program for educational institution |
|
|
- |
|
|
23,208 |
| Other |
|
|
913 |
|
|
- |
| Total Revenue Under ASC 606 |
|
|
7,743,164 |
|
|
4,930,028 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Total Revenue Under ASC 606 |
|
$ |
7,743,164 |
|
$ |
4,930,028 |
| |
|
|
|
|
|
|
|
Revenue
from product sales
Revenue for
products is recognized when the products are delivered to the customer and the customer completes the product inspection. Cash receipts
for undelivered products are recorded as deferred revenues. As of January 31, 2023, no deferred revenues are related to product sales.
Revenue
from crypto miners sales
During the period
ended January 31, 2023, the Company acted as an agent in facilitating the sales of crypto miners, produced by a third-party manufacturer,
to customers of the Company. Revenue for the sale of crypto miners was recognized when the miners were delivered to the customers and
the customers completed the inspection of the miners. Management assessed the Company’s contracts with the third-party manufacturer
and customers in consideration of ASC 606, “Revenue from Contracts with Customers”, and determined the Company as the agent
in said transactions. As such, the company recognized crypto miner sales net of costs. For the period ended January 31, 2023, Cost of
goods sold for miner purchases, netted by the gross sales was $26,084,482. As of January 31, 2023, $1,461,766 of deferred revenues are
related to deposits for crypto miners.
Revenue
from educational institution program
Revenue for
educational institution fees is recognized when the services are provided to the customer. Cash receipts for undelivered products are
recorded as deferred revenues. As of January 31, 2023, the Company had no deferred revenues related to the educational institution program.
Income
Taxes
The Company accounts for income taxes under ASC 740, “Income Taxes.” Under the asset and liability method of ASC 740, deferred
tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment
occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize
tax assets through future operations. The Company recognized deferred tax assets of $137,124 and $307,438 as of January 31, 2023 and October
31, 2022, respectively.
Basic
Earnings (Loss) Per Share
The Company
computes basic and diluted earnings (loss) per share in accordance with ASC Topic 260, Earnings per Share. Basic earnings
(loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting
period. Diluted earnings (loss) per share reflects the potential dilution that could occur if stock options and other commitments to issue
common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company.
Each shareholder of Series A Preferred Stock may convert their shares at the option of the holder thereof into an equal amount of shares
of any other class or series of the Company’s stock on a one to one basis, therefore the Company computes diluted earnings (loss)
per shares by dividing net income (loss) by the sum of the total of weighted average number of common shares and total preferred shares
outstanding.
Basic and diluted earnings per share
are as follows:
| |
|
January 31, |
|
| |
|
|
|
| |
|
2023 |
|
2022 |
|
| Basic earnings per share |
|
$ |
.19 |
|
$ |
.09 |
|
| Diluted earnings per share |
|
$ |
.10 |
|
$ |
.05 |
|
Fair
Value of Financial Instruments
The Company’s
balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their
fair value because of the relatively short period of time between the origination of these instruments and their expected realization.
ASC 820, Fair
Value Measurements and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer
a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market
participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s
own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable
inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the
fair value hierarchy are described below:
- Level 1 –
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
- Level 2 –
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly,
including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities
in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates);
and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
- Level 3 –
Inputs that are both significant to the fair value measurement and unobservable.
Fair value
estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of January
31, 2023. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term
nature of these instruments. As of January 31, 2023 and October 31, 2022, the Company had no financial instruments.
Recently
Issued Accounting Pronouncements
The Company
does not believe that any recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would
have a material effect on the accompanying financial statements.
Concentration
of Purchases
Net purchase
from suppliers accounting for 10% or more of total purchases are as follows:
For the period
ended January 31, 2023, 100% of the inventories were purchased from G-Force in the amount of $3,492.
For the period
ended January 31, 2022, 90.7% of the inventories were purchased from G-Force in the amount of $2,161,817.
Concentration
of Revenues
Gross revenues
from customers accounting for 10% or more of total revenues are as follows:
For the period
ended January 31, 2023, none.
