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1、F-1/A 1 formf-1a.htm As filed with the U.S.Securities and Exchange Commission on January 16,2025 Registration No.333-283546 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 PRE-EFFECTIVE AMENDMENT NO.2TOFORM F-1REGISTRATION STATEMENTUNDER THE SECURITIES ACT OF 1933 GATES GROUP Inc
2、.(Exact name of Registrant as specified in its charter)Not Applicable(Translation of Registrants name into English)Japan 6500 Not Applicable(State or other jurisdictionof incorporation or organization)(Primary Standard IndustrialClassification Code Number)(I.R.S.EmployerIdentification No.)GATES GROU
3、P Inc.34F Sumitomo Fudosan Shinjuku Grand Tower8-17-1 Nishishinjuku,Shinjuku-kuTokyo,160-6101 JapanTelephone:+81-3-5937-0846(Address,including zip code,and telephone number,including area code,of Registrants principal executive offices)Cogency Global Inc.122 East 42nd Street,18th FloorNew York,NY 10
4、168Telephone:(800)221-0102(Name,address,including zip code,and telephone number,including area code,of agent for service)Copies to:Laura Anthony,Esq.Craig D.Linder,Esq.Anthony,Linder&Cacomanolis,PLLC1700 Palm Beach Lakes Blvd.,Suite 820West Palm Beach,Florida 33401Telephone:(561)514-0936 Michael Bla
5、nkenshipWinston&Strawn LLP800 Capitol Street,Suite 2400Houston,Texas 77002-2925Telephone:(713)651-2600 Approximate date of commencement of proposed sale to the public:As soon as practicable after the effective date of this registration statement.If any of the securities being registered on this Form
6、 are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933,check thefollowing box.If this Form is filed to register additional securities for an offering pursuant to Rule 462(b)under the Securities Act,please check the following box and list theSecuriti
7、es Act registration statement number of the earlier effective registration statement for the same offering.If this Form is a post-effective amendment filed pursuant to Rule 462(c)under the Securities Act,check the following box and list the Securities Act registrationstatement number of the earlier
8、effective registration statement for the same offering.If this Form is a post-effective amendment filed pursuant to Rule 462(d)under the Securities Act,check the following box and list the Securities Act registrationstatement number of the earlier effective registration statement for the same offeri
9、ng.Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.Emerging growth company If an emerging growth company that prepares its financial statements in accordance with U.S.GAAP,indicate by check mark if the registrant has el
10、ected not to use theextended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B)of the Securities Act.The term“new or revised financial accounting standard”refers to any update issued by the Financial Accounting Standards Boa
11、rd to its Accounting StandardsCodification after April 5,2012.The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant files a furtheramendment which specifically states that this registration statement shall
12、thereafter become effective in accordance with Section 8(a)of the Securities Act of1933 or until the registration statement becomes effective on such date as the Commission,acting pursuant to Section 8(a),may determine.The information in this preliminary prospectus is not complete and may be changed
13、.These securities may not be sold until the registration statement filedwith the U.S.Securities and Exchange Commission is effective.This preliminary prospectus does not constitute an offer to sell or a solicitation of an offer topurchase securities in any jurisdiction where offer or sale is not aut
14、horized.PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED JANUARY 16,2025 GATES GROUP Inc.1,000,000 Common Shares We are offering 1,000,000 common shares,no par value.This is our initial public offering.Prior to the offering,there has been no public market for ourcommon shares.We expect the initial
15、 public offering price to be between US$5.50 and US$6.50 per share.For purposes of this prospectus,the assumed initial publicoffering price per share is US$6.00,the midpoint of the anticipated price range.We have applied to list our common shares on The Nasdaq Capital Market(the“Nasdaq”)under the sy
16、mbol“GTSG.”We believe that upon the completion ofthe offering contemplated by this prospectus,we will meet the standards for listing on the Nasdaq.We cannot guarantee that we will be successful in listing our commonshares on the Nasdaq;however,we will not complete this offering unless we are so list
17、ed.Currently,Yuji Sekino,our Chief Executive Officer and a member of our board of directors,beneficially owns 15,930,000 common shares,which representsapproximately 62.9%of the voting power of our outstanding common shares,directly and indirectly through RECON MARK,INC.Following this offering,Mr.Sek
18、inowill control approximately 60.5%of the voting power of our outstanding common shares if all the common shares are sold(or 60.1%of our outstanding voting power ifthe underwriters exercise the over-allotment option in full).As a result of his voting power,he will be able to control any action requi
19、ring the general approval of ourshareholders,including the election of our board of directors,the adoption of amendments to our articles of incorporation and the approval of any merger or sale ofsubstantially all of our assets.If we are approved to list our common shares on the Nasdaq,we will be a“c
20、ontrolled company”as defined in Rule 5615(c)(1)of theNasdaq listing standards because more than 50%of our voting power will be held by Mr.Sekino after the offering.As a“controlled company,”we are exempt by Rule5615(c)(2)of the Nasdaq listing standards from certain corporate governance requirements.A
21、ccordingly,you may not have the same protections afforded toshareholders of companies that are subject to all of the corporate governance requirements of the Nasdaq.See“Prospectus SummaryImplications of Being aControlled Company.”We are an“emerging growth company”under the federal securities laws an
22、d,as such,we have elected to comply with certain reduced public companyreporting requirements for this prospectus and future filings.See“Prospectus Summary Implications of Being an Emerging Growth Company and a Foreign PrivateIssuer.”Investing in our common shares involves a high degree of risk.Befo
23、re purchasing any shares,potential investors should carefully read the discussionof the material risks of investing in our common shares under the heading“Risk Factors”beginning on page 15 of this prospectus.Neither the U.S.Securities and Exchange Commission nor any state securities commission has a
24、pproved or disapproved of these securities orrecognized the adequacy or accuracy of this prospectus.Any representation to the contrary is a criminal offense.Per share Total Public offering price$Underwriting discounts and commissions(1)$Proceeds,before expenses,to us$(1)See“Underwriting”beginning on
25、 page 114 of this prospectus for additional information regarding the compensation payable to the underwriters.We have granted a 45-day option to the underwriters to purchase up to 150,000 additional common shares solely to cover over-allotments,if any.If theunderwriters exercise the option in full,
26、the total underwriting cash discounts and commissions payable by us will be US$517,500,and the total proceeds to us,beforeexpenses,will be US$6,382,500.Delivery of the common shares is expected to be made on or about,2025.Spartan Capital Securities,LLC The date of this prospectus is ,2025 TABLE OF C
27、ONTENTS PageCAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS iiABOUT THIS PROSPECTUS iiiMARKET AND INDUSTRY DATA iiiTRADEMARKS AND COPYRIGHTS iiiPROSPECTUS SUMMARY 1RISK FACTORS 15USE OF PROCEEDS 42DIVIDEND POLICY 43CAPITALIZATION 43DILUTION 45MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CON
28、DITION AND RESULTS OF OPERATIONS 47DESCRIPTION OF BUSINESS 69MANAGEMENT 89PRINCIPAL SHAREHOLDERS 98CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS 99DESCRIPTION OF SHARE CAPITAL 100SHARES ELIGIBLE FOR FUTURE SALE 106CERTAIN TAX CONSIDERATIONS 108UNDERWRITING 114EXPENSES RELATED TO THIS OFFERING
29、 126LEGAL MATTERS 126EXPERTS 126DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES 126ENFORCEABILITY OF CIVIL LIABILITIES 126WHERE YOU CAN FIND ADDITIONAL INFORMATION 127INDEX TO FINANCIAL STATEMENTS F-1 You should rely only on the information contained in this prosp
30、ectus and any free writing prospectus prepared by us.Neither we nor the underwritershave authorized anyone to provide you with information that is different,and neither we nor the underwriters take any responsibility for,and provide anyassurance as to the reliability of,any information,other than th
31、e information in this prospectus and any free writing prospectus prepared by us.We areoffering to sell our common shares,and seeking offers to buy our common shares,only in jurisdictions where such offers and sales are permitted.Thisprospectus is not an offer to sell,or a solicitation of an offer to
32、 buy,our common shares in any jurisdictions where,or under any circumstances under which,the offer,sale,or solicitation is not permitted.The information in this prospectus and in any free writing prospectus prepared by us is accurate only as of thedate on its respective cover,regardless of the time
33、of delivery of this prospectus or any free writing prospectus or the time of any sale of our common shares.Our business,results of operations,financial condition,or prospects may have changed since those dates.Before you invest in our common shares,you should read the registration statement(includin
34、g the exhibits thereto and the documents incorporated byreference therein)of which this prospectus forms a part.For investors outside of the United States:Neither we nor the underwriters have done anything that would permit this offering,or the possession or distribution ofthis prospectus,in any jur
35、isdiction where action for that purpose is required,other than in the United States.You are required to inform yourselves about,and observeany restrictions relating to,this offering and the distribution of this prospectus.Notice to prospective investors in Japan:Our common shares have not been and w
36、ill not be registered pursuant to Article 4,Paragraph 1 of the FinancialInstruments and Exchange Act of Japan.Accordingly,none of our common shares nor any interest therein may be offered or sold,directly or indirectly,in Japan or to,orfor the benefit of,any“resident”of Japan(which term as used here
37、in means any person resident in Japan,including any corporation or other entity organized under thelaws of Japan),or to others for re-offering or resale,directly or indirectly,in Japan or to or for the benefit of a resident of Japan,except pursuant to an exemption fromthe registration requirements o
38、f,and otherwise in compliance with,the Financial Instruments and Exchange Act and any other applicable laws,regulations,andministerial guidelines of Japan in effect at the relevant time.i CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements that re
39、flect our current expectations and views of future events,all of which are subject to risks anduncertainties.Forward-looking statements give our current expectations or forecasts of future events.You can identify these statements by the fact that they do not relatestrictly to historical or current f
40、acts.You can find many(but not all)of these statements by the use of words such as“approximates,”“believes,”“hopes,”“expects,”“anticipates,”“estimates,”“projects,”“intends,”“plans,”“will,”“would,”“should,”“could,”“may”or other similar expressions in this prospectus.These statementsare likely to addr
41、ess our growth strategy,financial results,and product and development programs.You must carefully consider any such statements and shouldunderstand that many factors could cause actual results to differ from our forward-looking statements.These factors may include inaccurate assumptions and a broadv
42、ariety of other risks and uncertainties,including some that are known and some that are not.No forward-looking statement can be guaranteed,and actual future resultsmay vary materially.Factors that could cause actual results to differ from those discussed in the forward-looking statements include,but
