WDSP Swings to Profit Despite Revenue Drop, Corrects Share Count

TL;DR

**WDSP's profit swing is a mirage; revenue plunged 38.5%, signaling deeper market issues despite cost cuts.**

AI Summary

World Scan Project, Inc. (WDSP) reported a significant turnaround in net income, moving from a net loss of $308,261 for the three months ended January 31, 2024, to a net income of $101,969 for the three months ended January 31, 2025. This positive shift occurred despite a substantial decrease in total revenues, which fell from $6,635,195 in the prior year to $4,084,010 in the current period, representing a 38.5% decline. The company's gross profit remained relatively stable at $1,463,344, a slight decrease from $1,486,438 year-over-year, indicating improved cost management relative to sales. Operating expenses also saw a notable reduction, dropping from $1,762,586 to $1,387,354, a 21.3% decrease, primarily driven by lower general and administrative expenses. Cash and cash equivalents decreased from $1,634,200 at October 31, 2024, to $1,449,453 at January 31, 2025, with net cash used in operating activities totaling $5,293,451. However, financing activities provided $5,244,000 from common shares sold, significantly bolstering liquidity. The company also corrected a clerical error regarding preferred shares outstanding in this 10-Q/A filing.

Why It Matters

This filing reveals a critical shift for World Scan Project, Inc., as it achieved profitability despite a significant revenue decline, suggesting improved operational efficiency and cost control. For investors, the net income of $101,969 is a positive signal, though the 38.5% revenue drop raises questions about market demand and competitive pressures in the drone industry. Employees might see this as a sign of stabilization, but the underlying revenue trend could impact future growth opportunities. Customers and the broader market will be watching if WDSP can sustain profitability while addressing its top-line challenges, especially given its focus on autonomous aerial vehicles in a competitive landscape.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant 38.5% decline in total revenues from $6,635,195 to $4,084,010, which could indicate weakening market demand or intense competition. While the company achieved net income of $101,969, this was largely driven by a substantial reduction in operating expenses, which may not be sustainable for long-term growth without revenue recovery.

Analyst Insight

Investors should exercise caution and conduct further due diligence into the drivers of the revenue decline. While the company achieved profitability, the significant drop in sales suggests underlying business challenges that could impact future performance. Monitor subsequent filings for revenue stabilization and growth strategies.

Financial Highlights

debt To Equity

0.14

revenue

$4.08M

operating Margin

1.86%

total Assets

$24.81M

total Debt

$3.08M

net Income

$101,969

eps

$0.01

gross Margin

35.83%

cash Position

$1.45M

revenue Growth

-38.5%

Key Numbers

• $4.08M — Total Revenues (Decreased from $6.64M, a 38.5% decline year-over-year)
• $101,969 — Net Income (Swung from a net loss of $308,261 in the prior year)
• $1.46M — Gross Profit (Slightly decreased from $1.49M year-over-year)
• $1.39M — Total Operating Expenses (Decreased from $1.76M, a 21.3% reduction)
• $1.45M — Cash and Cash Equivalents (As of January 31, 2025, down from $1.63M at October 31, 2024)
• $5.29M — Net Cash Used in Operating Activities (For the three months ended January 31, 2025)
• $5.24M — Cash Received for Share Subscriptions (Provided by financing activities for the three months ended January 31, 2025)
• 11,997,350 — Common Shares Outstanding (As of January 31, 2025)
• 10,000,000 — Preferred Shares Outstanding (As of January 31, 2025, corrected in this amendment)
• $0.01 — Basic Income per Common Share (Up from a loss of $0.03 in the prior year)

Key Players & Entities

• World Scan Project, Inc. (company) — registrant
• Ryohei Uetaki (person) — CEO, CFO, President, Director, Secretary, Treasurer, and 100% owner of SKYPR LLC
• Yasumasa Ichikawa (person) — Chief Technology Officer
• SKYPR LLC (company) — recipient of gifted shares from Ryohei Uetaki
• SEC (regulator) — Securities and Exchange Commission
• Bloomberg (company) — financial news organization

FAQ

Risk Factors

• Declining Revenues [high — financial]: Total revenues decreased by 38.5% from $6,635,195 in the three months ended January 31, 2024, to $4,084,010 in the three months ended January 31, 2025. This significant drop in sales could impact future profitability and operational capacity if not reversed.
• Negative Operating Cash Flow [high — financial]: The company used $5,293,451 in net cash from operating activities for the three months ended January 31, 2025. While offset by financing, sustained negative operating cash flow poses a long-term liquidity risk.
• Inventory Reduction [medium — operational]: Inventories decreased from $17,045,647 as of October 31, 2024, to $14,280,795 as of January 31, 2025. While this can improve cash flow, a substantial reduction might indicate challenges in production or sales forecasting.
• Dependence on Financing [high — financial]: The company received $5,244,000 from the sale of common shares to fund operations, as net cash used in operating activities was $5,293,451. This reliance on equity financing can dilute existing shareholders and is not a sustainable long-term solution.
• Preferred Share Disclosure Correction [low — regulatory]: The company corrected a clerical error regarding preferred shares outstanding in this 10-Q/A filing. While seemingly minor, such errors can raise questions about internal controls and reporting accuracy.

