Filed 2026-01-13 · Period ending 2025-09-30 · 22,104 words · SEC EDGAR
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# Exceed World, Inc. (EXDW) — 10-K
**Filed:** 2026-01-13
**Period ending:** 2025-09-30
**Accession:** 0001634293-26-000002
**Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1634293/000163429326000002/)
**Origin leaf:** dba3cd44ef2e92c394f405bd885b8477643c180fb14b7d849388d0610f4e390e
**Words:** 22,104
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**UNITED STATES**
**SECURITIES AND EXCHANGE COMMISSION**
**Washington D.C. 20549**
**FORM 10-K**
|
[X]ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. | |
**FOR THE
FISCAL YEAR ENDED September 30, 2025**
**OR**
|
[]TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
**For the transition period from to**
**COMMISSION FILE NUMBER: 000-55377**
**Exceed World, Inc.**
**(Exact name of registrant as specified in its charter)**
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DE |
47-3002566 |
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(State or other jurisdiction
of incorporation or organization) |
(I.R.S. Employer Identification
No.) |
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1-23-38-6F, Esakacho, Suita-shi,
Osaka Japan |
564-0063 |
| |
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(Address of Principal
Executive Offices) |
(Zip Code) |
| |
Securities to be registered under Section 12(b) of
the Act: None
Securities to be registered under Section 12(g) of
the Exchange Act:
****
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Title
of each class |
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Name of each exchange on
which our shares are traded |
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Common
Stock, $0.0001 |
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OTC
Markets |
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****
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Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.
[ ] Yes [X] No
Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or Section 15(d) of the Act.
[ ] Yes [X] No
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
[X] Yes [ ] No
Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T ( 232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
[X] Yes [ ] No
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K ( 229.405 of this chapter) is not contained herein, and will not be contained, to
the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
[ ]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
|
Large
accelerated filer |
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Accelerated
filer |
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Non-accelerated
filer | |
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Smaller
reporting company |
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Emerging
growth company |
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| |
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. []
Indicate by check mark whether the registrant is
a shell company (as defined in Rule 12b-2 of the Exchange Act).
[] Yes [X] No
As of March 31, 2025, the aggregate market value of the voting common stock held by non-affiliates of the Registrant (without admitting
that any person whose shares are not included in such calculation is an affiliate) was approximately $922,400 based on a market price
per share of $0.40.
As of January 13, 2026, there were 32,700,000
shares of the Registrants common stock, par value $0.0001 per share, issued and outstanding. As of the same date there were no
shares of preferred stock issued and outstanding.
**TABLE OF CONTENTS**
**Exceed
World, Inc.**
|
PART
I |
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PAGE | |
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Item
1 |
Business |
|
1 | |
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Item
1A |
Risk
Factors |
|
4 | |
|
Item
1B |
Unresolved
Staff Comments |
|
4 | |
|
Item
2 |
Properties |
|
4 | |
|
Item
3 |
Legal
Proceedings |
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4 | |
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Item
4 |
Mine
Safety Disclosures |
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4 | |
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|
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PART
II |
|
|
| |
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Item
5 |
Market
for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities |
|
5 | |
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Item
6 |
Selected
Financial Data |
|
5 | |
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Item
7 |
Managements
Discussion and Analysis of Financial Condition and Results of Operations |
|
5 | |
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Item
7A |
Quantitative
and Qualitative Disclosures about Market Risk |
|
5 | |
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Item
8 |
Financial
Statements and Supplementary Data |
|
F1-F10 | |
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Item
9 |
Changes
in and Disagreements with Accountants on Accounting and Financial Disclosure |
|
6 | |
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Item
9A |
Controls
and Procedures |
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6 | |
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Item
9B |
Other
Information |
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6 | |
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PART
III |
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|
| |
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Item
10 |
Directors,
Executive Officers and Corporate Governance |
|
7 | |
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Item
11 |
Executive
Compensation |
|
8 | |
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Item
12 |
Security
Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters |
|
9 | |
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Item
13 |
Certain
Relationships and Related Transactions, and Director Independence |
|
9 | |
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Item
14 |
Principal
Accounting Fees and Services |
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9 | |
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PART
IV |
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Item
15 |
Exhibits,
Financial Statement Schedules |
|
10 | |
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Signatures |
|
10 | |
****
[Table of Contents](#table)
**FORWARD LOOKING STATEMENTS**
This prospectus contains forward-looking statements that involve risk and uncertainties. We use words such as anticipate,
believe, plan, expect, future, intend, and similar expressions to
identify such forward-looking statements. Investors should be aware that all forward-looking statements contained within this filing are
good faith estimates of management as of the date of this filing. Our actual results could differ materially from those anticipated in
these forward-looking statements for many reasons, including the risks faced by us as described in the Risk Factors section
and elsewhere in this prospectus.
**PART I**
**Item 1. Business.**
**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&Fs 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 Companys 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 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.
**Overview**
Our principal executive offices are located at 1-1-36,
1-2-38-6F, Esakacho, Suita-shi, Osaka 564-0063, Japan. Our phone number is +81-6-6339-4177.
The Company has elected September 30th as its fiscal
year end.
Currently, we own the following wholly owned affiliated entities:
|
Name of Subsidiary |
State or Other Jurisdiction of Incorporation or Organization | |
|
|
| |
|
Force International Holdings Limited |
Hong Kong | |
|
e-Learning Laboratory Co., Ltd. |
Japan | |
|
e-Communications Co., Ltd. |
Japan | |
|
AUBE Japan Co., Ltd. |
Japan | |
* The following chart illustrates the structure of
our consolidated affiliated entities:
*
Currently, the number of the employees of the Company
is 57.
- 1 -
Table of Contents
****
**e-Learning Business**
With the completion of the Companys acquisition
of Force Holdings and its subsidiaries (Hereinafter, collectively referred to as the Group), we are in the business of providing
education services.
The Company is an education service provider in Japan
and it offers a range of e-learning education programs as well as supporting services to complement such education programs through an
internet platform named Force Club (Force Club), which was launched in 2007. The Company has offered e-learning
programs through Force Club, all of which were procured from independent third-party software developers, including pre-school
learning resources, learning resources supplementing elementary school, junior high school and senior high school curriculum, preparation
courses for university entrance examinations and professional qualification examinations, and English learning, appealing to a diverse
customer base from pre-school children to students and adult learners. A list of the Companys e-learning programs, target customer
group and release date are set out below. The e-learning programs of Force Club mainly serve as supplemental learning resources and self-learning
tools for students and adult learners.
****
|
No. |
Content Name |
Target |
Compatible Devices |
Release Date | |
|
1 |
ENGLISH MONSTERS |
Primary school students |
iOS smartphone / tablet |
2013 | |
|
Android smartphone / tablet | |
|
2 |
Romantic English Conversation - London Ver. |
Age 18 and over |
iOS smartphone / tablet |
2013 | |
|
Android smartphone / tablet | |
|
3 |
Romantic English Conversation - College Life Ver. |
Age 18 and over |
iOS smartphone / tablet |
2013 | |
|
Android smartphone / tablet | |
|
4 |
ENGLISH MONSTERS AR |
Primary school students |
iOS smartphone / tablet |
2013 | |
|
Android smartphone / tablet | |
|
5 |
The Blue Danube |
Infants |
iOS smartphone / tablet |
2012 | |
|
Android smartphone / tablet |
2014 | |
|
6 |
The Nutcracker |
Infants |
iOS smartphone / tablet |
2012 | |
|
Android smartphone / tablet |
2014 | |
|
7 |
Peter & the Wolf |
Infants |
iOS smartphone / tablet |
2012 | |
|
Android smartphone / tablet |
2014 | |
|
8 |
The Four Seasons |
Infants |
iOS smartphone / tablet |
2012 | |
|
Android smartphone / tablet |
2014 | |
|
9 |
The Carnival of the Animals |
Infants |
iOS smartphone / tablet |
2012 | |
|
Android smartphone / tablet |
2014 | |
|
10 |
Play A,B,C on the Keyboard |
Infants |
iOS smartphone / tablet |
2012 | |
|
Android smartphone / tablet |
2014 | |
|
11 |
Say Hello to English Words! |
Infants |
iOS smartphone / tablet |
2012 | |
|
Android smartphone / tablet |
2014 | |
|
12 |
Force Paint |
Infants |
iOS smartphone / tablet |
2012 | |
|
Android smartphone / tablet |
2014 | |
|
13 |
Force Musician |
Infants |
iOS smartphone / tablet |
2012 | |
|
14 |
Sign Language Course |
Adults |
PC |
2014 | |
|
15 |
University Entrance Exam Preparation Course |
High school students/ |
PC |
2008 | |
|
Those who prepare for entrance exam |
Android smartphone / tablet |
2014 | |
|
16 |
High School Student-oriented e-learning |
High school students |
PC |
2009 | |
|
Android smartphone / tablet |
2014 | |
|
17 |
Folstar |
Adults |
iOS smartphone
Android smartphone |
2008 | |
|
18 |
School TV |
Primary school students / Middle school students |
PC |
2015 | |
|
iOS smartphone / tablet | |
|
Android smartphone / tablet | |
|
19 |
English Monsters app |
Main: High school students / College students |
iOS smartphone / tablet
Android smartphone / tablet |
2015 | |
|
(However, primary school students, middle school students, and adults are also included as targets.) | |
|
20 |
ForceMart |
Force Club Members |
PC |
2017 | |
|
iOS smartphone / tablet | |
|
Android smartphone / tablet | |
|
21 |
Japanese Words Dictionary |
From primary school students to adults |
PC |
2021 | |
|
iOS smartphone / tablet | |
|
Android smartphone / tablet | |
The Companys e-learning programs are offered
to its customers who have to be first registered as a member of Force Club. Since 2002, the Company began to offer its e-learning programs
to its customers in CD-ROMs with pre-loaded learning content until 2007. Due to the popular trend for internet, starting from 2007, the
Company has made its e-learning programs available on its website for its customers, and the customers need to pay a monthly fee in order
to access and view the most up-to-date content on the website of the Company. At the advent of digital technology in recent years and
in view of the increasing popularity of tablet devices, the Company has released its e-learning programs on smartphones and tablet devices
for customer use since 2012 to cater for the popular demand of young learners and users in rural areas of Japan. The e-learning programs
of Force Club are targeted at residents of Japan, and thus the e-learning programs are presented in Japanese only and no translated version
is available. Since 2015, in addition to e-learning, the Company has started offline business which attracts public attentions such as
Abacus School and Robot Programming School. The Company also opened ixi After School in Tokyo, which provides after school
care services to children. Through these offline businesses, the Company has provided services to general users.
The Company regularly updates its e-learning materials
and programs. In particular, the learning resources supplementing elementary school, junior high school and senior high school curriculum
would be overhauled to correspond to any revision in school curriculum, which generally takes place once in a four-year period. In addition,
most of preparation courses for the university entrance examinations and professional qualification examinations would be revised at
one to two year intervals to cater for any changes to the examination syllabus. The website of the Company is updated from time to time
to reflect the updates and changes to the learning materials and programs and for users with smartphones and tablet devices, these updates
can also be downloaded from the website of the Company.
-2-
Table of Contents
****
Business Model
Apart from using a conventional direct sales marketing
strategy, the Company has also adopted multilevel marketing (MLM), via the Premium Membership in the Force Club, in operating
its businesses.
Since 2002, the Company has adopted a direct sales
marketing strategy to market its e-learning programs. Subsequently, in 2007, the Company gradually changed its marketing strategy from
direct sales to MLM for the purposes of (i) establishing its brand name and penetrating into the rural areas of Japan; (ii) promoting
its products to wider customer groups through premium members; and (iii) incentivizing premium members to recruit new members to join
Force Club in order to increase the sales of its products and maximize profits for the Company. Currently, the Company has no retail shops
or other point-of-sale for its products (e-learning courses).
MLM was adopted by the Company in order to expand
the sales of its e-learning programs through its Force Club members. There are two tiers of Force Club members, namely standard members
and premium members. Among Force Club members, premium members get a tablet device which entitles the premium members to life-time access
of all of the Companys e-learning educational content. Since the Companys e-learning education programs are distributed
in the form of online downloads, it can be used both online and offline.
Force Club Membership
Force Club members are those who intend to use products and services the
Company offers. There are three tiers of Force Club members, namely standard members, support members and premium members. Premium members
are those who wish to engage in recruiting new members (Premium Members).
