Amendment No.5 to Form F-1

F-1/A 1 d400449df1a.htm AMENDMENT NO.5 TO FORM F-1 Amendment No.5 to Form F-1

As filed with the U.S. Securities and Exchange Commission on June 28, 2023

Registration No. 333-269068

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO.5

FORM F-1

REGISTRATION STATEMENT

Under

The Securities Act of 1933

Earlyworks Co., Ltd.

(Exact name of Registrant as specified in its charter)

Earlyworks Co., Ltd.

(Translation of Registrant’s name into English)

Japan

7371

Not Applicable

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

5-7-11, Ueno, Taito-ku

Tokyo, Japan 110-0005

+81 03-5614-0978

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Cogency Global Inc.

122 East 42nd Street, 18th Floor

New York, NY 10168

(212) 947-7200

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Ying Li, Esq.

Guillaume de Sampigny, Esq.

Hunter Taubman Fischer & Li LLC

950 Third Avenue, 19th Floor

New York, NY 10022

(212) 530-2206

Fang Liu, Esq.

VCL Law LLP

1945 Old Gallows Road, Suite 630

Vienna, VA 22182

(703) 919-7285

Approximate date of commencement of proposed sale to the public: Promptly after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, or the Securities Act, check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities 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 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(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

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 elected not to use the extended 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 Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, as amended, or until the registration statement shall become effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

EXPLANATORY NOTE

This registration statement on Form F-1 (File No. 333-269068) contains disclosure that will be circulated as two separate final prospectuses, as set forth below.

•

Public offering prospectus. A prospectus (the “Public Offering Prospectus”) to be used for the public offering of 1,200,000 American depositary shares representing 1,200,000 ordinary shares of the Registrant (the “Public Offering ADSs”), based on an assumed initial public offering price of $5.00, through the underwriters named on the cover page of the Public Offering Prospectus.

•

Resale prospectus. A prospectus (the “Resale Prospectus”) to be used for the offer and potential resale by the selling shareholders identified in this registration statement (the “Selling Shareholders”) of 2,338,400 American depositary shares representing 2,338,400 ordinary shares of the Registrant (the “Shareholder ADSs”), based on an assumed initial public offering price of $5.00. The Selling Shareholders own ordinary shares of the Registrant prior to this offering, which will be converted into Shareholder ADSs effective immediately prior to the effective time of this registration statement.

The Resale Prospectus is substantively identical to the Public Offering Prospectus, except for the following principal points:

•

it contains different outside and inside front covers and back cover pages; among other things, the identification of the underwriters and related compensation for the Public Offering ADSs will only be included in the Public Offering Prospectus and the Shareholder ADSs will be listed on the outside and inside front covers of the Resale Prospectus without identification of the underwriters and related compensation information;

•

it contains different “Offering” sections in the Prospectus Summary section relating to the offering of the Public Offering ADSs and the Shareholder ADSs, as applicable; such Offering section included in the Public Offering Prospectus will summarize the offering of the Public Offering ADSs and such Offering section included in the Resale Prospectus will summarize the offering of the Shareholder ADSs;

•

it contains different “Use of Proceeds” sections, with the Use of Proceeds section included in the Resale Prospectus only indicating that the Registrant will not receive any proceeds from the sale of the Shareholder ADSs by the Selling Shareholders that occur pursuant to this registration statement;

•

it does not contain the Capitalization and Dilution sections included in the Public Offering Prospectus;

•

a “Selling Shareholders” section is only included in the Resale Prospectus;

•

the “Underwriting” section from the Public Offering Prospectus is not included in the Resale Prospectus and the “Plan of Distribution” section is included only in the Resale Prospectus; and

•

it does not contain the Legal Matters section and does not include a reference to counsel for the underwriters.

The Registrant has included in this registration statement a set of alternate pages after the back-cover page of the Public Offering Prospectus (the “Alternate Pages”) to reflect the foregoing differences in the Resale Prospectus as compared to the Public Offering Prospectus. The Public Offering Prospectus will exclude the Alternate Pages and will be used for the public offering by the Registrant. The Resale Prospectus will be substantively identical to the Public Offering Prospectus except for the addition or substitution of the Alternate Pages and will be used for the resale offering by the Selling Shareholders.

The Selling Shareholders have represented to the Registrant that they will consider selling some or all of their respective Shareholders ADSs registered pursuant to this registration statement immediately after the pricing of the public offering, as requested by the underwriters for the public offering in order to create an orderly, liquid market for the American depositary shares (“ADSs”). As a result, the sales of our ADSs registered in this registration statement will result in two offerings by the Registrant taking place concurrently or sequentially, which could affect the price and liquidity of, and demand for, our ADSs. This risk and other risks are included in “Risk Factors” in each of the Public Offering Prospectus and the Resale Prospectus.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the United States Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, dated June 28, 2023

PRELIMINARY PROSPECTUS

LOGO

Earlyworks Co., Ltd.

