Liquidity and Capital Resources
As of September 30, 2020 and September 30, 2019, we had cash and cash
equivalents in the amount of $19,370,086 and $20,198,362, respectively. The
decrease in cash is attributed to decrease of accounts payable and increase of
inventories. These accounts payable were mainly unpaid commissions to Force Club
premium members and these payments were completed as of the date of this report.
Currently, our cash balance is sufficient to fund our operations without the
need for additional funding.
Revenues
We recorded revenue of $21,019,454 for the year ended September 30, 2020 as
opposed to $28,393,548 for the year ended September 30, 2019. The decrease in
revenue, in our opinion, is attributed to a decrease in recruitment activities
of premium force club members.
Net loss
We recorded net loss of $962,278 for the year ended September 30, 2020 and net
loss of $132,017 for the year ended September 30, 2019. The increase in net loss
is attributed to a decrease in revenue from 2019 to 2020.
Cash flow
For the year ended September 30, 2020, we had negative cash flows from
operations in the amount of $621,048. For the year ended September 30, 2019, we
had negative cash flows from operations in the amount of $4,365,066. The
decrease in negative operating cash flow, in our opinion, is attributed to less
payments made to settle outstanding accounts payable and collection of revenue
proceeds in advance included in deferred income.
Working capital
As of September 30, 2020 and 2019, we had working capital of $14,083,699 and
$15,318,405, respectively.
Advertising
Advertising costs are expensed as incurred and included in selling and
distributions expenses. Advertising expenses were $1,009,721 and $1,908,950 for
the years ended September 30, 2020 and 2019, 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.
Future Plans
Over the course of the next twelve months, the Company intends to focus on
expanding its sales network in order to strengthen its business activities.
Currently, revenue is derived primarily from sales of the premium package. While
it is the intention of the Company to maintain this revenue stream, and to
further increase the number of premium members of the Force Club, the Company
also intends to diversify its operations and develop additional business
activities.
In order to do so, the Company intends to focus on development of an online
educational platform on which additional advertising income can be generated. At
present, there are no definitive plans that have been made regarding the
implementation or direction of this future online educational platform. However,
we intend to begin efforts to hire additional personnel with extensive
experience in web marketing in order to assist in the development of our future
platform.
In addition to e-learning business, the Company has also been engaged in
physical school business. Currently, we open "ixi Robot School" which provides
robot programming training to children and "Kodomo Mirai Career" Which children
can learn the social structure.
Impact of COVID-19
In the Company's financial year of 2020, the global outbreak of the coronavirus
disease 2019 ("COVID-19") has significantly affected economy in Japan, where the
Company mainly operates its business. Especially since February 2020, the
economy has rapidly declined due to limited economic activity caused by
COVID-19. The Company implemented some measures to prevent infection including
shortening business hours and restricting movements of employees. Our Force Club
Members' activities, which is our main sales resources, have also been limited
due to travel restrictions and social distance rules implemented nationwide and
globally. Consequently, the COVID-19 pandemic has adversely affected the
Company's business operations, financial condition and operating results for
2020, including but not limited to material negative impact to the Company's
total revenues, and these effects may continue in 2021. Due to the high
uncertainty of the evolving situation, the Company has limited visibility on the
full impact brought upon by the COVID-19 pandemic and the related financial
impact to future periods cannot be estimated at this time.
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