For the period
ended January 31, 2022, 98.2% of total revenue was generated from Drone Net in the amount of $4,839,829.
F-6
Table of
Contents
NOTE
3 - GOING CONCERN
The Company’s
financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern that contemplates
the realization of assets and liquidation of liabilities in the normal course of business.
The Company
demonstrates some positive trends, compared with the previous fiscal years, in our financial statements as in below:
As of January
31, 2023, the Company recorded cash and cash equivalents of $1,550,553, a decrease of $397,697 as compared to $1,948,250 in the prior
year period ended January 31, 2022. For the period ended, the Company’s major sources of liquidity is derived from crypto miner
sales. The main cause of the decrease in cash from October 31, 2022 to January 31, 2023 is due to the working capital, which is an increase
in Advance payments and prepaid expenses by $6M. The balance mainly consists of advance payments for crypto miner procurements. As stated
in the consolidated financial statements for the period ended on January 31, 2023, the Company recorded a net income of $2,022,241 (+115%
y-o-y) and used 4,872,778 (777% y-o-y) in cash flows from operating activities. As a result, the Company’s working capital has grown
to approximately $12.8 million compared to October 31, 2022 working capital of approximately $9.7 million.
Having reviewed the above, the Company
realizes that whether we shall be able to continue demonstrating the positive trends demonstrated in our financial statements, lies in
our ability to continue to generate revenue and increase revenue going forward. Principally, the Company's consolidated financial statements
are based on going concern assumptions, which assume the realization of assets and offset of liabilities in the normal course of business.
Based on this, the Company also recognizes that it is critical for us to continue to operate and/or perform our obligation(s) in the future
and procure any required funds needed to meet the redemption of its debt during normal business operations.
Management has evaluated the estimated
impact of COVID-19, which has become a significant factor impacting operations of businesses globally, one of which we believe we will
need to continue to monitor as to the potential effects it may have on our own business.
The Company assessed the impact of
COVID-19 and believes there to be minimal impact of COVID-19 on the Company’s drone sales, which is currently the Company’s
primary source of revenue. The Company will need to continue to monitor COVID-19 and the effects it may have, socially and economically,
as it is possible that such developments may in fact impact our operations going forward or more specifically, our sales results. At this
time, the Company believes that it will not affect our assumptions as a going concern.
Based
on the Company’s evaluation, based on the positive financial trends it has experienced year over year e.g. increase in net income,
management believes that it has completely mitigated the circumstances that led to a doubt with respect to the Company’s ability
to continue as a going concern, i.e. dependency on a single major customer, which existed at the time of the filing of the Company’s
prior year report.
The financial
statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification
of liabilities that might be necessary in the event that the Company cannot continue as a going concern.
NOTE 4 -
ACCOUNTS RECEIVABLE
Accounts receivable
from customers totaled $153,310 as of January 31, 2023 and $1,847,068 as of October 31, 2022. No bad debt allowance was provided
as of January 31, 2023 and October 31, 2022.
Concentration
of Accounts Receivable
Accounts receivable
from customers accounting for 10% or more of total accounts receivable are as follows:
For the period
ended January 31, 2023, 99.9% of total accounts receivable was owed to the Company by Soar in the amount of $153,291.
NOTE
5 - ADVANCE PAYMENTS AND PREPAID EXPENSES
Advance
payments are comprised of the payments for the undelivered products and other deliverables. As of January 31, 2023 and October 31, 2022,
the Company had advance payments and other prepaid
expenses of $22,408,075 and $16,389,562, respectively. Details of the advance payments as of January 31, 2023 and October 31, 2022 are
as follows:
| |
|
January 31,
2023 |
|
October 31, 2022 |
| Purchase of products from G-Force Inc. |
$ |
110,947 |
$ |
101,158 |
| Purchase of parts from Team M |
|
42,155 |
|
37,097 |
| Purchase of parts from Wise Partners Co., Ltd |
|
259,980 |
|
228,785 |
| Purchase of parts from Rogyx Co., Ltd |
|
32,838 |
|
31,161 |
| Purchase of cryptocurrency miners from Cellessence Corp. |
|
15,896,037 |
|
15,915,311 |
| Purchase of cryptocurrency miners from CU Holdings |
5,633,479 |
|
|
- |
| Other advances and prepaid expenses |
|
432,638 |
|
76,050 |
| Totals |
$ |
22,408,075 |
$ |
16,389,562 |
NOTE
6 - FIXED ASSETS
The
company recognizes purchased assets with a useful life longer than one year as fixed or non-current assets. These assets are depreciated
using the straight-line method of depreciation over the estimated useful life of the assets.