Premium Members have to join a premium plan under
which members are given rights to use all products and services of the Company, and engage in activities to recruit new Force Club members
and obtain monetary rewards and bonuses (special income or commissions) from such activities. The Company enters into a contract (the
Premium Member Contract) with each of its Premium Members. The salient terms of the Premium Member Contract are as follows:
Eligibility*- the following individuals/corporations are eligible
to register as the Companys Premium Members:
(i) Individuals (other than students) who are 20 years old or
above and are residents of Japan; and
(ii) Corporations established in Japan.
Applicants are required to provide proof of identity, such as
drivers license, passport or resident card for individual members or a certified copy of the commercial registration for corporate
members.
*Payments* an applicant who wishes to be a Force Club
Premium Member has to join the premium plan and pay an initial payment of JPY420,000 (exclusive of sales tax), comprising:
(i) The one-off registration fee of JPY10,000;
(ii) The premium package fee of JPY390,000; and
(iii)An advanced payment of monthly membership fees for the initial
two months amounting to JPY20,000.
Support members pay a lower fee for the access to
educational content and will receive promotional materials which is substantially lesser in scale as compared to that to a premium member.
The support member has the choice to become a premium member by making relevant premium member registration and purchasing the upgrade
pack from the Company.
Standard members pay the same registration fee, but
a reduced monthly rate and no premium package fee. Monthly membership fees payable from the third month onwards will be automatically
transmitted from a members bank account until termination of membership.
Based on provisions described fully in the Premium
Member Contract there are fees related to, but not exclusively limited to, cancellation of membership and other stipulations pursuant
to certain actions. If a Premium Member does not pay the monthly membership fee before the prescribed due date, such Premium Member will
be disqualified and will not be paid any commission with respect to his/her recruitment performance in the preceding month, and Force
Club services for such Premium Member will be suspended in the following month. The commission and Force Club services for such Premium
Member will be resumed in the subsequent month if the monthly membership fee is paid within three months from the due date. Otherwise,
the Premium Member is deemed to have withdrawn from his membership if the monthly membership fee is not paid for three consecutive months
after the payment due date.
In addition, the Premium Member Contract sets out
the rules of conduct required to be observed by Premium Members in recruiting new members to join Force Club. The Company is entitled
to suspend a Premium Members business activities, suspend his or her commission, demand return of commission(s), remove his or
her title, or terminate his or her membership if such Premium Member violates or infringes the rules of conduct or other related laws
or regulations, and/or acts in a way that is offensive to public order and morals.
Upon registration as Force Club members, applicants
will be given a user ID to gain access to the e-learning programs through Force Club platform. Force Club members will be given additional
four user IDs after registration so that they can use a total of five user IDs for accessing e-learning content through Force Club platform.
The number of Force Club members has increased from
approximately 3,989 as of September 30, 2008 to approximately 13,095 as of the date of this report.
**Connector Plan Membership**
The Company launched a new Game Business (Connector
Plan) website as from June 2024 earning membership fee and game points.
There is only one type of member who is required to
subscribe JPY110,000 as a one-off and non-refundable membership fee.
Having joined the membership, the member is required
to purchase JPY10,000 game points per month or the registered member introduces another member who purchases a monthly game point at JPY10,000.
The member is required to upload his/ her personal identification data through the AUBE (formerly ATEM) Quest Connector website at https://aq-connector.jp.
At the bottom of the AUBE (formerly ATEM) website, there are User Terms and Conditions, Terms under Specified Commercial Law and Privacy
Policy.
The membership fee JPY110,000 is paid
at the time of registration. The JPY10,000 game points purchased per month by the members can be used within 6 months since the purchase
date.
Similar to the Force Club Membership business model, when a member introduces others to register or purchase game points, the company
will calculate and pay a commission back to the member who referred them.
**Competition**
We believe that our main competitors are those provide
similar e-learning product offerings in Japan. Specifically, we believe our biggest competitors at present are Recruit Marketing Partners
Co., Ltd., which provides "Study Supplements", JustSystem Corporation, which provides "Smile Zemi", Benesse Corporation
which provides "Challenge Touch" and SuRaLa Net Co., Ltd. which provides "SuRaLa", whose product offerings are also
consistent of e-learning programs and services.
**Current Advertising**
****
Our advertising expenses are primarily 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.
**Employees**
The number of the employees of the Company, and all
subsidiaries, as of the filing date is fifty-seven. All fifty-seven employees are considered full-time employees. We do not presently
have pension, health, annuity, insurance, stock options, profit sharing, or similar benefit plans; however, we may adopt plans in the
future. There are presently no personal benefits available to our officers/or directors and or employees.
**Government Regulations**
Companies in Japan are regulated by the Act
on Specified Commercial Transactions in Japan. The Company believes it is fully in compliance with this Act, which outlines the
rules and regulation regarding transactions arising from door-to-door sales, mail order sales, telemarketing sales, and multilevel marketing
transactions, among other transactions defined in the Act.
The Company has legal counsel in Japan who provides
instruction, direction, and reviews Company activities to ensure, to the best of Legal Counsels knowledge, that the Company is
in compliance with the aforementioned Act.
-3-
[Table of Contents](#table)
**Item 1A. Risk Factors.**
****
As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for
by this Item.
****
**Item 1B. Unresolved Staff Comments.**
None.
**Item 2. Properties.**
Exceed World, Inc. is provided office space rent free from e-Learning Laboratory
Co., Ltd. at the address of 1-23-38-6F, Esakacho, Suita-shi.
e-Communications Co., Ltd., a Japan corporation, is a wholly owned subsidiary
of e-Learning Laboratory Co, Ltd., a Japan corporation.
e-Communications Co., Ltd. sub-leases (rents) office space from its parent
company, e-Learning Laboratory Co, Ltd., a Japan corporation at the following addresses:
1-23-38-1F, Esakacho, Suita-shi, Osaka Japan 1-23-38-6F,
Esakacho, Suita-shi, Osaka Japan 1-23-38-8F, Esakacho, Suita-shi, Osaka Japan 1-8-40-1F, Konan, Minato-ku, Tokyo, Japan. The aforementioned
office spaces are shared by both e-Communications Co., Ltd. and e-Learning Laboratory Co., Ltd.
The following table details the terms of the lease
agreements for various properties leased by e-Learning Laboratory Co., Ltd.
|
Workspace |
Address |
Lessee |
Lessor |
Monthly Rent |
Term (Expiration of Lease) | |
|
Esaka, Osaka, 1st floor |
1-23-38-1F, Esakacho, Suita-shi, Osaka Japan |
e-Learning Laboratory Co., Ltd. |
F&M Co., Ltd. |
JPY662,200 |
May 31, 2027 | |
|
($4,448) | |
|
Esaka, Osaka, 6th floor |
1-23-38-6F, Esakacho, Suita-shi, Osaka Japan |
e-Learning Laboratory Co., Ltd. |
F&M Co., Ltd. |
JPY 1,102,500 |
June 30, 2026 | |
|
($7,405) | |
|
Esaka, Osaka, 8th floor |
1-23-38-8F, Esakacho, Suita-shi, Osaka Japan |
e-Learning Laboratory Co., Ltd. |
F&M Co., Ltd. |
JPY614,935 |
October 30, 2026 | |
|
($4,130) | |
|
Tokyo |
1-6-12-1F, Konan, Minato-ku, Tokyo, Japan |
e-Learning Laboratory Co., Ltd. |
Tokyu Community Corp. |
JPY 1,834,921 |
August 31, 2026 | |
|
($12,325) | |
**Item 3. Legal Proceedings.**
****
For the year ended September 30, 2025, the Company has settled five legal cases in total amount of approximately JPY8.7 million (approximately
$59,000) related to the cancellation of contracts. As of the filing date, the Company had four pending legal cases, claiming a damage
of approximately JPY18 million (approximately $120,000) under the same nature. Our legal counsel estimated a probable settlement of these
cases with total settlement amount of approximately JPY7.2 million (approximately $48,000). The Company has recorded JPY7.2 million (approximately
$48,000) as contingency liability as of September 30, 2025, representing cases not yet settled as of September 30, 2025.
During the past ten (10) years, none of our directors,
persons nominated to become directors, executive officers, promoters or control persons was involved in any of the legal proceedings listen
in Item 401 (f) of Regulation S-K.
**Item 4. Mine Safety Disclosures.**
Not applicable.
-4-
[Table of Contents](#table)
**PART II**
**Item 5. Market for Registrants
Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.**
****
**Market Information**
****
We are currently quoted on the OTC Marketplace. Our ticker symbol is EXDW.
**Holders**
Currently, as of the date of this report, and as
of our fiscal year end, there are 66 shareholders of record of our common stock and 32,700,000 shares of common stock deemed issued and
outstanding.
**Dividends and Share Repurchases**
We have not paid any dividends to our shareholder.
There are no restrictions which would limit our ability to pay dividends on common equity or that are likely to do so in the future.
**Issuer Purchases of Equity Securities**
None.
**Equity Compensation Plan Information**
Not applicable.
**Recent Sales of Unregistered Securities; Uses of Proceeds from Registered
Securities**
****
None.
**Item 6. Selected Financial
Data.**
No applicable because the Company is a smaller reporting company.
**Item 7. Managements
Discussion and Analysis of Financial Condition and Results of Operations.**
****
**Liquidity and Capital Resources****
As of September 30, 2025 and September 30, 2024, we
had cash in the amount of $7,443,390 and $17,573,926, respectively. As of September 30, 2025, our working capital was $5,257,044. In assessing
our liquidity, management monitors and analyzes our cash, our ability to generate sufficient revenues in the future, and our operating
and capital expenditure commitments.
**Revenues**
We recorded revenue of $8,624,951 for the year ended
September 30, 2025 as opposed to $24,383,053 for the year ended September 30, 2024. The decrease in revenue, in our opinion, is attributed
to the decrease in recruitment activities of premium Force Club members.
**Net loss**
****
We recorded net loss of $6,880,447 for the year ended
September 30, 2025 as opposed to net income of $1,171,377 for the year ended September 30, 2024. The increase in net loss is attributed
to a decrease in revenue.
**Cash flow**
For the year ended September 30, 2025, we had cash
outflows from operations in the amount of $8,147,821. We had cash inflows from operations in the amount of $2,724,235 for the year ended
September 30, 2024. The increase in operating cash outflow, in our opinion, is mainly attributed to an increase
in net loss and changes in other current assets primarily due to the increase in consumption tax recoverable. Net cash used in investing
activities for the year ended September 30, 2025 is comparable to that of the year
ended September 30, 2024. Net cash provided by financing activities increased by $1,415,544 in the year ended September 30, 2025. The
increase is mainly due to the borrowings from short-term and long-term loans during the year ended September 30, 2025.
**Working capital**
As of September 30, 2025 and 2024, we had working
capital of $5,257,044 and $13,800,283, respectively.
**Advertising**
****
Advertising costs are expensed as incurred and included
in selling and distributions expenses. Advertising expenses were $1,156,209 and $2,128,822 for the years ended September 30, 2025 and
2024, 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. The increase in advertising expenses is mainly because the Company held more promotional activities in current periods to
attract customers.
**Future Plans**
Over the
next twelve months, the Company intends to focus on expanding its sales network to strengthen its business activities as well as to provide
benefits and incentives to premium members as value-added services, in addition to the standard compensation package.
**Critical Accounting Estimates**
Our discussion and analysis of our financial condition and results
of operations are based upon financial statements which have been prepared in accordance with generally accepted accounting principles
in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America 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. We base our estimates on historical experience and on assumptions that are believed to be reasonable. These
estimates and assumptions provide a basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results could differ from those estimates. See Note 2 of the Notes to Consolidated Financial Statements
included in Item 8 of this Annual Report on Form 10-K for a summary of significant accounting policies and the effect on our consolidated
financial statements. We did not identify any critical accounting estimates.
**Item 7A. Quantitative
and Qualitative Disclosures about Market Risk.**
As a smaller reporting company, we
are not required to provide the information required by this Item.
-5-
[Table of Contents](#table)
****
**Item 8. Financial Statements
and Supplementary Data.**
**Exceed
World, Inc.**
**FINANCIAL STATEMENTS**
****
**INDEX TO FINANCIAL
STATEMENTS**
****
|
|
|
Pages | |
|
|
|
| |
|
Report
of Independent Registered Public Accounting Firm (PCAOB FIRM ID 206) |
|
F2 | |
|
|
|
| |
|
Consolidated
Balance Sheets |
|
F3 | |
|
|
|
| |
|
Consolidated
Statements of Operations and Comprehensive Income (Loss) |
|
F4 | |
|
|
|
| |
|
Consolidated
Statements of Changes in Shareholders' Equity |
|
F5 | |
|
|
|
| |
|
Consolidated Statements
of Cash Flows |
|
F6 | |
|
|
|
| |
|
Notes to Consolidated Financial
Statements |
|
F7-F10 | |
-F1-
[Table of Contents](#table)
**REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM**
****
To the Shareholders and Board of Directors of
Exceed World, Inc.