43、 are not limited to:the size and growth potential of the markets for our products or services,and our ability to serve those markets;the rate and degree of market acceptance of our products or services;our ability to expand our sales organization to address effectively existing and new markets that
44、we intend to target;the impact from future regulatory,judicial,and legislative changes or developments in the U.S.and foreign countries;our ability to compete effectively in a competitive industry;our ability to obtain funding for our operations;our ability to attract collaborators and strategic par
45、tnerships;our ability to continue to meet the Nasdaq requirements;our ability to meet our other financial operating objectives;the availability of qualified employees for our business operations;general business and economic conditions;our ability to meet our financial obligations as they become due
46、;positive cash flows and financial viability of our operations and new business opportunities;ability to secure intellectual property rights over our proprietary services;our ability to be successful in new markets;and our ability to avoid infringement of intellectual property rights.We describe cer
47、tain material risks,uncertainties,and assumptions that could affect our business,including our financial condition and results of operations,under the heading“Risk Factors.”We base our forward-looking statements on our managements beliefs and assumptions based on information available to ourmanageme
48、nt at the time the statements are made.We caution you that actual outcomes and results may,and are likely to,differ materially from what is expressed,implied,or forecast by our forward-looking statements.Accordingly,potential investors should be careful about relying on any forward-looking statement
49、s.Except asrequired under the federal securities laws,we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of thisprospectus,whether as a result of new information,future events,changes in assumptions,or otherwise.ii ABOUT THIS PROSPECTU
50、S As used in this prospectus,unless the context otherwise requires or otherwise states,references to the“GATES,”“Company,”“we,”“us,”“our,”and similarreferences refer to GATES GROUP Inc.,a Japanese corporation,and its direct and indirect subsidiaries,including,GATES Inc.,GATES enterprise Inc.,Chuo Ka
51、nzaiInc.,Future Real Estate Institute Inc.,and G.I.F.T.Co.,Ltd.,each a Japanese corporation.Our functional currency is the Japanese yen(which we refer to as“”).Our reporting currency is the U.S.dollar.The terms“$”or“US$”refer to U.S.dollars,the legal currency of the United States.Consistent with ASC
52、 830,the reporting currency is converted at the following rates:(US$1=)December 31,2023 December 31,2022 December 31,2021 June 30,2024 June 30,2023 Spot rate 140.92 131.81 115.17 160.88 144.47 Average rate 140.50 131.46 109.84 152.20 134.91 We make no representation that the Japanese yen or U.S.doll
53、ar amounts referred to in this prospectus could have been or could be converted into U.S.dollarsor Japanese yen,as the case may be,at any particular rate or at all.Our financial statements are prepared in accordance with U.S.generally accepted accounting principles(which we refer to as“US GAAP”).Our
54、 fiscal yearends on December 31 of each year as does our reporting year.Therefore,any references to 2023 and 2022 are references to the fiscal and reporting years endedDecember 31,2023 and December 31,2022,respectively.Our most recent fiscal year ended on December 31,2023.See Note 2 in our audited c
55、onsolidated financialstatements as of and for the years ended December 31,2023,and December 31,2022,included elsewhere in this prospectus for a discussion of the basis of presentationof financial statements.We have made rounding adjustments to some of the figures included in this prospectus.Accordin
56、gly,numerical figures shown as totals in some tables may notbe an arithmetic aggregation of the figures that precede them.NON-GAAP FINANCIAL MEASURES In addition to U.S.GAAP measures,we also use Adjusted EBITDA and Adjusted EBITDA Margin as described under“Managements Discussion and Analysisof Finan
57、cial Condition and Results of OperationsNon-GAAP Financial Measures”in various places in this prospectus.These financial measures are presented assupplemental disclosure and should not be considered in isolation of,as a substitute for,or superior to,the financial information prepared in accordance w
58、ith U.S.GAAP,and should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this prospectus.Adjusted EBITDA andAdjusted EBITDA Margin may differ from similarly titled measures presented by other companies.Please see“Selected Consolidated Fina
59、ncial Information and Operating Data”for a reconciliation of non-GAAP financial measures to the most directlycomparable financial measure calculated in accordance with U.S.GAAP.MARKET AND INDUSTRY DATA This prospectus contains references to market data and industry forecasts and projections,which we
60、re obtained or derived from publicly available information,reports of governmental agencies,market research reports,and industry publications and surveys.These sources generally state that the information contained thereinhas been obtained from sources believed to be reliable.Forecasts and other for
61、ward-looking information obtained from these sources are subject to the samequalifications and additional uncertainties and risks regarding the other forward-looking statements in this prospectus due to a variety of factors,including thosedescribed in the sections entitled“Cautionary Note Regarding
62、Forward-Looking Statements”and“Risk Factors”and elsewhere in this prospectus.These and otherfactors could cause results to differ materially from those expressed in the forecasts and estimates.TRADEMARKS AND COPYRIGHTS The names and marks“GATES”,“SELL GATES ONES”,“ONE ROOM EXIT”,“GAISS”,“中央管財”(a Jap
63、anese name of Chuo Kanzai Inc.),“GATESenterprise”,and“G.I.F.T”appearing in this prospectus are the property of the Company and are registered tradenames and trademarks of the Company in Japan.Wefiled trademark application in Japan for the name of the Company“GATES GROUP”,in April 2024,which are curr
64、ently under examination.This prospectus may alsocontain trademarks,service marks,and trade names of other companies that are the property of their respective owners.The use or display of trademarks,service marks,trade names or services of third parties in this prospectus does not imply,and should no
65、t be construed to imply,any affiliation,endorsement or sponsorship by theCompany.For the convenience of readers only,some copyrights,trade names,and trademarks mentioned in this prospectus may appear without their,and symbols.iii PROSPECTUS SUMMARY This summary highlights certain information about u
66、s,this offering,and selected information contained in this prospectus.This summary is not complete and does notcontain all of the information that potential investors should consider before deciding whether to invest in our common shares.For a more complete understanding ofus and this offering,we en
67、courage you to read and consider the more detailed information in this prospectus,including“Risk Factors”and the financial statements andrelated notes.Unless otherwise noted,the share and per share information in this prospectus reflect the forward stock splits of the outstanding common shares of th
68、e Company at a 1for 20,000 ratio and a 1 for 2.25 ratio,which were effected on April 30,2024 and October 31,2024,respectively.Business Overview We are a Japanese real estate company providing a one-stop service that includes in-house procurement,sales,management,and operational support for condomini
69、umsand solar power generation facilities.We provide various services related to real estate under the two domains,“GATES AUCTION”and“GATES FUNDING”.Currently we are engaged in the following businesses:GATES AUCTION We purchase condominiums and solar power generation facilities from property owners a
70、nd sell them primarily to real estate sales companies and individualinvestors;We renovate and resell real estate purchased through voluntary sales and auctions to real estate sales companies and individual investors;We provide real estate management services such as collection of rent fees,repairs,a
71、nd restoration of properties to their original condition for condominiums;We provide consulting services for the sale of condominiums;We provide real estate brokerage services;and We provide real estate leasing services.GATES FUNDING We operate in the financial services sector,offering a real estate
72、 crowdfunding platform,where we raise funds from our members to purchase real estate anddistribute the proceeds from their management and sale.The members only acquire the right to claim dividends and the right to claim refunds of theirinvestments upon the completion of the real estate project.Such
73、dividends and refunds are based on the net proceeds from rental income and sale of properties.More specifically,the members do not acquire ownership or securities representing ownership in a property or a fractional ownership of a property as theinvestments of the members are made through an anonymo
74、us partnership(as described under“Description of Business”on page 76 of this prospectus).Thiscrowdfunding business with anonymous partnership agreements(which are not considered to be securities in Japan)is only being conducted in Japan.Additionally,we provide lending services.Since our inception,we
75、 have compiled and analyzed a growing database of real estate ownership information(approximately 600,000 properties).This has enabled us todevelop a proprietary algorithm that assesses the likelihood of a specific owner needing to sell their property,evaluating factors such as the property purchase
76、d,thepurchase date,other properties owned,and the estimated occupation of the owner.We currently use this algorithm in the business of purchase and sales of real estate.We continuously update and maintain the database to ensure we leverage the most up-to-date and relevant information for our real es
77、tate transactions.Our Mission“Real Estate Around the World in Your Hand”In Japan,the phrase“120-year life period”describes the aging society where people will live to 120 years old due to the progress of medical technologies.In such asociety,we believe that people will have to rely solely on pension
78、 income for approximately half of their lives after retirement and we believe that individual assetbuilding is necessary to establish a more secure life after retirement.In Japan,while the market for asset building in terms of dollars is growing,we believe only a fewcompanies offer small-lots of rea
79、l estate overseas for investment,and that market has not yet been established.We aim to provide overseas real estate in small lotsthrough our crowdfunding service,and we believe that this will make it easier for anyone to start asset building through overseas real estate.We also aim to provideopport
80、unities for overseas investors to invest in Japanese real estate more easily by establishing an auction platform in the future.Our mission is to create a world where everyone can freely and fairly build assets through real estate,under our corporate message of“Real Estate Around the World inYour Han
81、d”.We aim to lower the threshold for purchasing real estate and create a transparent and fair market in which everyone can participate.Through ourtechnology and business model,we believe we provide our clients with a viable form of asset building towards retirement.To realize our mission,we aim to d
82、evelop a platform that enables real estate investment beyond national borders,although we have not yet developed a real estateauction platform and that our crowdfunding platform has only been in operations in Japan and was recently launched in 2021.For the years ended December 31,2023 and 2022,the C
83、ompany reported revenues of US$108,703,609 and US$109,799,089,respectively,net loss of US$35,622 andnet income of US$55,028,respectively,and had net cash used in operating activities of US$1,992,181 and net cash provided by operating activities of US$3,353,265,respectively.For the six months ended J
