UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 6, 2018
Exceed World, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 000-55377 | 98-1339955 | ||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
|
1-23-38-6F, Esakacho, Suita-shi, Osaka Japan |
564-0063 |
|
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: +81-6-6339-4177
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☒
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. ☐
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Throughout this Report on Form 8-K, the terms the “Company,” “we,” “us” “our” and “Exceed World” refer to Exceed World, Inc., and “our board of directors” refers to the board of directors of Exceed World, Inc.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Current Report on Form 8-K contains forward-looking statements regarding, among other things, our future operating results and financial position, our business strategy, and other objectives for our future operations. The words “anticipate,” “believe,” “intend,” “expect,” “may,” “estimate,” “predict,” “project,” “potential” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by forward-looking statements including those set forth in the section of this Current Report entitled “Risk Factors.” We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make.
You should read this Current Report on Form 8-K and the documents that we have filed as exhibits to this Current Report on Form 8-K completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Current Report on Form 8-K are made as of the date of this Current Report on Form 8-K, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
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| Page | ||
| Item 1.01 Entry into a Material Definitive Agreement | 4 | |
| Item 2.01 Completion of Acquisition or Disposition of Assets. | 4 | |
| Item 9.01 Financial Statements and Exhibits | 5 | |
| Signatures | 5 |
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Item 1.01 Entry into a Material Definitive Agreement.
On December 6, 2018, Exceed World, Inc., a Delaware Corporation (the "Company" and or "Exceed") entered into a Share Contribution Agreement (this "Agreement") with Force Internationale Limited, a Cayman Island limited company ("Force Internationale"), our controlling shareholder. Under this Agreement, the Company transferred 100% of the equity interests of School TV Co., Ltd., a Japan corporation ("School TV"), to Force Internationale without consideration. This Agreement and action was approved by the boards of directors of each of, Exceed, 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.
Item 2.01 Completion of Acquisition or Disposition of Assets.
As described in item 1.01 above, the Company determined that the Company and School TV will be deconsolidated from the Company's interim financial statements as of December 31, 2018 and, as a result, is filing herewith certain unaudited pro forma consolidated financial information, which is attached hereto as Exhibit 99.1 and incorporated herein by reference.
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Item 9.01 Financial Statements and Exhibits.
(a) Pro forma financial information.
Unaudited, Consolidated Pro Forma Financial Information is attached hereto as Exhibit 99.1 and is incorporated by reference herein.
(b) Exhibits.
| Exhibit No. | Description | |
| 10.1 | Share Contribution Agreement dated December 6, 2018 by and among the Company and Force Internationale | |
| 99.1 | Unaudited Pro Forma Consolidated Financial Information |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Exceed World, Inc | |||
| Date: December 12, 2018 | By: | /s/ Tomoo Yoshida | |
| Name: Tomoo Yoshida | |||
| Title: Chief Executive Officer | |||
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SHARE CONTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered on December 6, 2018 by and between Exceed World, Inc, a Delaware corporation, (the "Transferor") and Force Internationale Limited, a Cayman Island limited company ( the "Transferee");
WHEREAS , the Transferor is the one hundred percent (100%) of record owner and holder of the issued and outstanding shares of the capital stock of School TV Co., Ltd, a Japan corporation, (“School TV”) which the Transferor has issued capital stock of 10 shares of no par value common stock; and
WHEREAS , the Transferee desires to acquire from the Transferor and the Transferor desires to .transfer to the Transferee 10 shares of common stock of School TV (the “School TV Stock”) without consideration, upon the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE , in consideration of the mutual covenants and agreements contained in this Agreement, and in order to consummate the transfer of the School TV's Stock aforementioned, it is hereby agreed as follows:
1. TRANSFER. Subject to the terms and conditions hereinafter set forth, at the closing of the transaction contemplated hereby, the Transferor shall convey, transfer, and deliver to the Transferee certificates representing the School TV's Stock, and the the Transferee shall acquire from the Transferor the School TV's Stock without consideration. The closing of the transactions contemplated by this Agreement ("Closing") shall be held at Osaka, Japan, on December 6, 2018, or such other place, date and time as the parties hereto may otherwise agree.
2. EFFECTIVE DATE. The effective date of this Agreement shall be December 6, 2018.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. The Transferor hereby warrants and represents:
(a) Organization and Standing . School TV is a corporation duly organized, validly existing and in good standing under the laws of Japan and has the corporate power and authority to carry on its business as it is now being conducted.
(b) Restrictions on Stock.
i. The Transferor is not a party to any agreement, written or oral, creating rights in respect to the School TV's Stock in any third person or relating to the voting of the School TV's Stock.
ii. Transferor is the lawful owner of the School TV's Stock, free and clear of all security interests, liens, encumbrances, equities and other charges.
iii. There are no existing warrants, options, stock purchase agreements, redemption agreements, restrictions of any nature, calls or rights to subscribe of any character relating to the stock, nor are there any securities convertible into such stock.