****
**Opinion on the Financial Statements**
****
We have audited the accompanying consolidated balance
sheets of Exceed World, Inc. and its subsidiaries (collectively, the Company) as of September 30, 2025 and 2024, and the
related consolidated statements of operations and comprehensive income (loss), changes in shareholders equity, and cash flows for
the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024,
and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted
in the United States of America.
**Basis for Opinion**
****
These financial statements are the responsibility
of the Companys management. Our responsibility is to express an opinion on the Companys financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards
of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal
control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
*/s/ MaloneBailey,
LLP*
www.malonebailey.com
We have served as the Company's auditor since 2019.
Houston,
Texas
January 13, 2026
-F2-
[Table of Contents](#table)
**EXCEED WORLD, INC.**
**CONSOLIDATED BALANCE SHEETS**
|
|
|
|
As
of |
|
|
As
of | |
|
|
|
|
September
30, 2025 |
|
|
September
30, 2024 | |
|
|
|
|
|
|
|
| |
|
ASSETS |
|
|
|
|
| |
|
Current
Assets |
|
|
|
|
| |
|
|
Cash |
$ |
7,443,390 |
$ |
17,573,926 | |
|
|
Restricted
cash |
|
149,388 |
883,386 | |
|
|
Accounts
receivable |
|
521,802 |
296,164 | |
|
|
Income
tax recoverable |
|
206,694 |
|
|
39,990 | |
|
|
Prepaid
expenses |
|
367,551 |
|
|
189,190 | |
|
|
Inventories |
|
53,823 |
|
|
56,178 | |
|
|
Short-term
investment |
|
671,682 |
|
|
- | |
|
|
Other
current assets |
|
1,580,404 |
|
|
682,836 | |
|
TOTAL
CURRENT ASSETS |
|
10,994,734 |
|
|
19,721,670 | |
|
|
|
|
|
|
|
| |
|
Non-current
Assets |
|
|
|
|
| |
|
|
Accounts
receivable - non-current |
|
235,089 |
|
|
- | |
|
|
Property,
plant and equipment, net |
|
789,723 |
|
|
776,740 | |
|
|
Software,
net |
|
4,228,011 |
|
|
2,980,010 | |
|
|
Operating
lease right-of-use assets, net |
|
341,664 |
|
|
593,191 | |
|
|
Other
intangible assets, net |
|
121,590 |
|
|
126,913 | |
|
|
Long-term
prepaid expenses |
|
32,755 |
|
|
34,750 | |
|
|
Deferred
tax assets |
|
364,830 |
|
|
506,474 | |
|
|
Long-term
investment |
|
335,841 |
|
|
- | |
|
|
Insurance
funds |
|
66,108 |
|
|
62,679 | |
|
|
Security
deposits |
|
190,787 |
|
|
199,010 | |
|
TOTAL
NON-CURRENT ASSETS |
|
6,706,398 |
|
|
5,279,767 | |
|
|
|
|
|
|
|
| |
|
TOTAL
ASSETS |
$ |
17,701,132 |
$ |
25,001,437 | |
|
|
|
|
|
|
|
| |
|
LIABILITIES
AND SHAREHOLDERS' EQUITY |
|
|
|
|
| |
|
Current
Liabilities |
|
|
|
|
| |
|
|
Accounts
payable |
$ |
345,927 |
$ |
769,067 | |
|
|
Accrued
expenses and other payables |
|
613,454 |
|
|
727,363 | |
|
|
Short-term
loan |
|
271,964 |
|
|
- | |
|
|
Contingency
liability |
|
48,314 |
|
|
48,440 | |
|
|
Income
tax payable |
|
1,488 |
|
|
1,471 | |
|
|
Deferred
income |
|
592,716 |
|
|
498,975 | |
|
|
Finance
lease liabilities, current |
|
16,294 |
|
|
19,499 | |
|
|
Operating
lease liabilities, current |
|
282,411 |
|
|
323,620 | |
|
|
Due
to related parties |
|
2,144,985 |
|
|
1,991,360 | |
|
|
Due
to director |
|
741,248 |
|
|
741,248 | |
|
|
Long-term
loans, current portion |
|
300,564 |
|
|
- | |
|
|
Other
current liabilities |
|
378,325 |
|
|
800,344 | |
|
TOTAL
CURRENT LIABILITIES |
|
5,737,690 |
|
|
5,921,387 | |
|
|
|
|
|
|
|
| |
|
Non-current
Liabilities |
|
|
|
|
| |
|
|
Finance
lease liabilities, non-current |
|
45,898 |
|
|
73,574 | |
|
|
Operating
lease liabilities, non-current |
|
30,945 |
|
|
240,043 | |
|
|
Long
term loans, non-current |
|
908,463 |
|
|
- | |
|
TOTAL
NON-CURRENT LIABILITIES |
|
985,306 |
|
|
313,617 | |
|
|
|
|
|
|
|
| |
|
TOTAL
LIABILITIES |
|
6,722,996 |
|
|
6,235,004 | |
|
|
|
|
|
|
|
| |
|
Shareholders'
Equity |
|
|
|
|
| |
|
|
Preferred
stock ($0.0001 par
value, 20,000,000 shares
authorized, 0 issued
and outstanding as of September 30, 2025 and 2024) |
|
- |
|
|
- | |
|
|
Common
stock ($0.0001 par
value, 500,000,000 shares
authorized, 32,700,000 shares
issued and outstanding as of September 30, 2025 and 2024) |
|
3,270 |
|
|
3,270 | |
|
|
Additional
paid-in capital |
|
103,840 |
|
|
103,840 | |
|
|
Retained earnings |
|
16,754,078 |
|
|
23,634,525 | |
|
|
Accumulated other comprehensive loss |
|
(5,883,052) |
|
|
(4,975,202) | |
|
TOTAL
SHAREHOLDERS' EQUITY |
|
10,978,136 |
|
|
18,766,433 | |
|
|
|
|
|
|
|
| |
|
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
17,701,132 |
$ |
25,001,437 | |
The
accompanying notes are an integral part of these consolidated financial statements.
-F3-
[Table of Contents](#table)
**EXCEED WORLD, INC.**
**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)**
|
|
|
|
Year Ended |
|
Year Ended | |
|
|
|
|
September 30, 2025 |
|
September 30, 2024 | |
|
|
|
|
|
|
| |
|
Revenues |
$ |
8,624,951 |
$ |
24,383,053 | |
|
Cost of revenues |
|
4,540,452 |
|
10,936,356 | |
|
Gross profit |
|
4,084,499 |
|
13,446,697 | |
|
|
|
|
|
|
| |
|
Operating expenses |
|
|
|
| |
|
|
Selling and distribution expenses |
|
1,156,209 |
|
2,128,822 | |
|
|
Administrative expenses |
|
9,801,112 |
|
9,645,134 | |
|
Total operating expenses |
|
10,957,321 |
|
11,773,956 | |
|
|
|
|
|
|
| |
|
Income (loss) from operations |
|
(6,872,822) |
|
1,672,741 | |
|
|
|
|
|
|
| |
|
Other income (expenses) |
|
|
|
| |
|
|
Other income |
|
123,710 |
|
99,138 | |
|
|
Interest expenses |
|
(9,015) |
|
(2,253) | |
|
Total other income |
|
114,695 |
|
96,885 | |
|
|
|
|
|
|
| |
|
Income (loss) before income tax |
|
(6,758,127) |
|
1,769,626 | |
|
Income tax expense |
|
122,320 |
|
598,249 | |
|
Net income (loss) |
$ |
(6,880,447) |
$ |
1,171,377 | |
|
|
|
|
|
|
| |
|
Comprehensive income (loss) |
|
|
|
| |
|
Net income (loss) |
$ |
(6,880,447) |
$ |
1,171,377 | |
|
Other comprehensive income (loss) |
|
|
|
| |
|
|
Foreign currency translation adjustment |
|
(907,850) |
|
981,113 | |
|
|
|
|
|
|
| |
|
Total comprehensive income (loss) |
$ |
(7,788,297) |
$ |
2,152,490 | |
|
|
|
|
|
|
| |
|
Income (loss) per common share |
|
|
|
| |
|
|
Basic |
$ |
(0.21) |
$ |
0.04 | |
|
|
Diluted |
$ |
(0.21) |
$ |
0.04 | |
|
|
|
|
|
|
| |
|
Weighted average common shares outstanding |
|
|
|
| |
|
|
Basic |
|
32,700,000 |
|
32,700,000 | |
|
|
Diluted |
|
32,700,000 |
|
32,700,000 | |
The accompanying notes are an integral part
of these consolidated financial statements.
-F4-
[Table of Contents](#table)
**EXCEED WORLD, INC.**
**STATEMENTS OF CHANGES
IN SHAREHOLDERS EQUITY**
|
|
|
|
|
|
|
|
ACCUMULATED |
|
|
|
|
| |
|
|
COMMON STOCK |
|
ADDITIONAL PAID-IN |
|
OTHER COMPREHENSIVE |
|
RETAINED |
|
|
| |
|
|
NUMBER |
|
AMOUNT |
|
CAPITAL |
|
LOSS |
|
EARNINGS |
|
TOTAL SHAREHOLDERS EQUITY |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Balance
as of September 30, 2023 |
32,700,000 |
$ |
3,270 |
$ |
103,840 |
$ |
(5,956,315) |
$ |
22,463,148 |
$ |
16,613,943 |
| |
|
Net
income |
- |
|
- |
|
- |
|
- |
|
1,171,377 |
|
1,171,377 |
| |
|
Foreign
currency translation |
- |
|
- |
|
- |
|
981,113 |
|
- |
|
981,113 |
| |
|
Balance
as of September 30, 2024 |
32,700,000 |
$ |
3,270 |
$ |
103,840 |
$ |
(4,975,202) |
$ |
23,634,525 |
$ |
18,766,433 |
| |
|
Net
loss |
- |
|
- |
|
- |
|
- |
|
(6,880,447) |
|
(6,880,447) |
| |
|
Foreign
currency translation |
- |
|
- |
|
- |
|
(907,850) |
|
- |
|
(907,850) |
| |
|
Balance
as of September 30, 2025 |
32,700,000 |
$ |
3,270 |
$ |
103,840 |
$ |
(5,883,052) |
$ |
16,754,078 |
$ |
$10,978,136 |
| |
The
accompanying notes are an integral part of these consolidated financial statements.