1,200,000 American Depositary Shares

Representing 1,200,000 Ordinary Shares

This is an initial public offering of American depositary shares (“ADSs”) representing our ordinary shares (“Ordinary Shares”). We are offering 1,200,000 ADSs representing 1,200,000 Ordinary Shares (the “Public Offering ADSs”), based on an assumed initial public offering price of US$5.00 per ADS. In addition, the registration statement of which this prospectus forms a part also registers on behalf of the Selling Shareholders the resale of an aggregate of 2,338,400 ADSs representing 2,338,400 Ordinary Shares (the “Shareholder ADSs”) by certain of our shareholders (the “Selling Shareholders”), based on an assumed initial public offering price of US$5.00 per ADS. The initial public offering of the Public Offering ADSs and the offering of the Shareholders ADSs are collectively referred to herein as the offering. The offering of the Public Offering ADSs is being made on a firm commitment basis. Prior to this offering, there has been no public market for ADSs or our Ordinary Shares. We expect the initial public offering price of the Public Offering ADSs to be US$5.00 per ADS.

The Shareholder ADSs being offered by the Selling Shareholders are part of and conditioned on the closing of the offering of the Public Offering ADSs. The sales price to the public of the Public Offering ADSs and the Shareholder ADSs will be fixed at the initial public offering price per Public Offering ADS until such time as our ADSs are listed on the Nasdaq Capital Market (“Nasdaq”); thereafter, the Shareholder ADSs may be sold at prevailing market prices, prices related to prevailing market prices or at privately negotiated prices. We will not receive any proceeds from the sale of any of the Shareholder ADSs sold by the Selling Shareholders. The offering of the Shareholder ADSs by the Selling Shareholders will terminate at the earlier of such time as all of the Shareholder ADSs have been sold pursuant to the registration statement and the date on which it is no longer necessary to maintain the registration of the Shareholder ADSs as a result of such ADSs being permitted to be offered and resold without restriction pursuant to the provisions of Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”), and the offering of the Shareholder ADSs may extend for a longer period of time than the offering of the Public Offering ADSs. The Shareholder ADSs will be resold from time to time by the Selling Shareholders.

We have applied to list the ADSs on Nasdaq under the symbol “ELWS.” It is a condition to the closing of this offering that the ADSs are approved for listing on Nasdaq and there is no guarantee or assurance that ADSs will be approved for listing on Nasdaq. At this time, Nasdaq has not yet approved our application to list our ADSs.

Investing in the ADSs involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors ” beginning on page 14 to read about factors you should consider before buying the ADSs.

We are an “emerging growth company” as defined under the federal securities laws and will be subject to reduced public company reporting requirements. Please read the disclosures beginning on page 5 of this prospectus for more information.

Following the completion of this offering, Mr. Satoshi Kobayashi, our chief executive officer and representative director, will beneficially own approximately 52.35% of the aggregate voting power of our issued and outstanding Ordinary Shares assuming no exercise of the underwriters’ over-allotment option, or approximately 51.84% assuming full exercise of the underwriters’ over-allotment option, in each case, excluding 48,000 and 55,200 Ordinary Shares, respectively, underlying the Representative’s Warrants (as defined below) and based on an assumed initial public offering price of US$5.00 per ADS. As such, we will be deemed a “controlled company” under Nasdaq Listing Rule 5615(c). However, even if we are deemed a “controlled company,” we do not intend to avail ourselves of the corporate governance exemptions afforded to a “controlled company” under the Nasdaq Listing Rules. See “Risk Factors” and “Management—Controlled Company.”

Per ADS

Total Without
Over-Allotment
Option

Total With
Over-Allotment
Option

Initial public offering price of the Public Offering ADSs

Underwriters’ discounts⁽¹⁾⁽²⁾

Proceeds to our Company before expenses⁽³⁾

(1)	Represents underwriting discounts equal to 7% per Public Offering ADS, which is the underwriting discount we have agreed to pay to underwriters with respect to Public Offering ADSs sold to investors in this offering of the Public Offering ADSs.

(2)

Does not include a non-accountable expense allowance payable to the underwriters equal to 1.0% of the gross proceeds of this offering of the Public Offering ADSs or the reimbursement of certain expenses of the underwriters. For a description of the other terms of compensation to be received by the underwriters, see “Underwriting.”

(3)

In addition to the underwriting discounts and expenses discussed above, we have agreed to issue, upon closing of this offering of the Public Offering ADSs, warrants to US Tiger Securities, Inc., as representative of the several underwriters (the “Representative”), exercisable commencing on the date of commencement of sales of securities in this offering for a period of three years, entitling the Representative to purchase up to ADSs, representing 4% of the total number of the Public Offering ADSs sold in this offering (including any ADSs sold as a result of the exercise of the underwriters’ over-allotment option) at a per Public Offering ADS price equal to $ , 125% of the initial public offering price (the “Representative’s Warrants”). The registration statement of which this prospectus is a part also covers the Representative’s Warrants and the ADSs issuable upon the exercise thereof and underlying Ordinary Shares. See “Underwriting” for additional information regarding total underwriter compensation.

The underwriters expect to deliver the Public Offering ADSs against payment in U.S. dollars in New York, New York on or about [●], 2023.