84、une 30,2024 and 2023,the Company reported revenues of US$66,907,985 and US$48,935,233,respectively,net loss ofUS$668,577 and US$626,266,respectively,and had net cash provided by operating activities of US$448,142 and net cash used in operating activities of US$2,428,865,respectively.As stated in the
85、 unaudited consolidated financial statements,as of June 30,2024,the Company had retained earnings of US$237,178.1 Organizational Structure The following diagram reflects our current organizational structure as of the date of this prospectus:GATES GROUP Inc.is a Japanese corporation formed in Japan o
86、n May 1,2018.GATES GROUP Inc.has three wholly owned subsidiaries,GATES Inc.,a Japanesecorporation,established on August 1,2011,Gates enterprise Inc.,a Japanese corporation,established on January 6,2020,and GATES USA Inc,a U.S.corporation,established on August 5,2024.GATES Inc.has three wholly owned
87、subsidiaries,including Chuo Kanzai Inc.,a Japanese corporation,established on May 9,2006,Future Real Estate Institute Inc.,aJapanese corporation,established on December 25,2019,and G.I.F.T Co.,Ltd.,a Japanese corporation,established on July 24,2012.GATES Inc.engages in sales and brokerage of used co
88、ndominiums for investment and used solar power generation facilities as well as real estate crowdfunding.GATES enterprise Inc.engages in the real estate leasing,management and brokerage business.Chuo Kanzai Inc.engages in sales and brokerage of real estate,primarily for voluntary sales.Future Real E
89、state Institute Inc.engages in sales and brokerage of real estate,primarily for voluntary sales.G.I.F.T Co.,Ltd.engages in the financial transaction business and the lending business.GATES USA Inc engages in procurement and sales of lands and condominiums in the U.S.Our Strategy We are considering t
90、he following strategies aimed at expanding our business and increasing our profitability.U.S.Expansion Initiative We plan to expand our business to the U.S.real estate market.Using the funds raised through our crowdfunding platform,we plan to purchase real estate properties inthe U.S.,and provide in
91、vestors in Japan with the sales and management services of those properties.For more details,please see“Planned Business Activities PlannedU.S.Expansion Initiative”.2 Developing Real Estate Auction Platform“SELLI”Utilizing a portion of the proceeds from this offering,we aim to establish and launch a
92、 real estate auction platform named“SELLI,”designed to facilitate the purchaseof high-quality condominiums and pre-owned solar power generation facilities worldwide.Real estate transactions often require specialized knowledge due to thecomplexities involved,including verifying property rights,owners
93、hip,condition,and estimating future profitability.These factors,coupled with the involvement ofmultiple real estate agents,often obscure property prices and inflate costs.SELLI aims to address these challenges by offering an auction platform that allows for thedirect sale of high-quality properties
94、at reasonable prices,eliminating the need for intermediary real estate agents.Our specialized knowledge in the entire process ofproperty acquisition enables us to deliver a seamless experience.For more details,see“Planned Business Activities Planned Auction Platform”.Offering Real Estate Literacy Se
95、ssions We plan to expand our study sessions on real estate literacy for the employees of public companies in Japan,which began in 2023 and has been held every month.Thestudy sessions are designed to improve literacy in various aspects of real estate,including,but not limited to,investments,rentals,t
96、axes and other areas.We considerthese study sessions to be advertising for our business.We seek to offer the study sessions,which are currently offered to one company listed on the stock exchange inJapan,to more than 100 public companies in Japan and the U.S.We plan to accomplish this by approaching
97、 and offering our study sessions to the public companies inJapan which are our existing clients or vendors,the U.S.public companies,and institutional investors.The number of participants(employees of the currentparticipating company)has been gradually increasing while we have improved and enriched t
98、he contents of the session.We also plan to promote and expand our studysessions by advertising our experience of holding such sessions if the number of participating companies increase.Although we do not currently have any specific planson how to expand our literacy sessions,we will seek further way
99、s to continue and expand the sessions for the purpose of achieving this goal.We have not earned from,or paid consideration to,the public companies for their employees attending the sessions.Increasing Sales to Individual Investors Currently,about 30%of the properties we purchase are sold to individu
100、al investors and about 70%are wholesaled to real estate sales companies.We aim to increase theratio of sales to individual investors.By increasing direct sales to individual investors,we will distribute more properties with reasonable prices directly to the marketand more market participants will be
101、 aware that those prices are the actual market prices without any intermediate costs which are generally incurred due to theinvolvement of multiple real estate companies in the process from purchase to delivery.If such awareness spreads among the market,we believe we will acquire a largermarket shar
102、e taking advantages of our ability to directly purchase and deliver the properties.We plan to hire more sales staff to enhance the sale of condominiums whichwe purchase directly from property owners.Once the development of our auction platform is completed and receives awareness in the market,we als
103、o plan to engagethose individual investors in it so that they can purchase real estate in the same environment as real estate companies.Increasing Solar Power Market Share We aim to achieve a substantial share of the market of the pre-owned solar power generation facilities by analyzing the facility
104、 owners and using algorithms to create anenvironment that allows purchasing of such facilities in the same way as condominiums.Considering the growing needs for eco-friendly energy,achieving a larger sharein the solar power market is the key factor to our further growth.3 Our Business Current Busine
105、ss Operations Our current business operations are categorized into two domains,“GATES AUCTION”and“GATES FUNDING”as below:GATES AUCTION Purchase and Sales of Real Estate.We specialize in purchasing condominiums from property owners and selling them primarily to real estate sales companiesand individu
106、al investors.When selling to real estate companies,we select the buyer who offers the highest price for the properties creating a process similar toan auction.In a typical process of real estate sales in Japan,multiple real estate companies are involved which seek their profits from the process,whic
107、h lead tohigher selling prices to the end customers.The typical real estate sales process in Japan is as follows:(i)first,purchase of a property by a company specializingexclusively in purchasing properties;(ii)second,the property purchased is sold to a real estate wholesale company;(iii)third,the p
108、roperty is wholesaled to areal estate sales company and then the information of the property becomes open to the public through a platform such as Real Estate Information System(REINS);and(iv)fourth,the property is eventually sold to an end customer through a real estate brokerage company.In each st
109、age of(ii)to(iv),thesecompanies take their profits when selling a property and it makes the final price higher when the property is delivered to the end customer.In our businessmodel,we purchase properties directly from property owners and directly sell them to our customers without the involvement
110、of such multiple real estatecompanies,which we believe results in more reasonable and fair prices to the end customers while still profitable to us.What makes us different is our strongrelationships with multiple financial institutions.Real estate companies specializing in purchasing properties gene
111、rally cannot sell their properties directly toindividual buyers as they cannot introduce loans for property purchase to the buyers.Typically,companies specializing in purchasing properties face challengesworking with financial institutions because they facilitate sellers in making lump-sum loan repa
112、yments.However,through persistent negotiations,we secureloan commitments from these institutions,streamlining the entire process while enabling transactions without involving multiple intermediaries that seek theirown profits before a property being sold to an individual buyer.We believe we can effe
113、ctively compete with our competitors and satisfy customers by sellingthe condominiums at fair and reasonable prices due to eliminating these intermediaries and hope to create awareness in the market that the prices we offer arethe fairest,which we believe will eventually strengthen our ability to ma
114、intain existing customers and attract new customers.Our property acquisition strategy focuses on carefully selecting newer condominiums located in the central area of Tokyo,and within a 10-minute walk fromtrain stations.From approximately 600,000 unlisted properties and 300 properties for sale each
115、month,we curate a selection that we offer at direct sales prices,eliminating the involvement of multiple real estate companies.Our property acquisition methods include reaching out to property owners via telephone,door-to-door visits,direct mail,landing page response,etc.Once acquired,these properti
116、es are either sold directly to individual investors(“One-Room DIRECT”)orwholesaled to real estate sales companies.Our basic policy is to settle the purchase and sales in a short period of time,normally within one week,but we holdthe ownership in a property when we expect the future increase of the p
117、roperty value.With our extensive network,our strength lies in our ability to purchaseproperties directly from property owners and directly sell them to our customers without the involvement of multiple real estate companies which we believeresults in more reasonable and fair prices to the end custom
118、ers while still profitable to us due to our direct purchase and sales.We believe we can effectivelycompete with our competitors and satisfy customers by selling the condominiums at fair and reasonable prices due to eliminating these intermediaries and hopeto create awareness in the market that the p
119、rices we offer are the most fair,which we believe will eventually strengthen our ability to maintain existingcustomers and attract new customers.In addition to direct purchase from property owners,we renovate and resell properties acquired through voluntary sales toindividual investors and real esta
120、te sales companies.Under this service,we consult with home-owners who are having trouble paying their mortgages and otherreal estate loans,and work closely with financial institutions to maximize the value of these properties and prevent them from being auctioned off due tobankruptcy.Revenue from th
121、e sale of condominiums is categorized under the“revenue from sales of real estate properties”revenue stream.Furthermore,weprovide consulting services for the sale of condominiums across Japan,including Tokyo,Kansai,Tokai,and Kyushu.Our consulting services encompass awide range of areas,including app
122、raisal,refinancing,recombination,inheritance,income improvement,management,and the sale of condominiums.Incomegenerated from these consulting services is included in the“revenue from real estate management services”revenue stream.Property Management Service.We provide real estate management services
123、 for condominiums,including rent collection,property repairs,and restoration tooriginal conditions.Income generated from property management services is classified under the“revenue from real estate management services”revenuestream.Purchase and Sale of Solar Power Generation Facilities.We purchase
124、and sell solar power generation facilities primarily to real estate sales companies andindividual investors.We identify potential acquisitions targets through:(1)introduction to companies which sell or maintain the solar power generationfacilities;(2)contacting companies disclosed by the Japanese go