-F5-
[Table of Contents](#table)
**EXCEED WORLD, INC.**
**CONSOLIDATED STATEMENTS OF CASH FLOWS**
|
|
|
|
Year Ended |
|
Year Ended | |
|
|
|
|
September 30, 2025 |
|
September 30, 2024 | |
|
|
|
|
|
|
| |
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
| |
|
Net income (loss) |
$ |
(6,880,447) |
$ |
1,171,377 | |
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities |
|
|
|
| |
|
|
Depreciation and amortization |
|
873,580 |
|
354,945 | |
|
|
Loss on company owned life insurance policies |
|
912 |
|
976 | |
|
|
Gain on disposal of property, plant and equipment |
|
(5,958) |
|
- | |
|
|
Deferred income taxes |
|
120,367 |
|
191,489 | |
|
|
Non-cash lease expense |
|
330,140 |
|
325,436 | |
|
|
Changes in operating assets and liabilities: |
|
|
|
| |
|
|
Accounts receivable |
|
(471,567) |
|
(231,248) | |
|
|
Income tax recoverable |
|
(167,860) |
|
546,965 | |
|
|
Prepaid expenses |
|
(185,628) |
|
(67,598) | |
|
|
Inventories |
|
34 |
|
(10,345) | |
|
|
Other current assets |
|
(837,927) |
|
1,470,127 | |
|
|
Long-term prepaid expenses |
|
638 |
|
1,315 | |
|
|
Accounts payable |
|
(390,218) |
|
89,910 | |
|
|
Contingency liability |
|
1,870 |
|
(358,777) | |
|
|
Accrued expenses and other payables |
|
68,101 |
|
371,694 | |
|
|
Income tax payable |
|
78 |
|
(432,993) | |
|
|
Deferred income |
|
114,016 |
|
(684,845) | |
|
|
Other current liabilities |
|
(387,812) |
|
311,243 | |
|
|
Operating lease liabilities |
|
(330,140) |
|
(325,436) | |
|
|
Net cash provided by (used in) operating activities |
|
(8,147,821) |
|
2,724,235 | |
|
|
|
|
|
|
| |
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
| |
|
|
Payment for long-term investment |
|
(334,851) |
|
- | |
|
|
Payment for short-term investment |
|
(669,703) |
|
- | |
|
|
Purchase of property, plant and equipment |
|
(162,949) |
|
(396,071) | |
|
|
Proceeds from disposal of property, plant and equipment |
|
28,128 |
|
- | |
|
|
Purchase of software |
|
(2,131,621) |
|
(2,923,412) | |
|
|
Purchase of company-owned life insurance policies |
|
(6,912) |
|
(6,876) | |
|
|
Net cash used in investing activities |
|
(3,277,908) |
|
(3,326,359) | |
|
|
|
|
|
|
| |
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
| |
|
|
Repayment of finance lease liabilities |
|
(38,227) |
|
(11,242) | |
|
|
Borrowing from short-term loan |
|
271,964 |
|
- | |
|
|
Borrowings from long-term loans |
|
1,209,027 |
|
- | |
|
|
Proceeds from related parties |
|
- |
|
38,462 | |
|
|
Net cash provided by financing activities |
|
1,442,764 |
|
27,220 | |
|
|
|
|
|
|
| |
|
Net effect of exchange rate changes on cash and restricted cash |
|
(881,569) |
|
867,047 | |
|
|
|
|
|
|
| |
|
Net change in cash and restricted cash |
|
(10,864,534) |
|
292,143 | |
|
Cash and restricted cash - beginning of the year |
|
18,457,312 |
|
18,165,169 | |
|
Cash and restricted cash - end of the year |
$ |
7,592,778 |
$ |
18,457,312 | |
|
|
|
|
|
|
| |
|
NON-CASH INVESTING AND FINANCING TRANSACTIONS |
|
|
|
| |
|
|
Operating expenses paid by related parties on behalf of the Company |
$ |
153,625 |
$ |
312,738 | |
|
|
Remeasurement of operating lease liabilities and right-of-use assets due to lease modification |
$ |
103,786 |
$ |
267,294 | |
|
|
Property, plant and equipment obtained in connection with finance lease |
$ |
13,176 |
$ |
61,376 | |
|
|
|
|
|
|
| |
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |
|
|
|
| |
|
Interest paid |
$ |
9,015 |
$ |
2,253 | |
|
Income taxes paid |
$ |
166,759 |
$ |
877,213 | |
The
accompanying notes are an integral part of these consolidated financial statements.
-F6-
[Table of Contents](#table)
**EXCEED WORLD, INC.**
**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**
**NOTE 1 ORGANIZATION, DESCRIPTION OF BUSINESS AND
BASIS OF PRESENTATION**
Exceed World, Inc. (the Company), was incorporated under the laws of the State of Delaware on November 25, 2014.
On September
26, 2018, e-Learning Laboratory Co., Ltd. (e-Learning), a direct wholly owned subsidiary of Force International Holdings
Limited, which was incorporated in Hong Kong with limited liability (Force Holdings), entered into a share purchase agreement
with Force Internationale Limited (Force Internationale), the holding company of Force Holdings, in which e-Learning agreed
to sell and Force Internationale agreed to purchase 74.5% equity interest of the Company at a consideration of US$26,000.
On September
26, 2018, the same date, Force Internationale entered into a share purchase agreement with the Company, in which Force Internationale
agreed to sell and the Company agreed to purchase 100% equity interest of Force Holdings. In consideration of the agreement, the Company
issued 12,700,000 common stocks at US$1 each to Force Internationale. The results of these transactions are that Force Internationale
is an 84.4% owner of the Company, and the Company is a 100% owner of Force Holdings (the Reorganization).
On December 6,
2018, the Company entered into a share contribution agreement (the Agreement) with Force Internationale. Under this Agreement,
the Company transferred 100% of the equity interest of School TV Co., Ltd. ("School TV"), to Force Internationale without consideration.
This Agreement was approved by the board of directors of the Company, Force Internationale and School TV. Upon the completion of the disposal,
School TV was deconsolidated from the Company's consolidated financial statements.
As of September 30, 2025, the Company operates through
our wholly owned subsidiaries, which are engaged in provision of the educational services through an internet platform called Force
Club and online games services call Connector Plan business.
The Company has elected September 30th as its fiscal
year end.
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the
United States of America (U.S. GAAP). When used in these notes, the terms "Company", "we", "us" or "our" mean the Company.
**NOTE 2 SIGNIFICANT ACCOUNTING POLICIES**
**PRINCIPLES OF CONSOLIDATION**
The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. Inter-company accounts and
transactions have been eliminated. The results of subsidiaries disposed during the respective periods are included in the consolidated
statements of operations and comprehensive income (loss) up to the effective date of disposal.
|
Name
of Subsidiary |
Place
of Organization |
Percentage of
Effective
Ownership | |
|
Force
International Holdings Limited (Force Holdings) |
Hong
Kong |
100% | |
|
e-Learning
Laboratory Co., Ltd. (e-Learning) |
Japan |
100% (*1) | |
|
e-Communications
Co., Ltd. (e-Communications) |
Japan |
100% (*2) | |
|
AUBE
Japan Co., Ltd. (AUBE) |
Japan |
100% (*2) | |
****
(*1) Wholly owned subsidiary of Force Holdings
(*2) Wholly owned subsidiary of e-Learning
****
**USE
OF ESTIMATES**
The presentation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as the date
of the financial statements and the reported amounts of revenue and expenses reported in those financial statements. Certain accounting
policies that contain subjective management estimates and assumptions include those related to allowance for credit losses, write-down
in value of inventory, useful lives and impairment of long-lived assets, implicit interest rate of operating leases, accrual for contingencies,
accrual for contingencies, realization of deferred tax assets and legal contingencies. Operating results in the future could vary from
the amounts derived from management's estimates and assumptions.
**CONCENTRATION OF CREDIT RISK**
Financial instruments that potentially expose the Company to concentrations or credit risk consist primarily of cash. The Company places
its majority of cash with financial institutions with high credit ratings and quality located in Japan. Cash balances in bank accounts
in Japan are insured by the Deposit Insurance Corporation of Japan up to a limitation of JPY10 million per depositor per financial institution.
**RECLASSIFICATION**
Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications
had no impact on the net earnings (loss) or the financial position.
****
**RELATED
PARTY TRANSACTION**
A related party is generally defined as (i) any person that holds 10% or more of the Companys securities and their immediate families,
(ii) the Companys management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with
the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered
to be a related party transaction when there is a transfer of resources or obligations between related parties.
Transactions involving
related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free market
dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions
were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.
**CASH**
Cash includes cash on hand and deposits in banks that are unrestricted as to withdrawal or use, and which have original maturities of
three months or less. The Company maintains substantially all its bank accounts in Japan. Cash balances in bank accounts in Japan are
insured by the Deposit Insurance Corporation of Japan subject to certain limitations.
**RESTRICTED CASH**
Restricted cash represents cash deposits in financial institutions that are restricted as to withdrawal according to certain agreements
with financial institutions. The restricted cash is not available for withdrawal or the Companys general use until after certain
periods. Restricted cash is classified as current or non-current based on when the funds will be released in accordance with the terms
of the respective agreements.
**SHORT-TERM INVESTMENT**
Short-term investment represents fixed rate time deposits with original maturity of greater than three months but
less than a year.
**ACCOUNTS RECEIVABLE AND ALLOWANCE**
****
Accounts receivables are recognized and carried at the original invoice amount less allowance for credit losses. 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 customers ability to pay
in establishing and adjusting its allowance for credit losses. Accounts receivable balances are written off after all collection efforts
have ceased. No allowance for credit losses was reserved as of September 30, 2025 and 2024. There is a customer accounting for 99% and
99% of the Companys total outstanding account receivable as of September 30, 2025 and 2024, respectively.
**PROPERTY, PLANT AND EQUIPMENT**
****
Property, plant and equipment are stated at cost less
depreciation and impairment loss. Depreciation is calculated using the straight-line method or declining balance method at the following
estimated useful life:
|
Building |
47 years on straight-line method | |
|
Leasehold improvement |
Shorter of lease term or the estimated useful lives of the assets on straight-line method | |
|
Equipment |
2 to 15 years on declining balance method or straight-line method | |
|
Vehicle |
6 years on straight-line method | |
|
Land |
Not depreciated | |
Assets held under finance leases are depreciated over
their expected useful lives on the same basis as owned assets.
**INTANGIBLE ASSETS**
Intangible assets consist of internal use software and resort membership.
The Company capitalizes certain costs related to obtaining or
developing software for internal use. Prior to October 1, 2024, costs incurred during the application development stage internally or
externally are capitalized and amortized on a straight-line basis over the expected useful life of five years. The application development
stage includes design of chosen path, software configuration and integration, coding, hardware installation and testing. Costs incurred
during the preliminary project stage and post implementation-operation stage are expensed as incurred.
In September 2025, the FASB issued
ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for
Internal-Use Software (ASU 2025-06), which removes all references to project stages and clarifies the threshold entities
apply to begin capitalizing costs. Under ASU 2025-06, an entity will begin capitalizing software costs when management has authorized
and committed to funding the software project and the software project has met the probable-to-complete recognition threshold. The Company
elected to early adopt this guidance for the year ended September 30, 2025, effective as of October 1, 2024, and chose the prospective
transition approach that the Company would apply the guidance to new software costs incurred for all projects, including costs incurred
for in-process projects, as of the beginning of the period of adoption.
Resort membership has indefinite useful life,
and the balance was $121,590 and $126,913
as of September 30, 2025 and 2024, respectively, included in other intangible assets.
****
**IMPAIRMENT OF LONG-LIVED ASSETS**
The carrying value of property, plant and equipment and intangible assets subject to depreciation and amortization is evaluated whenever
events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An impairment loss would be
measured by the amount by which the carrying value of the asset exceeds the fair value of the asset. The Company believed no impairment
existed as of September 30, 2025 and 2024.
-F7-
[Table of Contents](#table)
**LONG-TERM INVESTMENT**
Long-term investment consists of equity investments without readily determinable fair value. For those investments over which the Company
does not have significant influence and without readily determinable fair value, the Company records them at cost, less impairment, and
plus or minus subsequent adjustments for observable price changes, in accordance with ASC 321, Investments Equity Securities.
Under this measurement alternative, changes in the carrying value of the equity investments are required to be made whenever there are
observable price changes in orderly transactions for the identical or similar investment of the same issuer. In the year ended September
30, 2025, the Company purchased certain shares of an investee company in the amount of JPY50 million, approximately $345,000 when purchased.
During year ended September 30, 2025, no impairment loss was recognized for this investment.
**FOREIGN CURRENCY TRANSLATION**
****
The Company maintains its books and records in its local currencies, Japanese YEN (JPY), Hong Kong Dollars (HK$)
and United States Dollars (US$ or $), which are the functional currencies as being the primary currencies
of the economic environment in which their operations are conducted. Transactions denominated in currencies other than the functional
currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets
and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable
exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statements of operations
and comprehensive income (loss).
The reporting currency of the Company is US$ and the accompanying consolidated financial statements have
been expressed in US$. In accordance with ASC Topic 830-30, Translation of Financial Statement, assets and liabilities of the Company
whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses
are translated at average rates prevailing during the period. Shareholders equity is translated at historical exchange rate at
the time of transaction. The gains and losses resulting from translation of financial statements are recorded as a separate component
of accumulated other comprehensive loss within the consolidated statements of changes in shareholders equity.
Translation of amounts from the local currency of
the Company into US$1 has been made at the following exchange rates:
|
|
September 30, 2025 |
|
September
30, 2024 | |
|
Current
JPY: US$1 exchange rate |
148.88 |
|
142.73 | |
|
Average
JPY: US$1 exchange rate |
149.32 |
|
150.50 | |
|
|
|
|
| |
|
Current
HK$: US$1 exchange rate |
7.80 |
|
7.80 | |
|
Average
HK$: US$1 exchange rate |
7.80 |
|
7.80 | |
****
**REVENUE RECOGNITION**
The Company primarily operates and manages multilevel marketing (MLM) in operating its businesses as the Force Club Membership
and generates revenues by providing the rights to access the Companys educational content and to recruit new members. From June
2024, the Company launched a new game business called Connector Plan, in which the Company generated revenues by providing the rights
to access the online games and sale of virtual points.
The Company recognizes revenue by applying the following steps in accordance with
ASC 606 - Revenue from contracts with Customers. The Company recognizes revenue upon transfer of control of promised products or services
to customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for those products or services.