Industry Context

World Scan Project, Inc. operates in the autonomous aerial vehicle (drone) development and manufacturing sector. This industry is characterized by rapid technological advancements, increasing demand for applications in logistics, surveillance, and agriculture, and a competitive landscape with both established players and emerging startups. Regulatory frameworks are also evolving, impacting deployment and operational standards.

Regulatory Implications

The correction of a clerical error regarding preferred shares outstanding in this 10-Q/A filing, while minor, points to the importance of robust internal controls for accurate financial reporting. Companies in this sector must also navigate evolving regulations related to drone operation, data privacy, and airspace management, which can impact market access and operational costs.

What Investors Should Do

1. Monitor revenue trends closely.
2. Analyze the sustainability of the net income turnaround.
3. Evaluate the company's cash flow management and financing strategy.
4. Assess the impact of inventory reduction.

Key Dates

• 2025-01-31: End of Third Quarter — Reporting period for the financial results discussed in the 10-Q/A, showing a net income turnaround despite revenue decline.
• 2024-10-31: End of Second Quarter — Prior period balance sheet date, used for comparison of cash and cash equivalents and other balance sheet items.
• 2024-01-31: End of Prior Year Third Quarter — Prior period income statement date, used for comparison of revenues, gross profit, and net loss.
• 2020-10-25: Company Incorporation — Foundation date of World Scan Project, Inc., with initial share issuances to Ryohei Uetaki.

Glossary

Accumulated earnings

The total net income or loss of a company since its inception, less any dividends paid out. (Shows the cumulative profitability of the company, which is $8,472,093 as of January 31, 2025, indicating a positive cumulative result despite recent operational challenges.)

Additional paid-in capital

The amount of capital contributed by investors in excess of the par value of the stock. (This account increased significantly from $10,629,847 to $15,873,803, reflecting substantial capital raised through share issuances.)

Cost of revenues

The direct costs attributable to the production or purchase of the goods sold by a company. (Decreased from $5,148,757 to $2,620,666, a significant reduction that contributed to the stable gross profit despite lower revenues.)

Net cash used in operating activities

The amount of cash a company has spent on its core business operations over a period. (A substantial outflow of $5,293,451 for the three months ended January 31, 2025, highlights the cash burn from operations, which was offset by financing.)

Share application pending allotment

Represents funds received from potential investors for shares that have not yet been formally issued or allotted. (This line item decreased from $5,154,136 to $0, indicating that previously pending share applications were resolved or expired.)

Year-Over-Year Comparison

Compared to the prior year's three-month period, World Scan Project, Inc. experienced a significant 38.5% decrease in total revenues, falling from $6,635,195 to $4,084,010. Despite this revenue decline, the company achieved a positive net income of $101,969, a substantial swing from a net loss of $308,261. This turnaround was driven by a 21.3% reduction in operating expenses, particularly general and administrative costs, and a stable gross profit margin, indicating improved cost management relative to sales. Cash and cash equivalents saw a decrease, and operating activities consumed significant cash, but this was largely offset by substantial cash inflows from equity financing.

Key Financial Figures

• $0.0001 — 0,000 shares of Common Stock, par value $0.0001 per share and 10,000,000 shares of Seri
• $2,000 — Series A Preferred Stock, is valued at $2,000. On October 25, 2019, Ryohei Uetaki w
• $323,675 — otal to these shareholders and received $323,675 as aggregate consideration. At the time
• $1,740,000 — otal to these shareholders and received $1,740,000 as aggregate consideration. At the time
• $ — rrency is not US$ are translated into US$, using the exchange rate on the balance

Filing Documents

• worldscan_q125o.htm (10-Q/A) — 475KB
• ex31_125.htm (EX-31) — 11KB
• ex32_125.htm (EX-32) — 7KB
• 0001813744-25-000010.txt ( ) — 2482KB
• wdsp-20250131.xsd (EX-101.SCH) — 30KB
• wdsp-20250131_cal.xml (EX-101.CAL) — 15KB
• wdsp-20250131_def.xml (EX-101.DEF) — 28KB
• wdsp-20250131_lab.xml (EX-101.LAB) — 165KB
• wdsp-20250131_pre.xml (EX-101.PRE) — 132KB
• worldscan_q125o_htm.xml (XML) — 318KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION ITEM 1