During the period
ended January 31, 2023, the
Company purchased no additional long-term assets The Company is depreciating previously purchased assets over
a 5-10 year period once they were put into use. Depreciation expense for the period ended
January 31, 2023 was approximately $12,817.
During
the year ended October 31, 2022, the Company purchased long-term assets, including building renovations, totaling approximately $227,180.
The Company is depreciating these assets over a 5-10 year period
once they were put into use. Depreciation expense for the year ended October 31, 2022 was approximately $50,535.
NOTE
7 - DEFERRED REVENUE
Deferred revenue
is the amount the Company received in advance from the customer for their orders placed with us. As of January 31, 2023 deferred revenue
in the amount of $1,461,766 was related to our sales of cryptocurrency miners which represents a large amount in both number of
transactions and values. As of October 31, 2022, deferred revenue in the amount of $7,401,171 was related to our sales of cryptocurrency
miners which represents a large amount in both number of transactions and values.
NOTE
8 - INCOME TAXES
For
the periods ended January 31, 2023 and 2022, the Company had income tax expense in the amount of $1,607,773 and
$671,720, respectively.
United
States
The
Company was incorporated under the laws of the State of Delaware on October 25, 2019. The U.S. federal income tax rate is 21%.
Japan
The
Company conducts its major businesses in Japan through WSP Japan and is subject to tax in this jurisdiction. As a result of its business
activities, the Company files tax returns that are subject to examination by the local tax authority.
The
Company is subject to a number of income taxes, which, in aggregate, represent a statutory tax rate approximately as follows:
| |
Company’s assessable profit |
|
| For the year ended October 31, |
Up to JPY 4 million |
|
Up to JPY 8 million |
|
Over JPY 8 million |
| 2022 |
22.9% |
|
25.37% |
|
37.59% |
| |
|
|
|
|
|
|
For
the periods ended January 31, 2023 and 2022, the Company’s income tax expenses are as follows:
| |
|
Three
Months Ended |
| |
|
January
31, |
| |
|
2023 |
|
|
2022 |
| Current |
|
$ |
1,404,222 |
|
|
$ |
671,720 |
| Deferred |
|
|
203,551 |
|
|
|
- |
| Total |
|
$ |
1,607,773 |
|
|
$ |
671,720 |
As of
January 31, 2023 and October 31, 2022, the Company had income tax payable of $5,248,647 and $3,329,572, respectively.
NOTE
9 - SHAREHOLDERS EQUITY
Preferred
Stock
The authorized
preferred stock of the Company consists of 200,000,000 shares with a par value of $0.0001. The authorized Series A Preferred Stock of
the Company consists of 100,000,000. There were 10,000,000 shares of Series A Preferred Stock issued and outstanding as of January 31,
2023 and October 31, 2022.
The rights,
preferences, privileges, restrictions and other matters relating to the Series A Preferred Stock are as follows:
(a)
Each share of Series A Preferred Stock shall have no voting rights;
(b)
Each shareholder of Series A Preferred Stock may convert their shares at the option of the holder thereof into an equal amount of shares
of any other class or series of the Company’s stock on a one to one basis.
Common
Stock
The authorized
common stock of the Company consists of 200,000,000 shares with a par value of $0.0001. There were 10,647,350 shares of common stock
issued and outstanding as of January 31, 2023 and October 31, 2022.