125、vernment;and(3)approaching past and existing clients from our condominium business,asthe markets for condominiums and solar power generation facilities are closely related in nature and many of our clients in the condominium sector own solarpower generation facilities.Revenue from the sale of these
126、solar power generation facilities is recorded under the“revenue from sales of solar powergeneration facilities”revenue stream.Real Estate Brokerage Services.We also provide real estate brokerage services.Income from providing such services is included in the“revenue from realestate management servic
127、es”revenue stream.Real Estate Leasing Services.We provide leasing services to condominiums and detached houses.Income from providing such services is included in the“revenue from rental services”revenue stream.GATES FUNDING Financial Services.As a part of our financial services,we offer real estate
128、crowdfunding,where we raise funds from our members via our crowdfundingplatform to purchase real estate and distribute the proceeds from the management and sale of these properties.Our crowdfunding platform allows individuals toinvest as little as approximately US$62 across a diverse portfolio of re
129、al estate investment opportunities offered on the platform.On average,we register 0.3customers per day.To ensure sustainable,safe,and secure asset management for our clients,we meticulously select and screen all properties featured on theplatform.The entire process,from property management to sale,c
130、an be entrusted to us as a professional real estate firm.Revenue generated from the sales andlease of real estate properties through crowdfunding projects is recorded under in the“revenue from sales of real estate properties”and the“revenue from rentalservices”.We also provide lending services,and t
131、he revenue from these services is included in“other revenue”.4 Planned Business Activities Our planned business activities include:Planned U.S.Expansion Initiative.We plan to expand our business to the U.S.real estate market.Using the funds raised through our crowdfunding platform,we plan to acquire
132、 real estate properties in the U.S.,and provide investors in Japan with the sales and management services of those properties.We areconsidering the state of Texas as the first location to initiate this plan.We plan to conduct the procurement and sales of real estate properties including lands,detach
133、ed houses and condominiums through GATES USA Inc,a wholly owned subsidiary of the Company incorporated in the state of Texas in August 2024.We decided to initiate this plan in Texas based on the following factors:(i)the stable and growing residential population and the number of housing units inTexa
134、s,(ii)low property prices compared to ones in other major areas in the U.S.such as California and New York,and estimated increase in the property pricesin Texas,(iii)the similarity in basic system and flow of real estate transactions between Texas and Japan,and(iv)some of major Japanese real estatec
135、ompanies entered the market of Texas.In addition to analyzing these market data,our CEO directly inspected properties in Texas and strongly felt thepotential of Texas.Within the state of Texas,we are considering starting in the north side of Texas,specifically an area from Dallas to Sherman,where we
136、 willacquire properties,considering the factors such as regional convenience,demographics,potential economic growth,safety,and average income of residents.Inorder to research the capital flows in real estate transactions and analyze the risks associated with the acquisition,sales,and management of p
137、roperties in theU.S.,the Company acquired,leased and sold a property in the state of Georgia during the period June 2022 through July 2023.We estimate that the investors inJapan have strong interest in investment in the U.S.real estate properties,according to the survey result conducted during our s
138、tudy session,showing that morethan 95%of the participants expressed their interest in investing in the U.S.real estate properties.Furthermore,the aggregate investment amount in the U.S.stock market from Japan exceeded 5 trillion yen,and securitized real estate market in Japan has grown to 59.8 trill
139、ion yen in 2023.We also anticipate thatinterest in the U.S.real estate market will remain in the medium to long term due to expected fluctuations of interest rate and exchange rate.Considering thesefacts,we believe that the expansion into the U.S.real estate market will significantly contribute to o
140、ur growth.Although we have not formulated strategiesincluding specific target locations or expansion methods,we are considering further expansion to the East and West Coasts of the U.S.and other regionsfollowing the expansion to Texas.Planned Auction Platform.Utilizing a portion of the proceeds from
141、 this offering,we aim to establish and launch a real estate auction platform named“SELLI,”designed to facilitate the purchase of high-quality condominiums and pre-owned solar power generation facilities worldwide.We differentiate our platformfrom others by offering secure transactions supported by o
142、ur extensive experience as a real estate company specializing in property purchases.Real estatetransactions often require specialized knowledge due to the complexities involved,including verifying property rights,ownership,condition,and estimatingfuture profitability.These factors,coupled with the i
143、nvolvement of multiple real estate agents,often obscure property prices and inflate costs.SELLI aims toaddress these challenges by offering an auction platform that allows for the direct sale of high-quality properties at reasonable prices,eliminating the need forintermediary real estate agents.Our
144、specialized knowledge in the entire process of property acquisition enables us to deliver a seamless experience.Furthermore,we are considering adding a feature that enables the users to invest in fractional interests in real estate properties on our platform with a littleamount of fund like“Robinhoo
145、d”,a popular financial services platform.We set the following phases to develop and expand our prospective auction platform:Phase 1 We plan to expand our auction platforms investment opportunities into the U.S.real estate market in addition to Japan.The prices of realestate in the U.S.have shown sta
146、ble increase as compared to the prices of real estate in Japan which have shown drastic fluctuations.To cater to awider audience,we plan to offer these U.S.investment opportunities through both crowdfunding and auctions.We aim to form a business alliancewith a U.S.real estate company to further incr
147、ease properties on our respective platforms.We also plan to engage U.S.investors on our auctionplatform and crowdfunding platform where we provide them with investment opportunities to acquire entire or fractional interests in the properties inJapan and the U.S.For the sake of clarity,such investmen
148、t opportunities to U.S.investors exclude rights to claim dividends and the right to claimrefunds upon termination of the project under anonymous partnership agreements.5 Phase 2-We plan to expand the auction platform not only to real estate in the U.S.,but also real estate in other regions and count
149、ries in the world.Although we do not have any specific plans on the target areas to which we will expand at this point,we aim to increase the area where we provideinvestment opportunities in real estate by considering factors such as economic and market trends in such areas at the time.Phase 3 We ul
150、timately aim to offer opportunities to acquire world-wide real estate on our auction platform to investors worldwide.We believe thatSELLI will realize the true transparency of property prices through the real estate auction where worldwide investors participate.Planned Social Lending Services.Our su
151、bsidiary,G.I.F.T Co.,Ltd.,plans to offer social lending services.In this model,we will collect funds from investors toextend loans to businesses,with the generated profits from loan interest being distributed back to the investors.As of December 31,2023,we had handled oneproject and made a loan to C
152、huo Kanzai Inc.,our subsidiary.The revenue from that transaction is eliminated in our consolidated financial statements for theyear ended December 31,2023 as an intercompany transaction.We have not yet provided the social lending services to any third-party customers and do nothave any specific plan
153、ned projects at this point.However,we are planning to develop these services for general investors and in the process of licenseapplication to expand the current permitted business scope.Developments Related to Condominiums.We plan to develop a call center to accelerate purchase of condominiums by p
154、romoting more communications withowners.We plan to hire more staff to enhance the sale of condominiums which we purchase directly to individual investors.We plan to develop a platformwhich will publicize prices of condominiums to the public(which would otherwise not be public information),cooperatin
155、g with financial institutions.Developments Related to Solar Power Generation Facilities.By compiling and analyzing a database of approximately 600,000 real estate owner and propertyinformation since our inception,we have developed our proprietary algorithm for condominiums that assesses the likeliho
156、od of a specific owners need to sellproperty by analyzing factors such as the property purchased,purchase date,other properties owned,and estimated occupation of the owner.We plan to applythis algorithm to our solar power generation facilities to further enhance our capabilities to identify and purc
157、hase properties,and provide additional investmentopportunities to real estate companies and individual investors.Developments Related to Crowdfunding.We are planning to develop a new system to enable timely collections of funds from a larger number of users.Currently,our fund collection process invo
158、lves the following steps:1.We select an investment property,such as an condominium2.We recruit investors for the selected product on our crowdfunding platform,where they can apply for the investment.3.If the total investment applications exceed the solicited amount,we conduct a draw to select the in
159、vestors.4.We purchase the investment property.5.We collect the funds from selected investors.6.We distribute the income or capital gains generated from the product.Currently,we purchase the property before receiving funds from investors because the funds are transferred to our bank account via a thi
160、rd-party funds transfersystem,which takes approximately one month to process.By developing a new funds transfer system,we aim to expedite the receipt of funds,therebyimproving our cash management.6 Alliance in Our Real Estate Crowdfunding Business.We are currently proceeding with a plan for the alli
161、ance in our real estate crowdfunding business with aJapanese real estate company.The company operates a real estate crowdfunding platform which has achieved the largest aggregated investment amount inJapan.We expect the increase of approximately 200 thousand in our real estate crowdfunding members i
162、f the alliance realizes.We have not yet entered into anyagreement for the alliance with them and are currently in the process of reconciling their crowdfunding terms and conditions with ours.After the adjustment iscompleted,we plan to apply to the Tokyo Metropolitan Government for the terms and cond
163、itions.We plan to start offering crowd funding projects as soon asobtaining the approval from the government,which is expected to take several months.Developments Related to Rebuilding Condominiums.In Japan,aging condominiums cannot be rebuilt due to opposition from some residents,which hasbecome a
164、widespread social concern in the country.To address this,we plan to offer condominium rebuilding consulting services in collaboration withcondominium management associations.Customers and Suppliers Our primary customers in sales and brokerage of condominiums and solar power generation facilities are