FINANCIAL STATEMENTS - UNAUDITED

FINANCIAL STATEMENTS - UNAUDITED F1 Consolidated Balance Sheets - UNAUDITED F1 CONSOLIDATED Statements of Operations AND COMPREHENSIVE INCOME- UNAUDITED F2 cONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)- UNAUDITED F3 cONSOLIDATED Statement of Cash Flows - unaudited F4 Notes to CONSOLIDATED Financial Statements - unaudited F5 ITEM 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS 3 ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 3 ITEM 4

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 4

- OTHER INFORMATION

PART II - OTHER INFORMATION ITEM 1

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS 5 ITEM 1A

RISK FACTORS

RISK FACTORS ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 5 ITEM 3 DEFAULTS UPON SENIOR SECURITIES 5 ITEM 4 MINE SAFETY DISCLOSURES 5 ITEM 5 OTHER INFORMATION 5 ITEM 6 EXHIBITS 5

SIGNATURES

SIGNATURES 6 -2- Table of Contents

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION WORLD SCAN PROJECT, INC. CONSOLIDATED BALANCE SHEETS January 31, 2025 (Unaudited) October 31, 2024 ASSETS Current Assets Cash and cash equivalents $ 1,449,453 $ 1,634,200 Accounts receivable, trade 37,752 902 Other receivables, current 1,276,496 1,070,404 Advance payments and prepaid expenses 4,846,703 4,636,258 Inventories 14,280,795 17,045,647 TOTAL CURRENT ASSETS 21,891,199 24,387,411 Non-current assets Furniture, fixtures and equipment, net 195,439 212,200 Lease asset long term 627,324 677,022 Investment securities 1,554,102 1,562,093 Long term prepaid expenses and security deposits, net 47,126 49,071 Deferred tax assets 407,399 436,572 Other intangible assets, non-current 84,318 85,882 TOTAL NON-CURRENT ASSETS 2,915,708 3,022,840 TOTAL ASSETS $ 24,806,907 $ 27,410,251 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accrued expenses and other payables $ 324,757 $ 1,186,679 Accounts payable - related party 45,299 45,532 Income taxes payable 36,995 334,413 Consumption tax payable - 13,882 Short-term lease liability 213,202 233,160 Advance received 2,027,755 3,391,942 Due to related party 458 458 Share application pending allotment - 5,154,136 TOTAL CURRENT LIABILITIES 2,648,466 10,360,202 Non-Current Liabilities Lease liability long term 435,976 466,643 TOTAL LIABILITIES $ 3,084,442 $ 10,826,845 Shareholders' Equity Preferred stock ($ 0.0001 par value, 200,000,000 shares authorized; 10,000,000 shares issued and outstanding as of January 31, 2025 and October 31, 2024) $ 1,000 $ 1,000 Common stock ($ 0.0001 par value, 200,000,000 shares authorized, 11,997,350 and 11,560,350 shares issued and outstanding as of January 31, 2025 and October 31, 2024, respectively) 1,200 1,156 Additional paid-in capital 15,873,803 10,629,847 Accumulated earn

NOTES TO FINANCIAL STATEMENTS

NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2025 (UNAUDITED) NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS World Scan Project, Inc., a Delaware corporation ("the Company") was incorporated under the laws of the State of Delaware on October 25, 2019. On October 25, 2019, Ryohei Uetaki, our officer and director, paid for expenses involved with the incorporation of the Company with personal funds on behalf of the Company, in exchange for 10,000,000 shares of Common Stock, par value $0.0001 per share and 10,000,000 shares of Series A Preferred stock, par value $0.0001 per share, which issuance was exempt from the registration provisions of Section 5 of the Securities Act under Section 4(2) of such same said act. The value of the stock provided to Mr. Uetaki, based on the par value of $.0001 per share of common stock and Series A Preferred Stock, is valued at $2,000. On October 25, 2019, Ryohei Uetaki was appointed as Chief Executive Officer, Chief Financial Officer, President, Director, Secretary, and Treasurer. On November 18, 2019, Yasumasa Ichikawa was appointed as Chief Technology Officer. On January 25, 2020, the Company entered into and consummated a Share Contribution Agreement with Ryohei Uetaki. Pursuant to this agreement Mr. Uetaki gifted to the Company, at no cost, 300 shares of common stock of World Scan Project Corporation, a Japan corporation ("WSP Japan"), which represented all of its issued and outstanding shares. The Company has since gained a 100% interest in the issued and outstanding shares of WSP Japan's common stock and WSP Japan is now a wholly owned subsidiary of the Company. The Company and WSP Japan were under common control at the time of the acquisition. WSP Japan was incorporated under the laws of Japan on January 22, 2020. Currently, WSP Japan is headquartered in Tokyo, Japan. The Company's primary business is focused on developing and manufacturing autonomous aerial vehicles including drones. On February 19, 2020, Ryo

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