WDSP Swings to Profit Despite 38% Revenue Drop

TL;DR

**WDSP's profit is a mirage; revenue tanked, signaling deeper issues for this drone maker.**

AI Summary

World Scan Project, Inc. (WDSP) reported a significant turnaround in net income for the three months ended January 31, 2025, achieving a net income of $101,969 compared to a net loss of $308,261 in the prior year period. However, total revenues decreased substantially by 38.47%, from $6,635,195 in Q1 2024 to $4,084,010 in Q1 2025. Gross profit remained relatively stable at $1,463,344, a slight decrease from $1,486,438, due to a larger proportional reduction in cost of revenues. Operating expenses also saw a notable reduction, falling by 21.39% from $1,762,586 to $1,387,354, primarily driven by lower general and administrative expenses. The company's cash and cash equivalents decreased by 11.31% to $1,449,453 from $1,634,200 at October 31, 2024, largely due to $5,293,451 in cash used in operating activities, partially offset by $5,244,000 from share subscriptions. Inventories decreased by 16.22% to $14,280,795 from $17,045,647, indicating potential inventory management or sales shifts. The company successfully raised $5,244,000 through common share sales, increasing additional paid-in capital to $15,873,803.

Why It Matters

This filing reveals a mixed picture for WDSP. While the company achieved profitability, a significant revenue decline of 38.47% raises questions about its market position and growth strategy in the competitive drone industry. Investors should scrutinize whether the profit turnaround is sustainable or merely a result of aggressive cost-cutting, particularly the 21.39% reduction in operating expenses. For employees and customers, a shrinking revenue base could signal future challenges, even with improved net income. The competitive landscape for autonomous aerial vehicles is intense, and WDSP's ability to regain revenue momentum will be crucial for long-term viability and market share.

Risk Assessment

Risk Level: high — The company's revenue plummeted by 38.47% from $6,635,195 to $4,084,010 year-over-year, indicating significant operational challenges. Furthermore, WDSP explicitly states it has not filed all required reports under Section 13 or 15(d) of the Exchange Act and has not submitted all Interactive Data Files, marked as '[X] No' for both, which are serious regulatory compliance deficiencies.

Analyst Insight

Investors should exercise extreme caution and consider divesting or avoiding WDSP shares. The substantial revenue decline, coupled with regulatory non-compliance regarding SEC filings, points to significant underlying operational and governance risks. Further due diligence is required to understand the sustainability of the reported net income and the reasons for the revenue contraction.

Financial Highlights

debt To Equity

0.14

revenue

$4,084,010

operating Margin

1.86%

total Assets

$24,806,907

total Debt

$3,084,442

net Income

$101,969

eps

N/A

gross Margin

35.83%

cash Position

$1,449,453

revenue Growth

-38.47%

Revenue Breakdown

Key Numbers

• $101,969 — Net Income (Swung from a $308,261 net loss in the prior year period to a profit in Q1 2025.)
• $4,084,010 — Total Revenues (Represents a 38.47% decrease from $6,635,195 in Q1 2024.)
• $1,387,354 — Total Operating Expenses (Decreased by 21.39% from $1,762,586 in Q1 2024.)
• $5,293,451 — Net Cash Used in Operating Activities (Significant cash outflow from operations for the three months ended January 31, 2025.)
• $5,244,000 — Cash Received for Share Subscriptions (Primary source of cash from financing activities in Q1 2025.)
• 11,997,350 — Common Shares Outstanding (Increased from 11,560,350 shares as of October 31, 2024.)
• $14,280,795 — Inventories (Decreased by 16.22% from $17,045,647 as of October 31, 2024.)
• $1,449,453 — Cash and Cash Equivalents (Decreased by 11.31% from $1,634,200 as of October 31, 2024.)
• $2,027,755 — Advance Received (Cash receipts for undelivered products as of January 31, 2025.)
• 38.47% — Revenue Decrease Percentage (Percentage decline in total revenues from Q1 2024 to Q1 2025.)