165、 individual investors and real estate sales companies.Individualinvestors account for approximately 30%and real estate companies account for approximately 70%of our entire customer base respectively.We are aiming to increasethe sales to individual investors.Our main suppliers are individual investor
166、s who own condominiums.In real estate crowdfunding,our main customers are individualsranging from ages 20 to 60.Industry Overview Real Estate Industry Generally Despite the impacts of the COVID-19 pandemic,the Japanese real estate market continues to remain substantial with an annual transaction val
167、ue around 4.6 trillion yen(approximately$32.6 billion),according to the Japan Real Estate Institute.However,market needs are beginning to evolve,as energy-saving features will becomemandatory for mortgage deductions,and interest rates are expected to rise alongside increases in the consumer price in
168、dex in Japan since the start of 2024.Despite thesechanges,real estate and rent prices continue to climb,which presents challenges for companies specializing in the purchasing and sale of real estate like ours.Webelieve we can adapt to shifting market needs driven by economic conditions by creating b
169、usinesses tailored to individual needs.Additionally,we expect that ourexpertise can help address social issues such as the aging of real estate and the growing number of people struggling to pay their mortgages.The real estate industry is susceptible to economic trends,policy interest rate trends,la
170、nd price trends,real estate sales price trends,and real estate taxation.Therefore,deterioration in real estate market conditions,significant increases in interest rates,or other changes in conditions could affect our business performance.Condominium Industry The condominium market in Japan continues
171、 to grow as investors recognize these properties as assets with potentially higher yields compared to securities like stocksand bonds,especially given Japans negative interest rate policy.Global inflation,the weakening of the Japanese Yen,and a shortage of carpenters have driven up thecosts of raw m
172、aterials and labor,contributing to the rise in condominium prices.In the Tokyo metropolitan area,the average prices of pre-owned condominiums soldhave been increasing for 48 consecutive months as of May 2024.Real Estate Crowdfunding Industry The global real estate crowdfunding market is expected to
173、reach US$2,724.7 billion by the end of 2036,growing at a CAGR of 50.1%during the forecast period of2024-2036.The industry size of the real estate crowdfunding market in 2023 is over US$21.0 billion.The major factors expected to propel the market growth during theforecasted period are the global indu
174、strialization driving commercial real estate activities and favorable regulations for real estate crowdfunding in several countriesacross the world.The Japanese real estate crowdfunding market is growing at a significant pace driven by massive construction activity in the country,contributingmore th
175、an 5.5%of Japans GDP in 2021.In Japan,crowdfunding requires the use of internet channels to collect small donations from many people.Generating salesfrom their products,services,and creative initiatives has become a common strategy for Japanese companies,both startups and established firms,leveragin
176、g a healthymarket,cooperative local communities,and favorable regulatory conditions.As of December 31,2023,the Japanese crowdfunding industry had a transaction value ofapproximately US$170 million.The average amount of funds raised per campaign in 2023 is expected to increase significantly,reaching
177、US$45,000.(Global RealEstate Crowdfunding Market Research,Size,Share and Forecast 2036().7 Solar Power Industry The total amount of electricity generated from renewable energy sources,mainly solar power,has been increasing year by year,reaching 8,196 thousand kW at the endof FY2020,equivalent to 53%
178、of the FY2030 target(15,405 thousand kW)of the 6th Basic Energy Plan.The market is expected to reach 1,798,600,000 thousand(approximately US$13,300,000 thousand).Real Estate Management Industry In the building maintenance and management business,the overall building units and the number of condomini
179、um units sold in the Tokyo metropolitan area areincreasing year by year.Furthermore,apartments and buildings constructed during the high economic growth period are aging,and with demand for reconstruction andcommensurate maintenance,management is expected to continue to be in demand in the future.Co
180、mpetition There are many competitors,from large companies to new entrants in the market of condominiums for investment.In the solar power facilities market,no majorcompanies have entered the market and there are few competitors.Major companies have entered the market a bit,but there are still few co
181、mpetitors in voluntary salesmarket.There are many competitors,from large companies to new entrants in the real estate auction market and renovation market.In particular,the real estatecrowdfunding industry is crowded with competitors,with 280 companies having entered the market as of December 31,202
182、2,including many leading listed companiessuch as Owners Book,Creal,and Rimple.There are many competitors,from large companies to new entrants in the market of real estate management.Our Competitive Strengths We believe that there are three major sources of our competitiveness:First,our ability to pu
183、rchase properties through the development of our proprietary algorithms.We started as a company specializing in purchasing and brokeringcondominiums for investment.By compiling and analyzing a database of real estate owner information(approximately 600,000 properties)since our inception,we havedevel
184、oped a proprietary algorithm which provides information on the possibility of a specific owners need to sell property by analyzing the property the ownerpurchased,when the owner purchased it,the other properties the owner holds and the estimated occupation of the owner.We currently use this algorith
185、m in the businessof purchase and sales of real estate.This proprietary algorithm helps us to effectively approach property owners when we purchase real estate properties.We also utilize this algorithm to analyze the potential financing commitment that financial institutions will provide for specific
186、 real estate properties.We are currentlyimproving the algorithm by giving it training data for further learning.Once the learning process is completed,we will be able to take advantage in negotiation withsellers of properties that financial institutions have been reluctant to evaluate prior to our p
187、urchase.In addition,it will enable us to further expand purchases of realestate properties by reducing the time required to contact financial institutions for their evaluation.Eventually,we aim to apply this algorithm to a customer service by which property owners who purchase from us can easily see
188、 the current evaluated sales price of theirproperties.As there are not services similar to Z in Japan,a platform which provides various information related to real estate in the U.S.including evaluatedprice of properties,we believe we can acquire a larger market share in Japan if it is realized.Seco
189、nd,is our one-stop service which covers the entire process of real estate transaction.In general,Japanese real estate companies specialize in either purchasing orselling and multiple real estate agents intervene between a seller and a buyer in a transaction,each of which incurs intermediate costs.As
190、 a result,the final sales pricetends to be higher as these agents take their profits in the process to the delivery to a buyer.However,by conducting the entire process from purchase to sale by our ownwithout any agents,we can sell to our customers at a more reasonable and fairer price,which is one o
191、f our competitive strengths compared to the other real estatecompanies.Third,our advantage lies in our commitment to fair sales prices and our strong partnerships with financial institutions.Typically,companies specializing in purchasingproperties face challenges working with financial institutions
192、because they facilitate sellers in making lump-sum loan repayments.However,through persistentnegotiations,we secure loan commitments from these institutions,streamlining the entire process while enabling transactions without involving multiple intermediariesthat incur additional costs before a prope
193、rty being sold to an individual buyer.Finally,our strength lies in our design of a variety of real estate crowdfunding products.Future Real Estate Institute Inc.,our subsidiary,has products that have not beencommercialized in the current real estate crowdfunding market,such as ones purchased through
194、 voluntary sales,purchased through auctions,and ones after ourrenovation,which we believe is our advantage.8 Recent Developments Incorporation of New Entity in the U.S.On August 5,2024,GATES USA Inc,a wholly owned subsidiary of the Company,was incorporated in the state of Texas.GATES USA Inc engages
195、 in procurement andsales of lands and condominiums in the U.S.Sales The following sets forth partial and preliminary financial information and operating data from July 1,2024 to November 30,2024.We have provided the partial andpreliminary results and operating data described below for the purpose of
196、 providing investors with the most current information that our company is able to provideunder the time constraints,following the six months ended June 30,2024 for which we have filed interim unaudited financial statements,which form a part of thisprospectus.The preliminary financial information is
197、 not a comprehensive statement of our financial results from July 1,2024 to November 30,2024.These preliminaryamounts do not include other costs,such as operating expenses or interest expenses.Because our 2024 fiscal year has not ended as of yet,we are still in the process ofcompleting our annual ye
198、ar-end financial statements(which will encompass such partial and preliminary financial information and operating data).Therefore,it ispossible that normal annual adjustments will be made to such partial and preliminary financial information and operating data.During the period from July 1,2024 thro
199、ugh November 30,2024,the Company settled 377 sales transactions of condominiums.The aggregate settlement amount ofthese condominiums was 7,814 million(approximately US$49 million),and the aggregate purchase price of these condominiums and related expenses correspondingto these sales was 6,708 millio
200、n(approximately US$42 million).During the period from July 1,2024 through November 30,2024,the Company settled 9 real estate consulting transactions and the aggregate settlement amount fromsuch transactions was 8 million(approximately US$47 thousand).The costs and expenses associated with these sett
201、lements was 932 thousand(approximately US$6thousand)During the period from July 1,2024 through November 30,2024,the Company received consideration from 1,787 agreements for the property management servicesand the aggregate consideration amount from such agreements was 78 million(approximately US$485
202、 thousand).The costs and expenses associated with thesesettlements was 35 million(approximately US$217 thousand).During the period from July 1,2024 through November 30,2024,the Company settled 14 sales transactions of solar power generation facilities.The aggregatesettlement amount of these solar po
203、wer generation facilities was 122 million(approximately US$761 thousand),and the aggregate purchase price of these facilities andrelated expenses corresponding to these sales was 95 million(approximately US$593 thousand).During the period from July 1,2024 through November 30,2024,the Company did not
204、 record interest revenue from the financial services.During the period from July 1,2024,through November 30,2024,the Company settled 156 real estate brokerage transactions and the aggregate settlement amount fromsuch transactions was 59 million(approximately US$367 thousand).The costs and expenses a
205、ssociated with these settlements was 373 thousand(approximatelyUS$2 thousand)During the period from July 1,2024,through November 30,2024,the Company received rent from 105 agreements for the real estate leasing and the aggregate rentfrom such agreements was 31 million(approximately US$192 thousand).