- Identification of the contract, or contracts, with
a customer
- Identification of the performance obligations in
the contract
- Determination of the transaction price
- Allocation of the transaction price to the performance
obligations in the contract
- Recognition of revenue when (or as) we satisfy the
performance obligation
*Force Club Membership fee*
Generally, the Company grants Force Club members the
rights to access the Companys educational content. There are three tiers of members, namely standard members, support members and
premium members. The premium members are granted full access to the Companys educational content and the right to recruit prospect
customers to become the Companys members. Each premium member needs to purchase a premium pack, containing promotional materials
aiding the recruiting process, from the Company. The standard members are granted limited access to the Companys educational content.
To further promote the Companys business, the
Company also offers its customers to subscribe and become a support member. Similar to a premium member, the support members are granted
full access to the Companys educational content and the right to recruit prospect customers to become the Companys members,
but the amount of commission entitled to the support member for each recruitment is lower than that to the premium members. The customers
subscribing to support membership pay a lower fee for the access to educational content and will receive promotional materials which is
substantially lesser in scale as compared to that to a premium member. For the years ended September 30, 2025 and 2024, the revenue generated
from support member subscription is immaterial.
The support member has the choice to become a premium
member by making relevant premium member registration and purchasing the upgrade pack from the Company. The revenue from upgrade pack
is accounted for in the same manner as the revenue from the premium pack as described below.
Revenue from the premium pack (including the upgrade
pack) is recognized net of discounts and return allowances at a point in time upon delivery. Revenue from the right to access the Companys
educational content is recognized over a period of time ratably over the effective period. For sales of premium packs and upgrade packs
with return conditions, the Company reasonably estimate the possibility of return based on historical experience. There were no liabilities
for return allowances nor assets from the right to recover products from the associated return allowances recorded as of September 30,
2025 and 2024, as substantially all sales of premium packs (including the upgrade pack) during the years then ended have reached the end
of the return periods.
*Connector Plan Membership Fee*
**
The connector plan revenues are mainly generated through
membership fee and sale of virtual points, and those virtual points can only be consumed in the Companys online games.
Membership fee - The Company charges a membership
fee to its customers, which grants its members the rights to full access to the Companys online games and the right to recruit
prospect customers to become the Companys members for the duration of the membership. As the Company has the obligation to provide
access to its online games for the duration of the membership term, the Company recognizes membership fee on a straight-line basis over
a period of time ratably over the estimated service period. The Company used the average retention period of its members as the estimate
for the service period. The Company evaluates the appropriateness of such estimates quarterly to see if they are in line with the Companys
observations in the operations. The Company believes this provides a reasonable depiction of the transfer of services to customers, as
it is the best representation of the time period during which the Companys customers benefit from the Companys services.
Determining the estimated service period is subjective and requires managements judgment. Future usage patterns may differ from
historical ones and therefore, the estimated service period may change in the future. The estimated service periods for the Companys
connector plan membership are approximately 200 days. For membership with refundable periods, the Company reasonably estimate the possibility
of refund based on historical experience. The Company historically did not incur material refunds and did not accrue liabilities for
refunds of membership fees. If actual refunds differ from the Companys estimates, the effects could be material to the consolidated
financial statements.
Sale of virtual points - The Company sells virtual points to its members and the members can consume the points by playing the online
games. Revenues generated from sale of virtual points are recognized at the point in time when the members consume the points by playing
online games or when the points are expired.
*Contract asset and liability*
Deferred income related to force club business is
recognized when consideration is received from a member prior to the goods were delivered or the access was granted. Deferred income
related to connector plan business is for the estimated value of the unused virtual points. As of September 30, 2025 and 2024, the Company's
deferred income was $592,716 and $498,975
respectively. During the year ended September 30, 2025, the Company recognized $498,975 of deferred income from the opening balance.
The Company does not have any contract asset.
**
*Disaggregation of revenue*
**
For the years ended September 30, 2025 and 2024, substantially all of the Company's revenue was generated in Japan and contributed by
the Company's subsidiaries. The Company disaggregates revenue into two revenue streams, consisting of Force Club Membership Fee and Connector
Plan Membership Fee, as follows:
|
|
|
Year Ended
September 30, 2025 |
|
Year Ended
September 30, 2024 | |
|
Force Club Membership Fee |
|
6,374,779 |
|
21,639,463 | |
|
Connector Plan Membership Fee |
|
2,018,469 |
|
2,469,851 | |
|
Others |
|
231,703 |
|
273,739 | |
|
Total |
|
8,624,951 |
|
24,383,053 | |
**ADVERTISING**
****
Advertising costs are expensed as incurred and included
in selling and distributions expenses. Advertising expenses were $1,156,209 and $1,053,125 for the years ended September 30, 2025 and
2024, 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.
**RESEARCH AND DEVELOPMENT EXPENSE**
****
Research and development expenses consist primarily of expenses incurred related to the development activities for the Companys
internal-used software and are charged to operations as incurred as these costs do not qualify for capitalization. For the years ended
September 30, 2025 and 2024, research and development expenses of $2,759,763 and $2,166,443 were included in general and administrative expenses in the consolidated statements of operations and comprehensive income (loss).
****
**EARNINGS 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 by
the weighted average number of common stock 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 (loss) of the Company.
The Company does not have any potentially dilutive
instruments as of September 30, 2025 and 2024, thus, anti-dilution issues are not applicable.
**INCOME TAXES**
****
The provision for income taxes includes income taxes currently payable and those deferred as a result of temporary differences between
the financial statements and the income tax basis of assets and liabilities. Deferred income tax assets and liabilities are measured using
enacted income 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 of a change in income tax rates on deferred income tax assets and liabilities is recognized in income or loss in
the period that includes the enactment date. A valuation allowance is provided to reduce deferred tax assets to the amount of future tax
benefit when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Projected future taxable
income and ongoing tax planning strategies are considered and evaluated when assessing the need for a valuation allowance. Any increase
or decrease in a valuation allowance could have a material adverse or beneficial impact on the Companys income tax provision and
net income or loss in the period the determination is made.
The Company recognizes the tax benefit from an uncertain tax position claimed
or expected to be claimed on a tax return only if it is more likely than not that the tax position will be sustained on examination by
taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a
position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.
Penalties and interest incurred related to underpayment of these uncertain tax positions are classified as income tax expense in the period
incurred. No such penalties and interest incurred during the years ended September 30, 2025 and 2024.
****
**LEASES**
The Company accounts for leases in accordance with ASC 842 and determines if an arrangement is a lease at inception. Operating leases
are included in operating lease right-of-use (ROU) assets, operating lease liabilities, current and operating lease liabilities,
non-current in the Companys consolidated balance sheets, and finance leases are included in property, plant and equipment, finance
lease obligations, current and finance lease obligations, non-current in the Companys consolidated balance sheets. ROU assets and
related lease liabilities from operating leases and finance leases are recognized at commencement date based on the present value of lease
payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is
reasonably certain that it will exercise that option, if any. As the Companys leases do not provide an implicit rate, the Company
used an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
For leases with a term of 12 months or less, the Company makes an accounting policy election by class of underlying asset not to recognize
lease assets and lease liabilities. The Company recognizes lease expenses for such leases on a straight-line basis over the lease term.
Modification to existing lease agreements, including changes to the lease term or payment amounts, are reviewed to determine whether they
result in a sperate contract. For modifications that do not result in a separate contract, management reviews the lease classification
and re-measures the related ROU assets and lease liabilities at the effective date of the modification.
**FAIR VALUE MEASUREMENT**
****
FASB ASC 820,*Fair Value Measurements and
Disclosures*, ("ASC 820") defines fair value as the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date.ASC 820 also establishes a fair value hierarchy that
prioritizes the inputs used in valuation methodologies into three levels:
Level 1: Quoted prices in active markets for
identical assets or liabilities.
Level 2: Significant other inputs that are
directly or indirectly observable in the marketplace.
Level 3: Significant unobservable inputs which
are supported by little or no market activity.
As of September 30, 2025 and 2024, the carrying value of currents
assets and current liabilities approximated their fair values reported in the consolidated balance sheets due to their short-term maturities.
****
**RECENT ACCOUNTING PRONOUNCEMENTS**
In November 2023, the FASB issued ASU No. 2023-07,
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires that an entity disclose significant segment
expenses impacting profit and loss that are regularly provided to the chief operating decision maker. The update is required to be applied
retrospectively to prior periods presented, based on the significant segment expense categories identified and disclosed in the period
of adoption. The amendments in ASU 2023-07 are required to be adopted for fiscal years beginning after December 15, 2023. The Company
adopted ASU 2023-07 on October 1, 2024. The information is disclosed in Note 12.
In December 2023, the FASB issued ASU No. 2023-09,
Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires that entities disclose specific categories in
their rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The new standard
is effective for the Company beginning December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact
of adopting the standard.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive
Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"). This ASU requires
new financial statement disclosures disaggregating prescribed expense categories within relevant income statement expense captions. ASU
2024-03 will be effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early
adoption is permitted. The Company is currently evaluating the impact of adopting the standard.
-F8-
[Table of Contents](#table)
****
**NOTE 3 OTHER CURRENT ASSETS**
****
Other current assets consist of the following:
|
|
|
As of
September 30, 2025 |
|
As of
September 30, 2024 | |
|
Consumption tax recoverable |
$ |
928,797 |
$ |
- | |
|
Promotional materials* |
|
633,831 |
|
667,050 | |
|
Others |
|
17,776 |
|
15,786 | |
|
Total |
$ |
1,580,404 |
$ |
682,836 | |
* Promotional materials represent tablets to be provided to Force Club premium members to access the educational content. The Company
treated them as advertising materials under ASC 720-35 Other Expenses - Advertising Costs, and deferred to expense them when the tablets
were provided to the customers.
**NOTE
4 INCOME TAXES**
For
the years ended September 30, 2025 and 2024, the provision of income tax expense was $122,320
and $598,249,
consisting of current portion of $1,953
and $406,760
and deferred portion of $120,367
and $191,489,
respectively.
Japan
The Company conducts its major businesses in Japan and e-Learning, e-Communications and AUBE (Japanese Subsidiaries) are
subject to tax in this jurisdiction. As a result of its business activities, Japanese Subsidiaries file tax returns that are subject to
examination by the local tax authority.
Japanese
Subsidiaries are subject to a number of income taxes, which, in aggregate, represent a statutory tax
rate approximately as follows:
|
|
|
Companys
assessable profit | |
|
For
the years ended September 30, |
|
Up
to JPY 4 million |
|
Up
to JPY 8 million |
|
Over
JPY 8 million | |
|
2025 |
|
21.87% |
|
23.74% |
|
34.34% | |
|
2024 |
|
21.87% |
|
23.74% |
|
34.34% | |
Open tax years in Japan are five years. As of September 30, 2025, the Companys earliest open tax year for Japanese income tax purposes
is its fiscal year ended September 30, 2020. The Company's tax attributes from prior periods remain subject to adjustment.
The
reconciliations of the Japanese statutory income tax rate and the Companys effective income tax
rate are as follows:
|
|
|
Year Ended
September
30, 2025 |
|
Year Ended
September 30, 2024 | |
|
Japanese statutory tax rate |
|
33.80% |
|
33.80% | |
|
Income tax difference under different tax jurisdictions |
|
(1.18)% |
|
5.80% | |
|
Effect of valuation allowance on deferred income tax assets |
|
(25.17)% |
|
(11.16)% | |
|
Non-deductible expenses |
|
(0.45)% |
|
1.61% | |
|
Deductible tax payments |
|
- |
|
(1.91)% | |
|
Other adjustments |
|
(8.81)% |
|
0.81% | |
|
Total |
|
(1.81)% |
|
28.95% | |
Hong
Kong
Force Holdings, a direct wholly owned subsidiary of
the Company in Hong Kong, is engaged in investment holding. Hong Kong profits tax has been provided at the rate of 16.5% on the estimated
assessable profit arising in Hong Kong.
No provision for the Hong Kong profits tax has been
made as Force Holdings did not generate any estimated assessable profits in Hong Kong during the years ended September 30, 2025 and 2024.
Open tax year in Hong Kong is seven years after the
relevant year of assessment. This may be extended to ten years in the case of fraud of willful evasion of taxes. There are no provisions
that govern the time limit for tax collection.
United States
Exceed World, Inc., which acts as a holding company
on a non-consolidated basis, does not plan to engage any business activities and current or future loss will be fully allowed. For the
years ended September 30, 2025 and 2024, Exceed World, Inc., as a holding company registered in the state of Delaware, has incurred net
loss and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry forward has been fully reserved.
The Company is a Delaware corporation that is subject
to U.S. corporate income tax on its taxable income at a rate of up to 21% for taxable years beginning after December 31, 2017. Recent
U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the 2017 Act), was signed into law on December
22, 2017. The 2017 Act significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal
corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business
deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously
deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income
tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. Taxpayers may elect to pay the one-time
transition tax over eight years or in a single lump sum.