4. REPRESENTATIONS AND WARRANTIES OF TRANSFEROR AND TRANSFEREE. The Transferor and the Transferee hereby represent and warrant that there has been no act or omission by he Transferor, the Transferee or School TV which would give rise to any valid claim against any of the parties hereto for a brokerage commission, finder's fee, or other like payment in connection with the transactions contemplated hereby.
5. GENERAL PROVISIONS
(a) Entire Agreement. This Agreement (including the exhibits hereto and any written amendments hereof executed by the parties) constitutes the entire Agreement and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof.
(b) Sections and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
(c) Governing Law. This agreement and all transactions contemplated hereby, shall be governed by, construed and enforced in accordance with the laws of Japan. The parties herein waive trial by jury and agree to submit to the personal jurisdiction and venue of a court of subject matter jurisdiction located in Tokyo, Japan. In the event that litigation results from or arises out of this Agreement or the performance thereof, the parties agree to reimburse the prevailing party's reasonable attorney's fees, court costs, and all other expenses, whether or not taxable by the court as costs, in addition to any other relief to which the prevailing party may be entitled.
IN WITNESS WHEREOF , this Agreement has been executed by each of the individual parties hereto on the date first above written.
Signed, sealed and delivered in the presence of:
Transferor: Exceed World, Inc.
By: /s/ Tomoo Yoshida
Chie Executive Officer
Transferee: Force Internationale Limited
By: /s/ Tomoo Yoshida
Director
Exceed World, Inc.
Unaudited Pro Forma Condensed Combined Financial Information
The following unaudited pro forma condensed combined financial information and related notes present the historical condensed combined financial information of Exceed World, Inc. (hereinafter referred to as "Exceed World", the "Company," "we," "our," "us" and similar terms unless the context indicates otherwise) and Force International Holdings Limited ("Force Holdings"), which was incorporated in Hong Kong with limited liability and its subsidiaries (collectively referred to as the “Force Holdings Group”, after giving effect to the transfer of the School TV’s stock from the Company to Force Internationale Limited (the "Deconsolidation"). The unaudited pro forma condensed combined financial information gives effect to the Deconsolidation based on the assumptions, reclassifications, and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined balance sheet as of June 30, 2018 is presented as if the Deconsolidation had occurred on June 30, 2018. The unaudited pro forma condensed combined statement of operations for the year ended September 30, 2017 is presented as if the Deconsolidation had occurred on October 1, 2016. The pro forma condensed combined financial statements do not necessarily reflect what the combined company’s financial condition or results of operations would have been had the acquisition occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.
| EXCEED WORLD, INC. | ||||||||||
| UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET | ||||||||||
| (A) | Less | Pro Forma | ||||||||
| Deconsolidation of | Pro Forma | Exceed World, Inc | ||||||||
| Exceed World, Inc | School TV Co., Ltd. | Adjustments | Consolidated | |||||||
| June 30, 2018 | June 30, 2018 | June 30, 2018 | ||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | ||||||||
| ASSETS | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | 13,773,034 | $ | 31,839 | $ | - | $ | 13,741,195 | ||
| Marketable securities | 186,083 | - | - | 186,083 | ||||||
| Accounts receivable | 1,107 | 1,107 | - | - | ||||||
| Inventories, net | 496,669 | 78,570 | - | 418,099 | ||||||
| Prepaid expenses | 1,086,339 | 1,122 | - | 1,085,217 | ||||||
| Due from related parties | 50,076 | 118,216 | (E) | 208,583 | 140,443 | |||||
| Other current assets | 285,498 | - | - | 285,498 | ||||||
| Total current assets | 15,878,806 | 230,854 | 208,583 | 15,856,535 | ||||||
| Prepaid expenses | 347,806 | - | - | 347,806 | ||||||
| Deferred income tax assets | 271,027 | - | - | 271,027 | ||||||
| Fixed assets, net | 386,037 | - | - | 386,037 | ||||||
| Intangible assets, net | 3,050,098 | 633,656 | - | 2,416,442 | ||||||
| Long-term receivable - related party | - | - | (D) | 225,917 | 225,917 | |||||
| Total assets | $ | 19,933,774 | $ | 864,510 | $ | 434,500 | $ | 19,503,764 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable | $ | 903,240 | $ | 5,470 | $ | - | $ | 897,770 | ||
| Due to related parties | 775,042 | 247,696 | (E) | 208,583 | 735,929 | |||||
| Accrued expenses | 55,639 | 6,794 | - | 48,845 | ||||||
| Deferred income | 3,102,770 | 807 | - | 3,101,963 | ||||||
| Other payables | 1,764,352 | - | - | 1,764,352 | ||||||
| Current portion of capital lease obligations | 9,535 | - | - | 9,535 | ||||||
| Total current liabilities | 6,610,578 | 260,767 | 208,583 | 6,558,394 | ||||||
| Capital lease obligations, long-term portion | 45,340 | - | - | 45,340 | ||||||
| Long-term note payable | 497,018 | 497,018 | - | - | ||||||
| Long-term note payable – related party | - | 225,917 | (D) | 225,917 | - | |||||
| Long term accrued interest | 5,799 | - | - | 5,799 | ||||||
| Long term deferred income | 2,396 | 2,396 | - | - | ||||||
| Total liabilities | 7,161,131 | 986,098 | 434,500 | 6,609,533 | ||||||
| Shareholders' equity (deficit) | ||||||||||
| Preferred stock | - | - | - | - | ||||||
| Common stock | 3,270 | 4,262 | (B) | 4,262 | 3,270 | |||||
| Additional paid-in capital | 149,598 | 2,330 | (B) | (4,262) | 143,383 | |||||
| (C) | 377 | |||||||||
| Accumulated earnings (deficit) | 12,318,899 | (128,798) | (C) | (377) | 12,447,320 | |||||
| Accumulated other comprehensive income | 300,876 | 618 | - | 300,258 | ||||||
| Total shareholders' equity (deficit) | 12,772,643 | (121,588) | - | 12,894,231 | ||||||
| Total liabilities and shareholders' equity | 19,933,774 | 864,510 | 434,500 | 19,503,764 | ||||||
(A) On September 26, 2018, the Company acquired 100 % of the shares of Force International Holdings Limited. The unaudited pro forma condensed combined balance sheet as of June 30, 2018 is presented as if this merger transaction had occurred on June 30, 2018.