NOTE
10 - RELATED-PARTY TRANSACTIONS
Loan to
the Company
As of January
31, 2023, our CEO and Director, Ryohei Uetaki, has advanced to the Company $19,976 for salary and $458 for expenses. This advance
is considered as a loan to the Company which is unsecured, noninterest-bearing and payable on demand.
NOTE
11 - LEASE ASSETS AND LIABILITIES
Our adoption of ASU 2016-02, Leases (Topic 842),
and subsequent ASUs related to Topic 842, requires us to recognize substantially all
leases on the balance sheet as an ROU asset and a corresponding lease liability. The new guidance also requires additional disclosures
as detailed below. We adopted this standard on the effective date of November 1, 2020 and used this effective date as the date of initial
application. Under this application method, we were not required to restate prior period financial information or provide Topic 842 disclosures
for prior periods. We elected the ‘package of practical expedients,’ which permitted us to not reassess our prior conclusions
related to lease identification, lease classification, and initial direct costs, and we did not elect the use of hindsight.
We
determine if a contract is a lease at the inception of the arrangement. We review all options to extend, terminate, or purchase the ROU assets,
and when reasonably certain to exercise, we include the option in the determination of the lease term and lease liability. We have six
operating leases related to our office space in Tokyo with remaining lease terms of 1 to 10 years. We recognized $73,153
and $11,541 in operating
lease costs for the three months ended January 31, 2023 and January 31, 2022, respectively.
Lease
ROU assets and liabilities are recognized at commencement date of the lease, based on the present value of lease payments over the lease
term. The lease ROU asset also includes any lease payments made and excludes any lease incentives. When readily determinable, we use
the implicit rate in determining the present value of lease payments. When leases do not provide an implicit rate, we use our incremental
borrowing rate based on the information available at the lease commencement date, including the lease term.
The
tables below present financial information associated with our leases. As
noted above, we adopted Topic 842 using a transition method that does not require application to periods prior to adoption.
| |
Balance Sheet Classification |
January 31, 2023 |
October 31, 2022 |
| |
|
|
|
|
|
| Right-of-use assets |
Lease asset long |
$ |
738,880 |
$ |
705,007 |
| Current lease liabilities |
Short-term lease liability |
|
224,833 |
|
231,041 |
| Non-current lease liabilities |
Lease liability long term |
|
561,244 |
|
520,002 |
| |
|
|
|
|
|
| Maturities of lease liabilities as of January 31, 2023 are as follows: |
|
| |
|
|
|
|
|
| 2023 |
230,516 |
|
|
|
|
| 2024 |
115,891 |
|
|
|
|
| 2025 |
91,975 |
|
|
|
|
| 2026 |
91,975 |
|
|
|
|
| 2027 and beyond |
459,876 |
|
|
|
|
| Total |
990,233 |
|
|
|
|
| Less interest |
(204,156) |
|
|
|
|
| Present value of lease liabilities |
786,077 |
|
|
|
|
NOTE 12 -
ACCRUED EXPENSES AND OTHER PAYABLES
Accrued expenses
and other payables are comprised of trade accounts payable, accrued payroll tax liabilities and accrued expenses As of January 31,
2023 and October 31, 2022, the Company had accrued expenses and other payables of $2,475,483 and $2,453,668, respectively. Details
of the accrued expenses and other payables as of January 31, 2023 and October 31, 2022 are as follows:
| |
|
January 31, 2023 |
|
|
October 31, 2022 |
| Accounts payable, trade |
$ |
2,408,852 |
|
$ |
2,383,161 |
| Accounts payable for employees |
|
47,099 |
|
|
54,879 |
| Accrued payroll liabilities |
|
19,532 |
|
|
15,628 |
| Totals |
$ |
2,475,483 |
|
$ |
2,453,668 |
NOTE 13 -
SUBSEQUENT EVENTS
The Company
has evaluated subsequent events through March 8, 2023 , the date on which the consolidated financial statements were available
to be issued and has found no material transactions to report.
F-7
Table
of Contents