The 2017 Act also includes provisions for a new tax
on the Global Intangible Low-taxed Income (GILTI) effective for tax years of foreign corporations beginning after December
31, 2017. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of controlled foreign corporations
(CFCs), subject to the possible use of foreign tax credits and a deduction equal to 50 percent to offset the income tax
liability, subject to some limitations. The Company elected to account for GILTI tax in the period the tax is incurred, and no provision
is made during the years ended September 30, 2025 and 2024.
To the extent that portions of the Companys
U.S. taxable income, such as Subpart F income or GILTI, are determined to be from sources outside of the U.S., subject to certain limitations,
the Company may be able to claim foreign tax credits to offset its U.S. income tax liabilities. If dividends that the Company receives
from its subsidiaries are determined to be from sources outside of the U.S., subject to certain limitations, the Company will generally
not be required to pay U.S. corporate income tax on those dividends. Any liabilities for U.S. corporate income tax will be accrued in
the Companys consolidated statements of operations and comprehensive income (loss) and estimated tax payments will be made when
required by U.S. law.
As of September 30, 2025, the Companys earliest
open tax year for U.S. federal income tax purposes is its fiscal year ended September 30, 2022. The Company's tax attributes from prior
periods remain subject to adjustment. Open tax years in state and foreign jurisdictions generally range from three to six years.
Accounting for Uncertainty in Income Taxes
The tax authority within the jurisdiction of each
of the Companys subsidiaries conducts periodic and ad hoc tax filing reviews on business enterprises operating within that jurisdiction
after those enterprises complete their relevant tax filings. Therefore, the Companys subsidiaries tax filings results are
subject to change. It is therefore uncertain as to whether the tax authorities may take different views about the Companys subsidiaries
tax filings, which may lead to additional tax liabilities.
ASC 740 requires recognition and measurement of uncertain
income tax positions using a more-likely-than-not approach. The management evaluated the Companys tax positions
and concluded that no provision for uncertainty in income taxes was necessary as of September 30, 2025 and 2024.
**NOTE
5 DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES**
The
Components of deferred tax assets and liabilities as of September 30, 2025 and 2024 were
as follows:
|
|
|
As
of September 30, 2025 |
|
As
of September 30, 2024 | |
|
Deferred tax assets |
|
|
|
| |
|
Inventories |
$ |
15,748 |
$ |
17,648 | |
|
Software |
|
355,111 |
|
493,650 | |
|
Expense |
|
16,368 |
|
16,411 | |
|
Net operating loss carryforward |
|
1,688,769 |
|
- | |
|
Total deferred tax assets |
|
2,075,996 |
|
527,709 | |
|
Less: valuation allowance |
|
(1,688,769) |
|
- | |
|
Net deferred tax assets |
$ |
387,227 |
$ |
527,709 | |
|
|
|
As
of September 30, 2025 |
|
As
of September 30, 2024 | |
|
Deferred tax liabilities |
|
|
|
| |
|
Insurance funds |
$ |
(22,397) |
$ |
(21,235) | |
|
Deferred tax liabilities, non-current |
$ |
(22,397) |
$ |
(21,235) | |
For
the purpose of presentation in the consolidated balance sheets, certain deferred income tax assets and liabilities have been offset.
The following is the analysis of the deferred income tax balances for financial reporting purpose:
|
|
|
As
of September 30, 2025 |
|
As
of September 30, 2024 | |
|
Deferred tax assets |
$ |
364,830 |
$ |
506,474 | |
**NOTE
6 RELATED-PARTY TRANSACTIONS**
Due
to related parties and directors
As
of September 30, 2025 and 2024, the Companys due to related parties and directors were
as follows:
|
|
|
|
As
of September 30, 2025 |
|
As
of September 30, 2024 | |
|
Due to director |
|
|
|
|
| |
|
Tomoo Yoshida, CEO, CFO, sole director and a shareholder of the Company |
|
$ |
741,248 |
$ |
741,248 | |
|
Total due to director |
|
$ |
741,248 |
$ |
741,248 | |
|
|
|
|
|
|
| |
|
Due to related parties |
|
|
|
|
| |
|
Keiichi Koga, a shareholder of the Company and a director of certain subsidiaries of the Company |
|
$ |
47,635 |
$ |
47,635 | |
|
Force Internationale, the Companys majority shareholder. Tomoo Yoshida is a director of Force Internationale |
|
|
2,097,350 |
|
1,943,725 | |
|
Total due to related parties |
|
$ |
2,144,985 |
$ |
1,991,360 | |
The payable balances are unsecured, due on demand, and bear no interest. From time to time, these related parties have advanced to the
Company or paid expenses on behalf of the Company, and the Company has also made repayments. During the years ended September 30, 2025
and 2024, Force Internationale paid expense on behalf of the Company in the amount of $153,625
and $312,738,
respectively.
Tomoo
Yoshida provided guarantee for the Companys office leases during the years ended September 30, 2025 and 2024.
-F9-
[Table
of Contents](#table)
**NOTE
7 PROPERTY, PLANT AND EQUIPMENT**
Property,
plant and equipment consist of the following:
|
|
|
As
of September 30, 2025 |
|
As
of September 30, 2024 | |
|
Buildings |
$ |
225,700 |
$ |
235,425 | |
|
Leasehold improvement |
|
203,888 |
|
193,757 | |
|
Equipment |
|
552,268 |
|
658,913 | |
|
Vehicles |
|
205,462 |
|
248,427 | |
|
Land |
|
167,661 |
|
174,885 | |
|
Construction in process |
|
103,805 |
|
15,974 | |
|
1,458,784 |
|
1,527,381 | |
|
|
|
|
|
| |
|
Accumulated depreciation |
|
(669,061) |
|
(750,641) | |
|
|
|
|
|
| |
|
Total net book value |
$ |
789,723 |
$ |
776,740 | |
The aggregate depreciation
expense of property, plant and equipment was $109,020
and $69,154
for the years ended September 30, 2025 and 2024, respectively.
**NOTE
8 SOFTWARE**
The
book value of the Companys software as of September 30, 2025 and 2024 was
as follows:
|
|
|
As
of September 30, 2025 |
|
As
of September 30, 2024 | |
|
Software |
$ |
5,611,144 |
$ |
2,335,929 | |
|
Accumulated amortization |
|
(1,462,150) |
|
(796,141) | |
|
Software in process |
|
79,017 |
|
1,440,222 | |
|
Total net book value |
$ |
4,228,011 |
$ |
2,980,010 | |
The
aggregate amortization expense related to the software was$764,560and$285,791
for the years ended September 30, 2025 and 2024, respectively,
included in cost of revenues and operating expenses.
The
estimated future amortization expense of software as of September 30, 2025 is
as follows:
|
Years ended September 30, |
|
Amount | |
|
2026 |
|
$ |
1,010,621 | |
|
2027 |
|
|
1,010,621 | |
|
2028 |
|
|
1,010,621 | |
|
2029 |
|
|
874,012 | |
|
2030 |
|
|
322,136 | |
|
Thereafter |
|
|
- | |
|
Total |
|
$ |
4,228,011 | |
**NOTE
9 Borrowings**
Short-term Loan
In September 2025, the Company entered into a line of credit agreement
with the San-in Godo Bank for a maximum borrowing amount of JPY200 million. The line of credit is subject to annual interest rate of TIBOR
plus 0.8%. The Company borrowed JPY40,490,000 (approximately $272,000) on September 30, 2025 with effective interest
rate of 1.402%. All borrowings under the line of credit are required to be repaid within six months from the borrowing date. The line
of credit is collateralized by a land owned by the Company.
Long-term
Loans
The Companys long-term loans consist of the
following:
|
Name of Financial Institutions |
Original Amount Borrowed |
Loan Duration |
Interest Rate |
Balance as of September 30, 2025 |
Balance as of September 30, 2024 | |
|
The Kiyo bank, Ltd. |
JPY 100,000,000 |
9/30/2025 9/30/2028 |
TIBOR+1.3% |
$ 671,682 |
$ 671,682 | |
|
The Kiyo bank, Ltd. |
JPY 80,000,000 |
9/30/2025 9/30/2032 |
TIBOR+1.0% |
$ 537,345 |
$ 537,345 | |
|
Aggregate
outstanding principal balances |
|
|
|
|
1,209,027 | |
|
Less: current portion |
|
|
|
|
(300,564) | |
|
Non-current portion |
|
|
|
|
908,463 | |
|
|
|
|
|
|
|
|
| |
Interest expenses for short-term loan and long-term
loans are nil for the year ended September 30, 2025.
Future principal repayments as of September 30, 2025
are as follows:
|
Years ended September 30, |
|
Amount |
|
|
2026 |
$ |
572,528 | |
|
2027 |
|
300,564 | |
|
2028 |
|
300,752 | |
|
2029 |
|
76,733 | |
|
2030 |
|
76,733 | |
|
Thereafter |
|
153,681 | |
|
Total |
$ |
1,480,991 | |
**NOTE
10 COMMITMENTS**
As
of September 30, 2024, the Company had three finance leases comprised of equipment and vehicle leases with a gross value of $83,705
and $34,112, respectively, included in property, plant and
equipment. The Company also leases its offices under operating lease and short-term lease. The estimated effect of lease renewal and
termination options, as applicable, was included in the consolidated financial statements in the current period.
As of September 30, 2025, the Company had three finance leases of equipment with a gross value of $82,715, included in property, plant
and equipment. The Company also leases its offices under operating lease and short-term lease. The estimated effect of lease renewal and
termination options, as applicable, was included in the consolidated financial statements in the current period.
The
components of lease expense were
as follows:
|
|
|
|
|
| |
|
|
|
For the years ended September 30, | |
|
|
|
2025 |
|
2024 | |
|
Operating lease cost |
$ |
338,700 |
$ |
336,044 | |
|
Short-term lease cost |
|
13,630 |
|
15,893 | |
|
Finance lease cost: |
|
|
|
| |
|
Amortization of right-of-use assets |
|
18,596 |
|
19,771 | |
|
Interest on lease obligations |
|
1,908 |
|
2,618 | |
|
Total finance lease cost |
|
20,504 |
|
22,389 | |
|
Total lease cost |
$ |
372,834 |
$ |
374,326 | |
The
following table presents the Companys supplemental information related to operating and finance
leases:
|
|
|
|
| |
|
|
|
For the years ended September 30, | |
|
|
|
2025 |
2024 | |
|
Cash paid for amounts included in the measurement of lease liabilities |
|
|
| |
|
Operating cash flows from finance leases |
$ |
1,908 |
2,618 | |
|
Operating cash flows from operating leases |
$ |
338,700 |
336,044 | |
|
Financing cash flows from finance leases |
$ |
16,731 |
11,242 | |
|
|
|
|
| |
|
Weighted Average Remaining Lease Term |
|
|
| |
|
Operating leases |
|
1.11 years |
1.83 years | |
|
Finance leases |
|
3.74 years |
4.10 years | |
|
Weighted Average Discount Rate |
|
|
| |
|
Operating leases |
|
1.84% |
1.84% | |
|
Finance leases |
|
1.91% |
3.59% | |
The
future maturity of lease liabilities as of September 30, 2025 were
as follows:
|
Years ended September 30, |
|
Finance lease |
|
Operating lease | |
|
2026 |
$ |
19,071 |
$ |
285,430 | |
|
2027 |
|
19,071 |
|
31,135 | |
|
2028 |
|
19,071 |
|
- | |
|
2029 |
|
12,581 |
|
- | |
|
2030 |
|
1,132 |
|
- | |
|
Thereafter |
|
- |
|
- | |
|
Total |
|
70,926 |
|
316,565 | |
|
Less imputed interest |
|
(8,734) |
|
(3,209) | |
|
Total lease liabilities |
|
62,192 |
|
313,356 | |
|
Less: current portion |
|
(16,294) |
|
(282,411) | |
|
Long-term lease liabilities |
$ |
45,898 |
$ |
30,945 | |
**NOTE
11 CONTINGENCIES**
The Company is subject to various claims and legal
proceedings in the course of conducting the business related to Force Club Membership and, from time to time, the Company may become involved
in additional claims and lawsuits incidental to the businesses. The Companys legal counsel and the management routinely assess
the likelihood of adverse judgments and outcomes to these matters, as well as ranges of probable losses; to the extent losses are reasonably
estimable. Accruals are recorded for these matters to the extent that management concludes a loss is probable and the financial impact,
should an adverse outcome occur, is reasonable estimable.