206、The costs and expenses associated with these rent revenues was 23 million(approximatelyUS$140 thousand).Loans and bonds During the period from July 1,2024 through January 10,2025,the Company entered into various loans and corporate bonds,in a total principal amount ofapproximately US$8.8 million,wit
207、h banks,financial institutions and individual investors for working capital purpose and for the purpose of purchasing real estateproperties.The Company paid off certain loans and bonds in an approximate aggregate amount of US$1,731 thousand ahead of schedule.See“ManagementsDiscussion and Analysis of
208、 Financial Condition and Results of Operations Loans and Bonds”in this prospectus for more detailed information about the loans andbonds.Authorized Share Increase On October 31,2024,the Company approved to increase the number of authorized shares from 30,000,000 to 67,500,000.Forward Stock Split On
209、October 31,2024,the Company approved a forward stock split of the Companys issued and outstanding common shares,at a ratio of 1-for-2.25(the“Stock Split”).As of December 31,2023 and immediately prior to the Stock Split,there were 11,260,000 common shares issued and outstanding.As a result of the Sto
210、ck Split,theCompany has 25,335,000 common shares issued and outstanding.All share and per share data included within the consolidated financial statements and relatedfootnotes have been adjusted to account for the effect of the Stock Split.9 Implications of Being an Emerging Growth Company and a For
211、eign Private Issuer We are an“emerging growth company”,as defined in Section 2(a)of the Securities Act of 1933,as amended(which we refer to as the“Securities Act”),as modified bythe Jumpstart Our Business Startups Act of 2012(which we refer to as the“JOBS Act”).As such,we are eligible to take advant
212、age of specified reduced reporting andother requirements that are otherwise applicable generally to reporting companies that make filings with the U.S.Securities and Exchange Commission(which we referto as the“SEC”).For so long as we remain an emerging growth company,we will not be required to,among
213、 other things:present more than two years of audited financial statements and two years of related selected financial data and managements discussion and analysis offinancial condition and results of operations disclosure in our registration statement of which this prospectus forms a part;have an au
214、ditor report on our internal control over financial reporting pursuant to Section 404(b)of the Sarbanes-Oxley Act of 2002(which we refer to asthe“Sarbanes-Oxley Act”);disclose certain executive compensation related items;and seek shareholder non-binding advisory votes on certain executive compensati
215、on matters and golden parachute arrangements,to the extent applicable to ourCompany as a foreign private issuer.The JOBS Act also permits emerging growth companies to take advantage of an extended transition period to comply with new or revised accounting standardsapplicable to public companies.We h
216、ave elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(2)of the JOBS Act.This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and privatecompanies unt
217、il those standards apply to private companies.As a result,our financial statements may not be comparable to companies that comply with public companyeffective dates.We will remain an emerging growth company until the earlier of(i)the last day of the fiscal year following the fifth anniversary of the
218、 completion of this offering,(ii)the last day of the fiscal year during which we have total annual gross revenue of at least US$1.235 billion,(iii)the date on which we are deemed to be a“largeaccelerated filer”under the Securities Exchange Act of 1934,as amended(which we refer to as the“Exchange Act
219、”),which means the market value of our commonshares that are held by non-affiliates exceeds US$700.0 million as of the last business day of our most recently completed second fiscal quarter,and(iv)the date onwhich we have issued more than US$1.0 billion in non-convertible debt during the prior three
220、-year period.In addition,we report in accordance with SEC rules and regulations applicable to a“foreign private issuer.”As a foreign private issuer,we will take advantage of certainprovisions under the rules that allow us to follow the laws of Japan for certain corporate governance matters.Even when
221、 we no longer qualify as an emerging growthcompany,as long as we continue to qualify as a foreign private issuer under the Exchange Act,we will be exempt from certain provisions of the Exchange Act that areapplicable to U.S.domestic public companies,including:the sections of the Exchange Act regulat
222、ing the solicitation of proxies,consents,or authorizations with respect to a security registered under the ExchangeAct;the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specifiedinformation,and current report
223、s on Form 8-K upon the occurrence of specified significant events;and Regulation Fair Disclosure(which we refer to as“Regulation FD”),which regulates selective disclosures of material information by issuers.As a foreign private issuer,we have four months after the end of each fiscal year to file our
224、 annual report on Form 20-F with the SEC.In addition,our executiveofficers,directors,and principal shareholders are exempt from the requirements to report transactions in our equity securities and from the short-swing profit liabilityprovisions contained in Section 16 of the Exchange Act.10 Foreign
225、private issuers,like emerging growth companies,are exempt from certain more stringent executive compensation disclosure rules.As such,even when we nolonger qualify as an emerging growth company,as long as we continue to qualify as a foreign private issuer under the Exchange Act,we will continue to b
226、e exemptfrom the more stringent compensation disclosures required of public companies that are not a foreign private issuer.We may take advantage of these exemptions until such time as we are no longer a foreign private issuer.We are required to determine our status as a foreign privateissuer on an
227、annual basis at the end of our second fiscal quarter.We would cease to be a foreign private issuer at such time as more than 50%of our outstanding votingsecurities are held by U.S.residents and any of the following three circumstances applies:(i)the majority of our executive officers or directors ar
228、e U.S.citizens or residents;(ii)more than 50%of our assets are located in the United States;or (iii)our business is administered principally in the United States.In this prospectus,we have taken advantage of certain of the reduced reporting requirements as a result of being an emerging growth compan
229、y and a foreign privateissuer.Accordingly,the information that we provide in this prospectus may be different than the information you may receive from other public companies in which youhold equity interests.If some investors find our securities less attractive as a result,there may be a less activ
230、e trading market for our securities and the prices of oursecurities may be more volatile.Implications of Being a Controlled Company The“controlled company”exception to the rules of the Nasdaq provides that a company of which more than 50%of the voting power is held by an individual,group oranother c
231、ompany,a“controlled company,”need not comply with certain requirements of the corporate governance rules of the Nasdaq.As of the date of this prospectus,Yuji Sekino,the Chief Executive Officer and a director of the Company,owned an aggregate of 15,930,000 common shares,which represents approximately
232、 62.9%ofthe voting power of our outstanding common shares,directly and indirectly through RECON MARK,INC.Following this offering,Mr.Sekino will controlapproximately 60.5%of the voting power of our outstanding common shares if all the common shares being offered are sold(or 60.1%of our outstanding vo
233、ting powerif the underwriters option to purchase additional shares is exercised in full).Accordingly,if we obtain listing on the Nasdaq,we will be a“controlled company”withinthe meaning of the corporate governance rules of the Nasdaq.Controlled companies are exempt from the corporate governance rule
234、s of the Nasdaq requiring that listedcompanies have(i)a majority of the board of directors consist of“independent”directors under the listing standards of the Nasdaq,(ii)a nominating/corporategovernance committee composed entirely of independent directors and a written nominating/corporate governanc
235、e committee charter meeting the requirements of theNasdaq,and(iii)a compensation committee composed entirely of independent directors and a written compensation committee charter meeting the requirements of theNasdaq.We currently utilize and presently intend to continue to utilize these exemptions.A
236、s a result,we may not have a majority of independent directors,ournomination and corporate governance committee and compensation committee may not consist entirely of independent directors and such committees may not besubject to annual performance evaluations.Accordingly,you may not have the same p
237、rotections afforded to shareholders of companies that are subject to all of thecorporate governance requirements of the Nasdaq.See“Management Corporate Governance Practices.”Following this offering,Mr.Sekino will control approximately 60.5%of the voting power of our outstanding common shares if all
238、the common shares are sold(or60.1%of our outstanding voting power if the underwriters exercise the over-allotment option in full).Corporate Information GATES GROUP Inc.was founded in Japan in May 2018.Our agent for service of process in the United States is Cogency Global Inc.located at 122 East 42n
239、d Street,18th Floor,New York,NY 10168.Our principal place of business is located at 34F Sumitomo Fudosan Shinjuku Grand Tower,8-17-1 Nishishinjuku,Shinjuku-ku,Tokyo,Japan,and our telephone number is+81-03-5937-0846.Our website is www.gatestokyo.co.jp.Information on our website or accessible via our
240、website is notreflected in this prospectus and is not part of this prospectus.Any information on our website should not be considered part of this prospectus.The address of ourwebsite is included in this prospectus for informational purposes only.11 THE OFFERING Issuer:GATES GROUP Inc.Securities off
241、ered by us:1,000,000 common shares(up to 1,150,000 shares if the underwriters exercise the over-allotment option in full)based on an assumed initial public offering price per share is US$6.00,the midpoint of the anticipated price range.Public offering price:For purposes of this prospectus,the assume
242、d initial public offering price per common share is US$6.00(which isthe midpoint of the price range set forth on the cover page of this prospectus).The actual offering price percommon share will be as determined between the underwriters and us based on market conditions at the time ofpricing.Therefo
243、re,the assumed public offering price used throughout this prospectus may not be indicative of thefinal offering price.Over-allotment option:We have granted to the underwriters an option to purchase up to an additional 150,000 common shares(15%ofthe number of common shares sold in this offering)exerc
244、isable solely to cover over-allotments,if any,at theapplicable public offering price less the underwriting discounts and commissions shown on the cover page of thisprospectus.The underwriters may exercise this option in full or in part at any time and from time to time until 45days after the date of
245、 this prospectus.Common shares outstanding before this offering:25,335,000 common shares(1)Common shares expected to be outstandingimmediately after this offering:26,335,000 common shares(or 26,485,000 common shares if the underwriters exercise in full their option topurchase additional common share
246、s).Use of proceeds:We expect to receive net proceeds from this offering of approximately US$4,850,000(or approximatelyUS$5,682,500 if the underwriters exercise in full their option to purchase up to 150,000 if the underwritersexercise the over-allotment option in full)after deducting estimated under
247、writing discounts and commissions ofUS$450,000(7.5%of the gross proceeds of the offering)(or approximately US$517,500 if the representativeexercises in full its over-allotment option)and after our offering expenses,estimated at US$700,000(orapproximately US$700,000 if the underwriters exercise the o
248、ver-allotment option in full).We intend to use the netproceeds from this offering to fund mergers and acquisitions of other businesses,development of the auctionplatform for condominiums and pre-owned solar power generation facilities,general corporate purposes,such asfunds to purchase condominiums,
