World Scan Project, Inc. 2023 10-K Review

Introduction

World Scan Project, Inc., a Delaware corporation, operates primarily through its wholly-owned subsidiary, World Scan Project Corporation, based in Tokyo, Japan. The company is an industrial automation equipment manufacturer focusing on developing and designing robots, drones, Web3 infrastructure, IoT equipment, and other related products. This review will delve into the company's 2023 10-K filing, analyzing its business operations, financial performance, and potential risks.

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Business Overview

World Scan Project, Inc. is in the start-up stage, primarily focusing on developing and designing drones and other automation equipment. The company operates globally, with its principal executive offices located in Tokyo, Japan. The company has developed several products, including the SkyFight-X drone, Flylly drone, META DIVER application, and ZEXABOX mining rigs.

Key Products

• SkyFight-X Drone: Designed for drone racing, primarily sold to Drone Net, a Japanese company.
• Flylly Drone: A small-sized drone with a 4K camera, not subject to the revised Aviation Act.
• META DIVER: A smartphone application providing VR experiences of historical and natural heritage sites.
• ZEXABOX: A GPU mining rig for digital currency mining.

Financial Performance

Revenue and Profitability

For the fiscal year ended October 31, 2023, World Scan Project, Inc. recorded revenues of $30,986,882, a slight increase from $29,440,341 in 2022. However, the company reported a net loss of $3,416,587 in 2023, a significant decline from a net income of $8,908,782 in 2022. This loss is primarily attributed to increased research and development expenses.

Cash Flow

The company experienced negative cash flows from operations amounting to $170,461 in 2023, compared to positive cash flows of $4,605,591 in 2022. This decrease is mainly due to increased R&D expenses. The company also reported negative cash flows from investing activities of $1,627,412, primarily due to the purchase of investment securities.

Balance Sheet

As of October 31, 2023, the company had total assets of $14,039,776, a decrease from $25,498,161 in 2022. The decrease in assets is mainly due to a reduction in advance payments and prepaid expenses. The company's total liabilities also decreased to $5,324,089 from $14,895,912 in 2022.

Risk Factors

Legal and Regulatory Risks

The company is subject to various regulations, particularly in Japan, where it conducts most of its operations. The revised Civil Aeronautics Act of 2020 mandates the registration of unmanned aircraft, which could impact the company's drone sales.

Financial Risks

The company reported a significant net loss in 2023, primarily due to increased R&D expenses. The company's ability to continue as a going concern depends on its ability to generate revenue and manage its expenses effectively.

Market Risks

The company's reliance on a single customer, Drone Net, for its SkyFight-X drones poses a significant market risk. Any changes in the relationship with Drone Net could adversely affect the company's revenue.

Conclusion

World Scan Project, Inc. is a company with innovative products and a global reach. However, its financial performance in 2023 raises concerns about its ability to sustain operations without additional funding. The company's focus on R&D is commendable, but it needs to balance these expenses with revenue generation to improve its financial health.

Investment Potential

Given the company's current financial situation and market risks, potential investors should approach with caution. The company's innovative products and global operations offer growth potential, but the financial risks and reliance on a single customer are significant concerns. Overall, World Scan Project, Inc. presents a moderate investment opportunity with a score of 5.5 out of 10.