In the opinion of management, appropriate and adequate
accruals for legal matters have been made, and management believes that the probability of a material loss beyond the amounts accrued
is remote. Nevertheless, the Company cannot predict the impact of future developments affecting the Companys pending or future
claims and lawsuits. The Company expenses legal costs as incurred, and all recorded legal liabilities are adjusted as required as better
information becomes available to the Company. The factors the Company considers when recording an accrual for contingencies include,
among others: (i) the opinions and views of the Companys legal counsel; (ii) the Companys previous experience; and (iii)
the decision of management as to how the Company intend to respond to the complaints.
For the year ended September 30, 2025, the Company
has settled five legal cases in total amount of approximately JPY8.7 million (approximately $59,000)
related to the cancellation of contracts. As of the filing date, the Company had four pending legal cases, claiming a damage of approximately
JPY18.0 million (approximately $120,000) related
to the disagreement in contracts. Our legal counsel estimated a probable settlement of these cases with total settlement amount of approximately
JPY7.2 million (approximately $48,000). The
Company accrued a total amount of JPY7.2 million (approximately $48,000) as contingency liability as of September 30, 2025, for cases
not yet settled as of September 30, 2025.
**NOTE 12 SEGMENT INFORMATION**
****
Operating segments are defined as components of an
enterprise engaging in business activities for which separate financial information is available and is regularly reviewed by the Companys
chief operating decision makers ("CODM") in making decisions regarding resource allocation and performance assessment. The Company
determines its operations constitute a single operating segment and reportable segment in accordance with ASC Topic 280 Segment
Reporting. The Companys CODM has been identified as the Chief Executive Officer, who assesses financial performance and
decides how to allocate resources based on consolidated net income (loss). Segment assets are reported on the Companys consolidated
balance sheets.
All of the Company's long-lived assets are located
in Japan and substantially all of the Company's revenues are derived from Japan. Therefore, no geographical segments are presented.
The following table summarizes selected financial
information with respect to the Companys single operating segment and reportable segment for the years ended September 30, 2025
and 2024:
|
|
|
|
|
|
| |
|
|
|
|
For the Years Ended September 30, | |
|
|
|
|
2025 |
|
2024 | |
|
Revenues |
|
$ |
8,624,951 |
$ |
24,383,053 | |
|
Less |
|
|
|
|
| |
|
Cost of revenues - software amortization |
|
|
758,325 |
|
285,303 | |
|
Cost of revenues - sales commission |
|
|
3,721,961 |
|
10,464,857 | |
|
Cost of revenues - others |
|
|
60,166 |
|
186,196 | |
|
Selling and distribution expenses |
|
|
1,156,209 |
|
2,128,822 | |
|
Administrative expenses - outsourcing |
|
|
2,781,572 |
|
2,166,443 | |
|
Administrative expenses - payroll |
|
|
3,512,216 |
|
3,607,491 | |
|
Administrative expenses - others |
|
|
3,507,324 |
|
3,871,200 | |
|
Income (loss) from operations |
|
|
(6,872,822) |
|
1,672,741 | |
|
Total other income |
|
|
114,695 |
|
96,885 | |
|
Income (loss) before income tax |
|
|
(6,758,127) |
|
1,769,626 | |
|
Income tax expense |
|
|
122,320 |
|
598,249 | |
|
Net income (loss) |
|
$ |
(6,880,447) |
$ |
1,171,377 | |
**NOTE
13 SUBSEQUENT EVENTS**
The
Company evaluated all subsequent events that may have a material impact on the Companys consolidated financial statements as of
January 13, 2026, and concluded that no such events have occurred.
-F10-
[Table
of Contents](#table)
**Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.**
None.
**Item
9A. Controls and Procedures.**
**Disclosure
Controls and Procedures**
The
Company has adopted and maintains disclosure controls and procedures that are designed to provide reasonable assurance that information
required to be disclosed in the reports filed under the Exchange Act, such as this annual report, is collected, recorded, processed,
summarized and reported within the time periods specified in the rules of the SEC. The Companys disclosure controls and
procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions
regarding required disclosure. As required under Exchange Act Rule 13a-15, the Companys management, including the Chief
Executive Officer who also serves as our Chief Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls
and procedures as of the end of the period covered by this annual report. Based on that evaluation, the Chief Executive Officer
who also serves as our Chief Financial Officer concluded that the disclosure controls and procedures are ineffective.
Our
Chief Executive Officer, Tomoo Yoshida, has reviewed the effectiveness of our disclosure controls and procedures (as defined in Rules
13a-15(f) and 15d-15(f) of the Exchange Act) as of the end of the period covered by the report for the year ended September 30, 2025
and has concluded that (i) the Companys disclosure controls and procedures are not effective to ensure that material information
relating to the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of
the Commission, and (ii) the Companys controls and procedures have not been designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's
management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate
to allow timely decisions regarding required disclosure.
**Managements
Report on Internal Control over Financial Reporting**
The
Companys management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined
in Exchange Act Rule 13a-15(f). The Companys internal control over financial reporting is designed to provide reasonable
assurance to the Companys management and board of directors regarding the preparation and fair presentation of published financial
statements. Management conducted an assessment of the Companys internal control over financial reporting based on the framework
and criteria established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control Integrated
Framework. Based on the assessment, management concluded that, as of September 30, 2025 the Companys internal control over
financial reporting is ineffective based on those criteria.
The Companys management, including its Chief Executive Officer who also serves as our Chief Financial Officer, does not expect
that the Companys disclosure controls and procedures and its internal control processes will prevent all errors and all fraud.
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives
of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances of error or fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that the breakdowns can
occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion
of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree
of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and may not be detected. However, these inherent limitations are known features of the financial
reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
The matters involving internal controls and procedures that our Chief Executive Officer considered to be material weaknesses under the
standards of the Committee of Sponsoring Organizations of Treadway Commission were: domination of management by a single individual without
adequate compensating controls, lack of a majority of outside directors on board of directors, inadequate segregation of duties consistent
with control objectives, lack of well-established procedures to identify, approve and report related party transactions, lack of an audit
committee, lack of appropriate controls around ITGC, and lack of sufficient accounting and finance personnel or written policies and procedures
with respect to the understanding and application of US GAAP and SEC reporting requirement.
Management
believes that the material weaknesses did not have an effect on our financial results. However, management believes that the lack of
a functioning audit committee and inadequate segregation of duties results in ineffective oversight in the establishment and monitoring
of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
Management
recognizes that its controls and procedures would be substantially improved if we had an audit committee and two individuals serving
as officers and as such is actively seeking to remediate this issue.
**Managements
Remediation Initiatives**
In
an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated,
or plan to initiate, the following series of measures:
We
have increased our personnel resources and technical accounting expertise to remediate material weakness in internal control over financial
reporting. We plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting
in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls
and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.
Management
believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy
the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.
We
will work as quickly as possible to implement these initiatives; however, the lack of adequate working capital and positive cash flow
from operations will likely slow this implementation.
**Changes
in Internal Control**
There
have been no changes in internal controls over the financial reporting that occurred during the fiscal fourth quarter, that have materially
affected, or are reasonably likely to materially affect our internal controls over financial reporting.
This
annual report does not include an attestation report of the Companys registered public accounting firm regarding internal control
over financial reporting. Managements report was not subject to attestation by the Companys registered public accounting
firm pursuant to temporary rules of the SEC that permit the Company to provide only managements report in this annual report.
**Item
9B. Other Information**.
None.
-6-
[Table
of Contents](#table)
**PART
III**
**Item
10. Directors, Executive Officers and Corporate Governance.**
Biographical
information regarding the Officers and Directors of the Company, who will continue to serve as Officers and Directors of the Company
are provided below.
Exceed
World, Inc.
|
Name |
|
Age |
|
Position(s) | |
|
|
|
|
|
| |
|
Tomoo
Yoshida |
|
63 |
|
Chief
Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and Director | |
**Tomoo
Yoshida**
Mr.
Yoshida graduated Osaka University of Commerce in 1986. Immediately after graduation, he joined Toyota Corolla Nankai Co. Ltd. and had
been engaged in car sales for eight years. In 1997, Mr. Yoshida incorporated Dipro Data Service Co., Ltd., where he had a managerial
role as well as served as an IT support consultant for five years. In 2002, Mr. Yoshida co-founded e-Learning Laboratory Co., Ltd., (e-Learning),
a company that provides educational services and products. Currently, he is the president of e-Learning. In 2009, e-Communications Co.,
Ltd, a wholly owned subsidiary of e-Learning and a company offering educational services was incorporated, where Mr. Yoshida has been
the president since its incorporation. In 2011, Mr. Yoshida founded Force Internationale Limited (Force Internationale),
a holding company, and appointed as its director. In 2012, Force International Holdings Limited, a subsidiary of Force Internationale
was incorporated, where Mr. Yoshida has served as a director.
**Corporate
Governance**
The
Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely and understandable
disclosure in reports and documents that the Company files with the Securities and Exchange Commission (the "SEC") and in other
public communications made by the Company; and strives to be compliant with applicable governmental laws, rules and regulations. The
Company has not formally adopted a written code of business conduct and ethics that governs the Company's employees, officers and directors
as the Company is not required to do so.
In
lieu of an Audit Committee, the Company's board of director(s) (the "Board of Directors" or "Board"), is responsible
for reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results and effectiveness
of the annual audit of the Company's financial statements and other services provided by the Company's independent public accountants.
The director(s) of the Company (the Director(s)), the Chief Executive Officer and the Chief Financial Officer of the Company
review the Company's internal accounting controls, practices and policies. We, Exceed World, Inc., only have one Officer and Director,
which is Mr. Tomoo Yoshida.
**Committees
of the Board**
Our
Company currently does not have nominating, compensation, or audit committees or committees performing similar functions nor does our
Company have a written nominating, compensation or audit committee charter. Our sole Director believes that it is not necessary to have
such committees, at this time, because the Director(s) can adequately perform the functions of such committees.
**Audit
Committee Financial Expert**
Our
Director has determined that we do not have a Board member that qualifies as an audit committee financial expert as defined
in Item 407(D)(5) of Regulation S-K, nor do we have a Board member that qualifies as independent as the term is used in
Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(14) of the
FINRA Rules.
We
believe that our Director(s) are capable of analyzing and evaluating our financial statements and understanding internal controls and
procedures for financial reporting. The Director(s) does not believe that it is necessary to have an audit committee because management
believes that the Board of Directors can adequately perform the functions of an audit committee. In addition, we believe that retaining
an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and
is not warranted in our circumstances given the stage of our development and the fact that we have not generated any positive cash flows
from operations to date.
**Involvement
in Certain Legal Proceedings**
Our
sole Officer and Director has not been involved in or a party in any of the following events or actions during the past ten years:
|
1. |
any
bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the
time of the bankruptcy or within two years prior to that time; | |
|
2. |
any
conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor
offenses); | |
|
3. |
being
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities
or banking activities; or | |
|
4. |
being
found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. | |
|
5. |
Such
person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State
securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended,
or vacated; | |
|
6. |
Such
person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated
any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not
been subsequently reversed, suspended or vacated; | |
|
7. |
Such
person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated, relating to an alleged violation of:(i) Any Federal or State securities or commodities
law or regulation; or(ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited
to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist
order, or removal or prohibition order; or(iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with
any business entity; or | |
|
8. |
Such
person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section
1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that
has disciplinary authority over its members or persons associated with a member. | |
**Independence
of Directors**
We
are not required to have independent members of our Board of Directors, and do not anticipate having independent Directors until such
time as we are required to do so.
**Code
of Ethics**
We
have not adopted a formal Code of Ethics. The Board of Director(s) evaluated the business of the Company and the number of employees
and determined that since the business is operated by a small number of persons, general rules of fiduciary duty and federal and state
criminal, business conduct and securities laws are adequate ethical guidelines. In the event our operations, employees and/or Directors
expand in the future, we may take actions to adopt a formal Code of Ethics.
**Shareholder
Proposals**
Our
Company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for Directors.
The Board of Director(s) believes that, given the stage of our development, a specific nominating policy would be premature and of little
assistance until our business operations develop to a more advanced level. Our Company does not currently have any specific or minimum
criteria for the election of nominees to the Board of Directors and we do not have any specific process or procedure for evaluating such
nominees. The Board of Director(s) will assess all candidates, whether submitted by management or shareholders, and make recommendations
for election or appointment.
A
shareholder who wishes to communicate with our Board of Director(s) may do so by directing a written request addressed to our sole Officer
and Director Tomoo Yoshida, at the address appearing on the first page of this Information Statement.