249、and working capital.See“Use of Proceeds.”Risk factors:See“Risk Factors”beginning on page 15 of this prospectus for a discussion of some of the factors you shouldcarefully consider before deciding to invest in our common shares.Listing:We have applied to list our common shares on the Nasdaq under the
250、 symbol“GTSG”.The approval of our listingon the Nasdaq is a condition of closing this offering.Lock-Ups:We,all of our directors and executive officers,and holders of our outstanding securities(or securities convertibleor exercisable into our common shares)have agreed not to offer for sale,issue,sell
251、,contract to sell,pledge orotherwise dispose of any of our common shares or securities convertible or exercisable into common shareswithout the prior written consent of the representative for a period of twelve(12)months from the date on whichthe trading of the common shares on the Nasdaq commences,
252、subject to certain limited exceptions.See“UnderwritingLock-Up Agreements.”Dividend policy:We have not paid annual dividends to shareholders in the past.Following our public offering,the payment offuture dividends on our common shares,if any,must be approved by our common shareholders at the annualme
253、eting of the shareholders,will depend on many factors,and the common shareholders may not approve.(1)Unless we indicate otherwise,all information in this prospectus:is based on 25,335,000 common shares issued and outstanding as of June 30,2024;assumes no exercise by the representative of its option
254、to purchase up to an additional 150,000 common shares to cover over-allotments,if any;and excludes the number of common shares underlying 760,050 stock acquisition rights(with an exercise price of 1(US$0.01)per common share)equal to 3%ofthe issued and outstanding common shares on a fully diluted bas
255、is as of the day prior to the successful listing on the Nasdaq,subject to adjustment as providedin the stock acquisition rights agreement.12 SELECTED CONSOLIDATED FINANCIAL INFORMATION AND OPERATING DATA The following tables set forth our selected consolidated financial information and operating dat
256、a as of and for the years ended December 31,2023 and 2022,and as of June 30,2024 and for the six months ended June 30,2024 and 2023.You should read the following selected consolidated financial information and operatingdata in conjunction with,and it is qualified in its entirety by reference to,our
257、audited consolidated financial statements and the related notes thereto,our unauditedconsolidated financial statements and related notes thereto,and the sections entitled“Capitalization”and“Managements Discussion and Analysis of FinancialCondition and Results of Operations”,each of which are include
258、d elsewhere in this prospectus.Our selected consolidated statements of operations and comprehensive loss information and operating data for the years ended December 31,2023 and 2022,and our related selected consolidated balance sheets information as of December 31,2023 and 2022,have been derived fro
259、m our audited consolidated financialstatements as of and for the years ended December 31,2023 and 2022,prepared in accordance with U.S.GAAP,which are included elsewhere in this prospectus.Our summary consolidated statement of income information and operating data for the six months ended June 30,202
260、4 and 2023,and our related summaryconsolidated balance sheet information as of June 30,2024,have been derived from our unaudited consolidated financial statements as of June 30,2024 and for the sixmonths ended June 30,2024 and 2023,prepared in accordance with U.S.GAAP,which are included elsewhere in
261、 this prospectus.Our historical results for the periods presented below are not necessarily indicative of the results to be expected for any future periods.Consolidated statements of operations and comprehensive loss information:Year Ended December 31,2023 2022 Revenues,net$108,703,609$109,799,089 C
262、ost of revenues 92,883,812 94,682,769 Gross profit 15,819,797 15,116,320 Operating expenses Selling,general and administrative expenses 15,254,672 14,848,396 Total operating expenses 15,254,672 14,848,396 Income from operations 565,125 267,924 Other income(expenses)Other income 112,580 105,308 Inter
263、est expenses (511,452)(93,407)Other expenses (205,791)(58,537)Total other expenses (604,663)(46,636)Income(loss)before income taxes (39,538)221,288 Income tax expense(benefit)(3,916)166,260 Net income(loss)$(35,622)$55,028 Less:net income attributable to noncontrolling interests 4,395 5,134 Net inco
264、me(loss)attributable to GATES GROUP Inc.$(40,017)$49,894 Six Months Ended June 30,2024 2023 Revenues,net$66,907,985$48,935,233 Cost of revenues 57,404,895 42,192,701 Gross profit 9,503,090 6,742,532 Operating expenses Selling,general and administrative expenses 10,319,758 7,427,627 Total operating e
265、xpenses 10,319,758 7,427,627 Loss from operations (816,668)(685,095)Other income(expenses)Other income 104,908 85,795 Interest expenses (268,267)(289,158)Other expenses (81,654)(118,585)Total other expenses (245,013)(321,948)Loss before income taxes (1,061,681)(1,007,043)Income tax benefit (393,104)
266、(380,777)Net loss$(668,577)$(626,266)Less:net income attributable to noncontrolling interests -1,248 Net loss attributable to GATES GROUP Inc.$(668,577)$(627,514)Reconciliation of non-GAAP measures:Year Ended December 31,2023 2022 Net income(loss)$(35,622)$55,028 Income tax expense(benefit)(3,916)16
267、6,260 Income(loss)before income taxes (39,538)221,288 Adjustments for:Depreciation and amortization expense 354,085 281,463 Other income(2)(112,580)(105,308)Interest expense 511,452 93,407 Other expenses(2)205,791 58,537 Adjusted EBITDA(1)$919,210$549,387 Adjusted EBITDA margin(1)0.85%0.50%Six Month
268、s Ended June 30,2024 2023 Net loss$(668,577)$(626,266)Income tax expense(benefit)(393,104)(380,777)Loss before income taxes (1,061,681)(1,007,043)Adjustments for:Depreciation and amortization expense 173,307 189,010 Other income(2)(104,908)(85,795)Interest expense 268,267 289,158 Other expenses(2)81
269、,654 118,585 Adjusted EBITDA(1)$(643,361)$(496,085)Adjusted EBITDA margin(1)(0.96)%(1.01)%(1)We define Adjusted EBITDA as income from operations before income tax expense,depreciation and amortization expense,other income,interest expense,and other expenses.Adjusted EBITDA margin is calculated by di
270、viding Adjusted EBITDA for a period by revenues,net for the same period.Management haspresented the performance measure Adjusted EBITDA because it monitors performance at a consolidated level and believes that this measure is relevant to anunderstanding of the Companys financial performance.In addit
271、ion,we believe this metric provides useful information in understanding our operatingperformance and trends in our business.Adjusted EBITDA is not a defined performance measure in U.S.GAAP.The Companys definition of AdjustedEBITDA may not be comparable with similarly titled performance measures and
272、disclosures by other entities.(2)Other income and other expense were excluded from calculation of EBITDA and EBITDA margin as they represent income and expenses which do not incurfrequently in the ordinary course of the Companys business.For all the periods presented,other income primarily consists
273、of interest income from short-termloans and bonds receivable and other one-off income.Other expenses primarily consist of administrative expenses for loans for property acquisitions andworking capital for the years ended December 31,2023 and 2022 and the six months ended June 30,2023.For the six mon
274、ths ended June 30,2024,otherexpenses primarily consist of amortization of bond issuance cost.The Company plans to use a portion of the proceeds from this offering to finance propertyacquisition and working capital thereafter and therefore our management expects that these expenses will be minimal as
275、 the extent of our reliance on loans andbonds will decrease.Consolidated balance sheets information:As of December 31,2023 2022 Total assets$18,804,912$14,286,032 Total liabilities 17,749,523 13,015,595 Total equity 1,055,389 1,270,437 As of June 30,2024 Total assets$16,341,078 Total liabilities 15,
276、847,732 Total equity 493,346 13 SUMMARY OF RISK FACTORS Below is a summary of material risks,uncertainties and other factors that could have a material effect on the Company and its operations:Our ability to raise capital in the future may be limited,and our failure to raise capital when needed coul
277、d prevent us from growing.It may not be possible for investors to effect service of process within the United States upon most our directors,corporate auditors and executive officers,or toenforce against us or those persons judgments obtained in U.S.courts predicated upon the civil liability provisi
278、ons of the federal securities laws of the UnitedStates.The illiquidity of real estate properties could significantly impede our ability to resell properties that we purchase.We may not make a profit if we sell a property.We may be incorrect in our determination of whether a certain property may be s
279、old at a profit,which could cause us to be unable to resell such propertywithout incurring a loss.A property that we purchase may turn out to be subject to litigation or liens that we failed to identify prior to our purchase or become subject to litigation orliens after our purchase,which would caus
280、e us to suffer a loss.A property that we purchase may turn out to have structural or other issues that we failed to identify prior to our purchase or may become subject to damagedue to factors outside of our control,which would cause us to suffer a loss.We may not be able to attract and retain a suf
281、ficient number of purchase/sales personnel needed to maintain and grow our business.A material amount of our revenues may be concentrated in one or more large purchasers.If we lose or experience a significant reduction in sales to such keypurchasers,our revenues may decrease substantially and our re
282、sults of operations and financial condition may be harmed.Condominiums that we purchase may become subject to damage due to factors outside of our control,which would cause us to suffer a loss.If properties are not available at competitive prices,our sales and results of operations could be adversel
283、y affected.A downturn in the real estate market or changes in industry trends would negatively impact our business.Competition for properties may result in fewer opportunities for us to either purchase properties or increase prices for properties,which may impede ourgrowth and materially and adverse
284、ly affect us.The consideration paid for properties that we purchase may exceed fair market value,which may harm our financial condition and operating results.Inflation may adversely affect us by increasing costs beyond what we can recover through price increases.We may incur significant costs in see
285、king purchasers for the properties that we purchase.We face risks associated with property purchases.If the security of our investors confidential information stored on our crowdfunding platform is breached or otherwise subjected to unauthorized access,theirsecure information may be stolen.Any signi
286、ficant disruption in service on our crowdfunding platform or in our computer or communications systems could reduce our attractiveness and result ina loss of users.Increasing competition within our emerging industry could have an impact on our business prospects.We may be incorrect in our determinat
287、ion of whether a certain solar power generation facility may be sold at a profit,which could cause us to be unable toresell such solar power generation facility without incurring a loss.Solar power generation facilities that we purchase may become subject to damage due to factors outside of our cont
288、rol,which would cause us to suffer a loss.If we cannot compete successfully against other resellers of solar power generation facilities,we may not be successful in developing our operations and ourbusiness may suffer.The success of our planned auction platform will rely on the supply and demand for
289、 condominiums and pre-owned solar power generation facilities.Even if the common shares are listed on the Nasdaq,there can be no assurance that we will be able to comply with the Nasdaqs continued listing standards.The price of our common shares could be subject to rapid and substantial volatility.T
290、he price of the common shares may fluctuate substantially.Management will have broad discretion as to the use of the proceeds from this offering,and we may not use the proceeds effectively.As a controlled company,we are not subject to all of the corporate governance rules of the Nasdaq.If the voting
291、 power of our capital stock continues to be highly concentrated,it may prevent you and other minority shareholders from influencing significantcorporate decisions and may result in conflicts of interest.We may incur significant taxation from an investigation by the tax authority in Japan.We may face