(B) This adjustment reflects the merger reserve in relation to the disposal of School TV.
(C) This adjustment reflects the reversal of the merger reserve for the acquisition of School TV in merger transaction.
(D) This adjustment represents the loan from e-Learning Laboratory Co. Ltd. to School TV. Prior to the Deconsolidation, the loan was considered as intercompany balances and was eliminated in consolidation. Subsequent to the Deconsolidation, the loan is recorded as long term receivable due from School TV.
(E) This adjustments represents the loan from e-Communications Co. Ltd. to School TV amounted at JPY10,000,000 ($90,367) and the amount due from Exceed World amounted at $118,216. Prior to the Deconsolidation, these amounts were considered as intercompany balances and were eliminated in consolidation. Subsequent to the Deconsolidation, these amounts are recorded as balances with related parties.
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| EXCEED WORLD, INC. | |||||||||
| UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME | |||||||||
| (A) | Less | Pro Forma | |||||||
| Deconsolidation of | Pro Forma | Exceed World, Inc | |||||||
| Exceed World, Inc | School TV Co., Ltd. | Adjustments | Consolidated | ||||||
| Year ended | Year ended | Year ended | |||||||
| September 30, 2017 | September 30, 2017 | September 30, 2017 | |||||||
| (Unaudited) | (Unaudited) | ||||||||
| Revenues | $ | 36,860,282 | $ | 30,274 | $ | - | $ | 36,830,008 | |
| Cost of revenues | 22,219,015 | 42,526 | - | 22,176,489 | |||||
| Gross profit (loss) | 14,641,267 | (12,252) | - | 14,653,519 | |||||
| Operating expenses | |||||||||
| Selling, general and administrative expenses | $ | 10,841,436 | $ | 2,241 | $ | - | $ | 10,839,195 | |
| Total operating expenses | 10,841,436 | 2,241 | - | 10,839,195 | |||||
| Profit (loss) from operations | 3,799,831 | (14,493) | - | 3,814,324 | |||||
| Other income | |||||||||
| Other income | 158,856 | - | 1,871 | 160,727 | |||||
| Change in fair value of marketable securities | 130,280 | - | - | 130,280 | |||||
| Gain on disposal of a subsidiary | 56,363 | - | - | 56,363 | |||||
| Total other income | 345,499 | - | 1,871 | 347,370 | |||||
| Other expenses | |||||||||
| Interest expense | 2,801 | 3,929 | 1,871 | 743 | |||||
| Total other expense | 2,801 | 3,929 | 1,871 | 743 | |||||
| Income (loss) before taxes | 4,142,529 | (18,422) | - | 4,160,951 | |||||
| Income tax expense | 533,439 | - | - | 533,439 | |||||
| Net income (loss) | $ | 3,609,090 | $ | (18,422) | $ | - | $ | 3,627,512 | |
| Other Comprehensive Income (loss) | |||||||||
| Foreign currency translation adjustment | (1,152,687) | 183 | - | (1,152,870) | |||||
| Total comprehensive Income (loss) | 2,456,403 | (18,239) | - | 2,474,642 | |||||
| Basic and diluted net loss per common share | $ | 0.11 | $ | $ | $ | 0.11 | |||
| Weighted average number of common shares | 32,700,000 | 32,700,000 | |||||||
(A) On September 26, 2018, the Company acquired 100% of the shares of Force International Holdings Limited. The unaudited proforma condensed combined statement of operations for the year ended September 30, 2017 is presented as if this merge transaction had occurred on October 1, 2016.
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