**Section
16(a) Beneficial Ownership Reporting Compliance**
Section
16(a) of the Exchange Act requires the Companys executive officers, directors and persons who beneficially own more than ten percent
of a registered class of the Companys equity securities, to file with the SEC initial reports of ownership and reports of changes
in ownership of the Companys common stock. Such officers, directors and persons are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms that they file with the SEC.
Based
solely on a review of the copies of such forms that were received by the Company, or written representations from certain reporting persons
that no Form 5s were required for those persons, the Company is not aware of any failures to file reports or report transactions in a
timely manner during the Companys fiscal year ended September 30, 2025.
**Procedure
for Nominating Directors**
During
the year ended September 30, 2025, we have not made any material changes to the procedures by which security holders may recommend nominees
to our Board of Directors.
**Family
Relationships**
There
are no family relationships among our Directors, Executive Officers or persons nominated to become executive officers or directors.
**Involvement
in Certain Legal Proceedings**
During
the past ten (10) years, none of our Directors, persons nominated to become directors, executive officers, promoters or control persons
was involved in any of the legal proceedings listen in Item 401 (f) of Regulation S-K.
**Arrangements**
There
are no arrangements or understandings between an Executive Officer, Director or nominee and any other person pursuant to which he was
or is to be selected as an executive officer or director.
-7-
[Table
of Contents](#table)
**Item
11. Executive Compensation.**
The
table below summarizes all compensation awarded to, earned by, or paid to our Executive Officers and Directors for the years ended September
30, 2025 and 2024 in relation to the Company.
SUMMARY
COMPENSATION TABLE
|
Name
and
principal
position |
Year |
Salary
($) |
Bonus
($) |
Stock
Awards
($) |
Option
Awards
($) |
Non-Equity
Incentive
Plan
Compensation
($) |
Nonqualified
Deferred
Compensation
Earnings
($) |
All
Other
Compensation
($) |
Total
($) | |
|
Tomoo
Yoshida
Chief
Executive Officer,
Chief
Financial Officer
Director |
2025
|
964,371
|
-
|
-
|
-
|
-
|
-
|
-
|
964,371
| |
|
|
|
|
|
|
|
|
|
|
| |
|
Tomoo
Yoshida
Chief
Executive Officer,
Chief
Financial Officer
Director |
2024
|
956,810
|
99,668
|
-
|
-
|
-
|
-
|
-
|
1,056,478
| |
**Notes:**
****On
September 26, 2018, the Company entered into, and consummated, a Share Purchase Agreement with Force Internationale Limited to acquire
100% of Force International Holdings Limited, a Hong Kong limited company. In consideration of this agreement, the Company issued 12,700,000
common shares to Force Internationale Limited.
e-Learning Laboratory Co., Ltd., a Japan corporation,
is a wholly owned subsidiary of Force International Holdings Limited. e-Communications Co., Ltd. and AUBE Japan Co., Ltd., a Japan corporation,
is a wholly owned subsidiary of e-Learning Laboratory Co., Ltd.
For the years ended September 30, 2025 and 2024, e-Learning
Laboratory Co., Ltd., paid out $803,643 and $797,342 respectively, to Mr. Tomoo Yoshida as salary compensation.
For the years ended September 30, 2025 and 2024, e-Communications
Co., Ltd., paid out $160,728 and $259,136, respectively, to Mr. Tomoo Yoshida as salary compensation.
For the years ended September 30, 2025 and 2024,
Force International Holdings Limited and Aube Japan Co., Ltd., had not paid any compensation of any type to Mr. Tomoo Yoshida.
**Option/SAR
Grants in Last Fiscal Year**
None.
**Outstanding
Equity Awards at Fiscal Year-End**
None.
**Equity
Compensation Plan Information**
Not
applicable.
**Employment
Agreements of our Sole Officer and Director**
None.
**Compensation
Discussion and Analysis**
**Director
Compensation**
The
Board of Directors reserves the right in the future to award the members of the Board of Directors cash or stock based consideration
for their services to the Company, which awards, if granted shall be in the sole determination of the Board of Directors.
**Executive
Compensation Philosophy**
Our
Board of Directors determines the compensation given to our executive officers in their sole determination. Our Board of Directors reserves
the right to pay our executive or any future executives a salary, and/or issue them shares of common stock issued in consideration for
services rendered and/or to award incentive bonuses which are linked to our performance, as well as to the individual executive officers
performance. This package may also include long-term stock based compensation to certain executives, which is intended to align the performance
of our executives with our long-term business strategies. Additionally, while our Board of Directors has not granted any performance
base stock options to date, the Board of Directors reserves the right to grant such options in the future, if the Board in its sole determination
believes such grants would be in the best interests of the Company.
**Incentive
Bonus**
The
Board of Directors may grant incentive bonuses to our executive officer and/or future executive officers in its sole discretion, if the
Board of Directors believes such bonuses are in the Companys best interest, after analyzing our current business objectives and
growth, if any, and the amount of revenue we are able to generate each month, which revenue is a direct result of the actions and ability
of such executives.
**Long-term,
Stock Based Compensation**
In
order to attract, retain and motivate executive talent necessary to support the Companys long-term business strategy we may award
our executive and any future executives with long-term, stock-based compensation in the future, at the sole discretion of our Board of
Directors, which we do not currently have any immediate plans to award.
-8-
[Table
of Contents](#table)
**Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholders Matters.**
As
of our fiscal year end, the Company had 32,700,000 shares of common stock and no shares of preferred stock issued and outstanding, which
number of issued and outstanding shares of common stock and preferred stock have been used throughout this report.
***The
table below is as of September 30, 2025.**
|
Name
and Address of Beneficial Owner |
Shares
of Common Stock Beneficially Owned |
Common
Stock Voting Percentage Beneficially Owned |
Voting
Shares of Preferred Stock |
Preferred
Stock Voting Percentage Beneficially Owned |
Total
Voting Percentage Beneficially Owned (*) | |
|
Executive Officers and Directors |
|
|
|
|
| |
|
Tomoo Yoshida |
1,400,000 |
4.3% |
- |
0.0% |
4.3% | |
|
5% Shareholders |
|
|
|
|
| |
|
Keiichi Koga |
1,400,000 |
4.3% |
- |
0.0% |
4.3% | |
|
Force Internationale Limited |
27,594,000 |
84.4% |
- |
0.0% |
84.4% | |
**Note:**
Tomoo Yoshida and Keiichi Koga are the controlling parties of Force Internationale Limited, a Cayman Island company. Collectively, Mr.
Yoshida and Keiichi Koga, through their personal equity interests and those indirect interests of the Company, through their ownership
in Force Internationale Limited, own 93% of the issued and outstanding shares of our common stock.
Beneficial
ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Under this rule, certain shares may be deemed to
be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares).
In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire shares (for example, upon
exercise of an option or warrant) within 60 days of the date as of which the information is provided. In computing the percentage ownership
of any person, the amount of shares is deemed to include the amount of shares beneficially owned by such person by reason of such acquisition
rights. As a result, the percentage of outstanding shares of any person as shown in the following table does not necessarily reflect
the persons actual voting power at any particular date.
**Item
13. Certain Relationships and Related Transactions.**
On
December 6, 2018, the Company entered into a Share Contribution Agreement (this "Agreement") with Force Internationale Limited
(Force Internationale), our controlling shareholder. Under this Agreement, the Company transferred 100% of the equity interests
of School TV Co., Ltd (School TV) to Force Internationale without consideration. This Agreement and action were approved
by the board of directors of each of, the Company, Force Internationale and School TV. A copy of this Agreement is included as Exhibit
10.1 to this Current Report and is hereby incorporated by reference.
Due
to related parties and directors
As
of September 30, 2025 and 2024, the Companys due to related parties and directors are as follows:
|
|
|
September 30, 2025 |
|
September 30, 2024 | |
|
Due to director |
|
|
|
| |
|
Tomoo Yoshida, CEO, CFO, sole director and a shareholder of the Company |
$ |
741,248 |
$ |
741,248 | |
|
Total due to director |
$ |
741,248 |
$ |
741,248 | |
|
|
|
|
|
| |
|
Due to related parties |
|
|
|
| |
|
Keiichi Koga, a shareholder of the Company and a director of certain subsidiaries of the Company |
$ |
47,635 |
$ |
47,635 | |
|
Force Internationale, the Companys majority shareholder. Tomoo Yoshida is a director of Force Internationale |
|
2,097,350 |
|
1,943,725 | |
|
Total due to related parties |
$ |
2,144,985 |
$ |
1,991,360 | |
The payable balances are unsecured, due on demand,
and bear no interest. From time to time, these related parties have advanced to the Company or paid expenses on behalf of the Company,
and the Company has also made repayments. During the years ended September 30, 2025 and 2024, Force Internationale paid expense on behalf
of the Company in the amount of $153,625 and $312,738, respectively.
Tomoo Yoshida provided guarantee for the Companys
office leases during the years ended September 30, 2025 and 2024.
**Review, Approval and Ratification of Related Party
Transactions**
Given our small size and limited financial resources,
we have not adopted formal policies and procedures for the review, approval or ratification of transactions, such as those described
above, with our Executive Officer(s), Director(s) and significant shareholders. We intend to establish formal policies and procedures
in the future, once we have sufficient resources and have appointed additional Directors, so that such transactions will be subject to
the review, approval or ratification of our Board of Directors, or an appropriate committee thereof. On a moving forward basis, our Directors
will continue to approve any related party transaction.
**Item
14. Principal Accounting Fees and Services.**
Below
is the aggregate amount of fees billed for professional services rendered by our principal accountants with respect to our last two fiscal
years.
|
|
|
|
2025 |
2024 | |
|
|
Audit fees |
MaloneBailey, LLP |
$206,000 |
$206,000 | |
|
|
Tax fees |
Anderson Bradshaw PLLC |
$6,500 |
$6,500 | |
|
|
Total |
|
$212,500 |
$212,500 | |
Board
of Directors Pre-Approval Process, Policies and Procedures
Our
principal auditors have informed our sole Director of the scope and nature of each service provided. With respect to the provisions of
services other than audit, review, or attest services, our principal accountants brought such services to the attention of our sole Director
prior to commencing such services.
-9-
[Table
of Contents](#table)
**PART
IV**
****
**Item
15. Exhibits, Financial Statement Schedules.**
(a)
Financial Statements
1.
Financial statements for our company are listed in the index under Item 8 of this document
2.
All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the
financial statements or notes thereto.
(b)
Exhibits required by Item 601 of Regulation S-K.
|
Exhibit
No. |
Description | |
|
3.1 |
Certificate
of Incorporation (1) | |
|
|
| |
|
3.2 |
By-laws
(1) | |
|
|
| |
|
3.3 |
Amendment
to the Articles of Incorporation of the Company (2) | |
|
|
| |
|
3.4 |
Amendment
to the Articles of Incorporation of the Company (3) | |
|
|
| |
|
31 |
Certification
of the Companys Principal Executive and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
with respect to the registrants report on Form 10-K (4) | |
|
|
| |
|
32 |
Certification
of the Companys Principal Executive and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 (4) | |
|
|
| |
|
101.SCH |
Inline XBRL Taxonomy Extension
Schema Document | |
|
|
| |
|
101.CAL |
Inline XBRL Taxonomy Extension
Calculation Linkbase Document | |
|
|
| |
|
101.DEF |
Inline XBRL Taxonomy Extension
Definition Linkbase Document | |
|
|
| |
|
101.LAB |
Inline XBRL Taxonomy Extension
Label Linkbase Document | |
|
|
| |
|
101.PRE |
Inline XBRL Taxonomy Extension
Presentation Linkbase Document | |
|
|
| |
|
104 |
Cover Page Interactive
Data File (formatted as Inline XBRL and contained in Exhibits 101) | |
|
(1) |
Filed as an exhibit to
the Company's Registration Statement on Form 10, as filed with the SEC on February 19, 2015, and incorporated herein by this reference. | |
|
(2) |
Filed as an exhibit to
the Company's Current Report on Form 8-K as filed with the SEC on January 12, 2016, and incorporated herein by this reference. | |
|
(3) |
Filed as an exhibit to
the Company's Current Report on Form 8-K as filed with the SEC on November 1, 2016, and incorporated herein by this reference. | |
|
(4) |
Filed herewith. | |
**Signatures**
Pursuant
to the requirements of Section 13 or 15(d) 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.
**Exceed
World, Inc.**
(Registrant)
By:
/s/ Tomoo Yoshida
Tomoo
Yoshida, Chief Executive Officer, Chief Financial Officer
Dated:
January 13, 2026
In
accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
By:
/s/ Tomoo Yoshida
Tomoo
Yoshida, Chief Executive Officer, Chief Financial Officer
Dated:
January 13, 2026
-10-