292、 restrictions on foreign investment related to Foreign Exchange and Foreign Trade Act in Japan.14 RISK FACTORS An investment in the common shares is highly speculative and involves a high degree of risk.We operate in a dynamic and rapidly changing industry thatinvolves numerous risks and uncertainti
293、es.You should carefully consider the factors described below,together with all of the other information contained in thisprospectus,including the audited financial statements and the related notes included in this prospectus,before deciding whether to invest in the common shares.These risk factors a
294、re not presented in the order of importance or probability of occurrence.If any of the following risks actually occur,our business,financialcondition and results of operations could be materially and adversely affected.In that event,the market price of the common shares could decline,and you couldlo
295、se part or all of your investment.Some statements in this prospectus,including statements in the following risk factors,constitute forward-looking statements.Please refer to the section entitled“Cautionary Statement Regarding Forward-Looking Statements.”General Risks Related to our Business Our abil
296、ity to raise capital in the future may be limited,and our failure to raise capital when needed could prevent us from growing.Our business and operations may consume resources faster than we anticipate.In the future,we may need to raise additional funds to invest in future growthopportunities.Additio
297、nal financing may not be available on favorable terms,if at all.If adequate funds are not available on acceptable terms,we may be unable to investin future growth opportunities,which could seriously harm our business and operating results.If we incur debt,the debt holders would have rights senior to
298、 commonshareholders to make claims on our assets,and the terms of any debt could restrict our operations,including our ability to pay dividends on our common shares.Furthermore,if we issue equity securities,shareholders will experience dilution,and the new equity securities could have rights senior
299、to those of our common shares.Any additional equity or equity-linked financings would be dilutive to our shareholders.Because our decision to issue securities in any future offering will depend onmarket conditions and other factors beyond our control,we cannot predict or estimate the amount,timing o
300、r nature of our future offerings.As a result,our shareholdersbear the risk of our future securities offerings reducing the market price of our common shares and diluting their interest.There is a risk that we will be a passive foreign investment company(which we refer to as“PFIC”)for the current or
301、any future taxable year,which could result inmaterial adverse U.S.federal income tax consequences if you are a U.S.holder.A non-U.S.corporation,such as our Company,is classified as a PFIC for any taxable year in which,after applying relevant look-through rules with respect tothe income and assets of
302、 its subsidiaries,either:(i)50%or more of the value of the corporations assets either produce passive income or are held for the production of passive income,based on the quarterlyaverage of the fair market value of such assets;or(ii)at least 75%of the corporations gross income is passive income.“Pa
303、ssive income”generally includes,for example,dividends,interest,certain rents androyalties,certain gains from the sale of stock and securities,and certain gains from commodities transactions.In determining the value and composition of our assets,the cash we raise in this offering will generally be co
304、nsidered to be held for the production of passive income and thus will be considered a passive asset.The determination of whether a corporation is a PFIC for a taxable year depends,in part,on the application of complex U.S.federal income tax rules that aresubject to differing interpretations.In addi
305、tion,the determination of whether a corporation will be a PFIC for any taxable year can only be made after the close of suchtaxable year.Our PFIC status will depend,in part,on the amount of cash that we raise in this offering and how quickly we utilize the cash in our business.Furthermore,because we
306、 may value our goodwill based on the market price of the common shares in this offering,a decrease in the market price of the common shares may alsocause us to be classified as a PFIC for the current or any future taxable year.Based upon the foregoing,it is uncertain whether we will be a PFIC for ou
307、r current taxableyear or any future taxable year.We believe we were not a PFIC in prior taxable year 2023 because less than 75%of our gross income was passive income and less than50%of the average value of our assets consisted of assets that would produce passive income in 2023.If we are a PFIC for
308、any taxable year during which a U.S.holder(as defined below)owns common shares,certain adverse U.S.federal income taxconsequences could apply to such U.S.holder.See“Certain Tax Considerations Certain U.S.Federal Income Tax Considerations for U.S.Holders”for furtherinformation.We have not determined,
309、if we were to be classified as a PFIC for a taxable year,whether we will provide information necessary for a U.S.holder to makea“qualified electing fund”election which,if available,would result in tax treatment different from(and generally less adverse than)the general tax treatment for PFICs.Accord
310、ingly,U.S.holders should assume that they will not be able to make a qualified electing fund election with respect to the common shares.The PFIC rules arecomplex,and each U.S.holder should consult its own tax advisor regarding the PFIC rules,the elections which may be available to it,and how the PFI
311、C rules mayaffect the U.S.federal income tax consequences relating to the ownership and disposition of our common shares.It may not be possible for investors to effect service of process within the United States upon all of our directors,corporate auditors and executive officers,or toenforce against
312、 us or those persons judgments obtained in U.S.courts predicated upon the civil liability provisions of the federal securities laws of the United States.We are a joint stock corporation organized under Japanese law.All of our directors,corporate auditors and executive officers reside in Japan,and si
313、gnificantlyall of our assets and the assets of such persons are located outside of the United States.As a result,it may not be possible for investors to effect service of process withinthe United States upon these persons or us,or to enforce against them or us judgments obtained in U.S.courts,whethe
314、r or not predicated upon the civil liabilityprovisions of the federal securities laws of the United States or of the securities laws of any state of the United States.There is doubt as to the enforceability in Japan,either in original actions or in actions for enforcement of judgments of U.S.courts,
315、of civil liabilities predicated solely on the federal securities laws of the United Statesor the securities laws of any state of the United States.A Japanese court may refuse to apply provisions of U.S.securities laws in original actions,or to enforcejudgments of U.S.courts that are based on such pr
316、ovisions,if it considers such provisions to be contrary to the public policy of Japan.The United States and Japan donot currently have a treaty providing for reciprocal recognition and enforcement of judgments,other than arbitration awards,in civil and commercial matters,and aJapanese court may deem
317、 that there is not sufficient basis for the reciprocity on the enforcement of judgments.Therefore,if you obtain a civil judgment by a U.S.court,you may not be able to enforce it in Japan.15 Rights of shareholders under Japanese law may be different from rights of shareholders in other jurisdictions.
318、Our articles of incorporation and the Companies Act of Japan(which we refer to as the“Companies Act”)govern our corporate affairs.Legal principlesrelating to matters such as the validity of corporate procedures,directors fiduciary duties and obligations,and shareholders rights under Japanese law may
319、 be differentfrom,or less clearly defined than,those that would apply to a company incorporated in any other jurisdiction.Shareholders rights under Japanese law may not be asextensive as shareholders rights under the laws of other countries.For example,under the Companies Act,only holders of 3%or mo
320、re of our total voting rights or ouroutstanding shares are entitled to examine our accounting books and records.Furthermore,there is a degree of uncertainty as to what duties the directors of a Japanesejoint stock corporation may have in response to an unsolicited takeover bid,and such uncertainty m
321、ay be more pronounced than that in other jurisdictions.Substantially all of our revenues are generated in Japan,but an increase of our international presence could expose us to fluctuations in foreign currencyexchange rates,or a change in monetary policy may harm our financial results.Our functional
322、 currency is Japanese yen and reporting currency is US dollar.Substantially all of our revenues are generated in Japan,but we adopt US dollar asreporting currency.We are exposed to fluctuations in the foreign currency exchange rate.We are subject to the effects of exchange rate fluctuations with res
323、pect to anyof these currencies which,among other factors,may be influenced by governmental policies and domestic and international economic and political developments.Anysignificant change in the value of the currencies of the countries in which we do business against the Japanese yen could adversel
324、y affect our financial condition andresults of operations due to translational and transactional differences in exchange rates.We cannot predict the effects of exchange rate fluctuations upon our future operating results because of the number of currencies involved,the amount of ourrevenues that wil
325、l be generated in other countries,the variability of currency exposures,and the potential volatility of currency exchange rates.We do not take anyactions to manage our foreign currency exposure,such as entering into hedging transactions.As a“foreign private issuer”we are permitted,and intend,to foll
326、ow certain home country corporate governance and other practices instead of otherwise applicableSEC and the Nasdaq requirements,which may result in less protection than is accorded to investors under rules applicable to domestic U.S.issuers.Our status as a foreign private issuer exempts us from comp
327、liance with certain SEC laws and regulations and certain regulations of the Nasdaq,includingcertain governance requirements such as independent director oversight of the nomination of directors and executive compensation.Further,consistent with corporategovernance practices in Japan,we do not have a
328、 standalone compensation committee or nomination and corporate governance committee under our board.In addition,we are not required under the Exchange Act to file current reports and financial statements with the U.S.Securities and Exchange Commission(which we refer to as the“SEC”)as frequently or a
329、s promptly as U.S.domestic companies whose securities are registered under the Exchange Act and we are generally exempt from filingquarterly reports with the SEC.Also,we are not required to provide the same executive compensation disclosures regarding the annual compensation of our five mosthighly c
330、ompensated senior executives on an individual basis as are required of U.S.domestic issuers.As a foreign private issuer,we are permitted to disclose executivecompensation on an aggregate basis and need not supply a Compensation Discussion&Analysis,as is required for domestic companies.Furthermore,as
331、 a foreignprivate issuer,we are also not subject to the requirements of Regulation FD(Fair Disclosure)promulgated under the Exchange Act.These exemptions andaccommodations will reduce the frequency and scope of information and protections to which you are entitled as an investor.For a detailed descr
332、iption of our homecountry corporate governance practices see“Management-Corporate Governance Practices”of this prospectus.16 As an“emerging growth company”under the JOBS Act,we are permitted to rely on exemptions from certain disclosure requirements.We qualify as an“emerging growth company”under the
333、 JOBS Act.As a result,we are permitted to,and intend to,rely on exemptions from certain disclosurerequirements.For so long as we are an emerging growth company,we will not be required to:have an auditor report on our internal control over financial reporting pursuant to Section 404(b)of the Sarbanes-Oxley Act;comply with any requirement that may be adopted by the Public Company Accounting Oversigh