Key Players & Entities

• World Scan Project, Inc. (company) — registrant
• Ryohei Uetaki (person) — CEO, CFO, President, Director, Secretary, Treasurer, and owner of SKYPR LLC
• Yasumasa Ichikawa (person) — Chief Technology Officer
• World Scan Project Corporation (company) — wholly owned subsidiary in Japan
• SKYPR LLC (company) — recipient of 7,000,000 common shares and 10,000,000 preferred shares from Ryohei Uetaki
• SEC (regulator) — Securities and Exchange Commission
• $101,969 (dollar_amount) — Net income for the three months ended January 31, 2025
• $308,261 (dollar_amount) — Net loss for the three months ended January 31, 2024
• $4,084,010 (dollar_amount) — Total revenues for the three months ended January 31, 2025
• $6,635,195 (dollar_amount) — Total revenues for the three months ended January 31, 2024

FAQ

Risk Factors

• Significant Operating Cash Burn [high — financial]: The company used $5,293,451 in operating activities during the three months ended January 31, 2025. This substantial outflow, while partially offset by $5,244,000 from share subscriptions, led to a decrease in cash and cash equivalents from $1,634,200 to $1,449,453.
• Inventory Management and Sales Shifts [medium — operational]: Inventories decreased by 16.22% to $14,280,795 from $17,045,647. This reduction could signal improved inventory management, a shift in sales strategy, or potentially a decrease in demand for certain products.
• Dependence on Equity Financing [medium — financial]: The company raised $5,244,000 through common share sales to fund operations, which is a significant portion of its cash inflow. This reliance on equity financing can dilute existing shareholders and may not be sustainable long-term.
• Declining Revenue Trend [high — market]: Total revenues decreased by 38.47% to $4,084,010 in Q1 2025 compared to $6,635,195 in Q1 2024. This significant drop requires further investigation into market demand, competitive pressures, or product lifecycle issues.

Industry Context

World Scan Project, Inc. operates in the autonomous aerial vehicles (drones) sector. This industry is characterized by rapid technological advancements, increasing regulatory scrutiny, and growing demand for applications in logistics, surveillance, and agriculture. Competition is fierce, with established players and emerging startups vying for market share.

Regulatory Implications

The company's operations, particularly in the development and manufacturing of drones, are subject to evolving aviation regulations and safety standards. Compliance with these regulations, including those from bodies like the FAA in the US, is crucial and can impact product development timelines and market access.

What Investors Should Do

1. Investigate the root cause of the 38.47% revenue decline to assess its sustainability and potential impact on future earnings.
2. Analyze the company's cash burn rate and its reliance on equity financing to understand its long-term financial viability.
3. Evaluate the company's inventory management strategy and its implications for future sales and profitability.
4. Monitor the competitive landscape and regulatory developments in the autonomous aerial vehicle market.

Key Dates

• 2025-01-31: End of Q1 2025 — Reporting period for the 10-Q, showing a net income turnaround but significant revenue decline.
• 2024-10-31: End of Q4 2024 — Prior period balance sheet date, used for comparison of assets and liabilities.
• 2024-01-31: End of Q1 2024 — Prior year period for income statement comparison, showing a net loss.

Glossary

Additional paid-in capital

The amount of money a company receives from selling stock above its par value. (Increased significantly to $15,873,803 due to share subscriptions, indicating capital infusion.)

Accumulated other comprehensive income

Includes unrealized gains and losses that are not reported on the income statement. (Shows a deficit of ($2,625,631), which has widened from the prior period.)

Advance received

Cash received from customers for goods or services that have not yet been delivered or rendered. (Decreased from $3,391,942 to $2,027,755, suggesting a reduction in future revenue commitments.)

Cost of revenues

The direct costs attributable to the production or purchase of the goods sold by a company. (Decreased proportionally more than revenues, leading to stable gross profit.)

Share subscriptions

Agreements where investors commit to purchase shares of a company's stock. (Provided $5,244,000 in cash, a key source of funding for operations.)

Year-Over-Year Comparison

Compared to the prior year period, World Scan Project, Inc. has achieved a significant turnaround from a net loss to a net income of $101,969. However, this improvement comes alongside a substantial 38.47% decrease in total revenues, from $6,635,195 to $4,084,010. Operating expenses were reduced by 21.39%, contributing to the improved net income. Cash reserves have declined, primarily due to high operating cash outflows, which were offset by 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) — 473KB
• ex31_125.htm (EX-31) — 11KB
• ex32_125.htm (EX-32) — 7KB
• 0001813744-25-000005.txt ( ) — 2452KB
• wdsp-20250131.xsd (EX-101.SCH) — 30KB
• wdsp-20250131_cal.xml (EX-101.CAL) — 15KB
• wdsp-20250131_def.xml (EX-101.DEF) — 26KB
• wdsp-20250131_lab.xml (EX-101.LAB) — 170KB
• wdsp-20250131_pre.xml (EX-101.PRE) — 131KB
• worldscan_q125o_htm.xml (XML) — 316KB

- 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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View this 10-Q filing on SEC EDGAR