Neither the U.S. Securities and Exchange Commission nor any state securities commission nor any other regulatory body has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

US Tiger Securities, Inc.

Prospectus dated [●], 2023

TABLE OF CONTENTS


	Page
PROSPECTUS SUMMARY		1
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS		11
ENFORCEABILITY OF CIVIL LIABILITIES		13
RISK FACTORS		14
USE OF PROCEEDS		33
DIVIDEND POLICY		34
CAPITALIZATION		35
DILUTION		37
CORPORATE HISTORY AND STRUCTURE		40
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		41
INDUSTRY		64
BUSINESS		72
REGULATION		87
MANAGEMENT		90
PRINCIPAL SHAREHOLDERS		96
RELATED PARTY TRANSACTIONS		98
DESCRIPTION OF SHARE CAPITAL		99
DESCRIPTION OF AMERICAN DEPOSITARY SHARES		109
SHARES ELIGIBLE FOR FUTURE SALE		118
TAXATION		120
UNDERWRITING		128
EXPENSES RELATING TO THIS OFFERING		132
LEGAL MATTERS		132
EXPERTS		132
WHERE YOU CAN FIND ADDITIONAL INFORMATION		132
INDEX TO FINANCIAL STATEMENTS		F-1

About this Prospectus

We, the Selling Shareholders, and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by us or on our behalf or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted or where the person making the offer or sale is not qualified to do so or to any person to whom it is not permitted to make such offer or sale. The information contained in this prospectus is current only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations, and prospects may have changed since that date.

Our functional currency and reporting currency are the Japanese yen (“JPY” or “¥”), the legal currency of Japan. Translations of balances in the balance sheets, statements of income, statements of changes in shareholders’ equity and statements of cash flows from JPY into USD as of October 31, 2022 and as of April 30, 2022 are solely for the convenience of the readers and are calculated at the rate of USD1.00=JPY148.63, representing the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on October 31, 2022. Historical and current exchange rate information may be found at https://www.federalreserve.gov/releases/h10/default.htm.

Conventions that Apply to this Prospectus

Unless otherwise indicated or the context requires otherwise, references in this prospectus to:

•

“ADRs” are to the American Depositary Receipts that may evidence the ADSs (defined below);

•

“ADSs” are to the American Depositary Shares, each of which represents one Ordinary Share (defined below);

•

“Exchange Act” are to the Securities Exchange Act of 1934, as amended;

•

“Japanese yen” or “JPY” are to the legal currency of Japan;

•

“Nasdaq” are to the Nasdaq Stock Market LLC;

•

“Ordinary Shares” are to the ordinary shares of Earlyworks Co., Ltd.;

•

“SEC” are to the United States Securities and Exchange Commission;

•

“Securities Act” are to the Securities Act of 1933, as amended;

•

“U.S.”, “US” or “United States” are to United States of America, its territories, its possessions and all areas subject to its jurisdiction;

•

“US$,” “$,” “USD” or “U.S. dollars” are to the legal currency of the United States; and

•

“we,” “us,” “our,” “our Company,” or the “Company” are to Earlyworks Co., Ltd.

Unless the context indicates otherwise, all information in this prospectus assumes no exercise by the underwriters of their over-allotment option.

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements included elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in the ADSs, discussed under “Risk Factors,” before deciding whether to buy the ADSs.

Unless otherwise indicated, all share amounts and per share amounts in this prospectus have been presented giving effect to (i) a forward split of our outstanding Ordinary Shares at a ratio of 50-for-1 which became effective on July 16, 2019, and (ii) a forward split of our outstanding Ordinary Shares at a ratio of 100-for-1 which became effective on October 26, 2021. For details, see “Description of Share Capital.”

Overview

We are a Japanese company operating our proprietary private blockchain technology, Grid Ledger System (“GLS”), to leverage blockchain technology in various applications in a range of industries.

In Japan, there have been several incidents of information leakage from the databases of various companies, and there is a demand in Japan for stronger information security. In order to provide stronger information security, various companies in Japan are conducting tests of systems utilizing blockchain technology. Among those continuing tests, as of the date of this prospectus, very few systems have been completed and are fully operating. We believe that Japan is lagging behind the international progress of blockchain system development. One reason for the slow development progress is the extremely small number of engineers in Japan who can handle blockchain technology and the high cost of learning. There is an assumption in Japan that no blockchain technology in use can process a large number of transactions at high speed while guaranteeing security. Public blockchains generally have slow transaction processing speeds and poor real-time data processing capacity, and since there is no administrator on public blockchains, users are responsible for dealing with any problems that may arise in transactions.

In order to address these challenges, we believe blockchain technology needs to be transformed to facilitate high-speed and real-time data processing, while ensuring security and usability. We believe our proprietary blockchain technology, GLS, can provide a solution to those challenges. GLS has the characteristics of traditional blockchains, such as tamper-resistance, security, and reliability; in addition, GLS also demonstrates high-speed processing capacity.

Since our founding in May 2018, we have continued our research and development efforts. Such efforts have been led by our Chief Technology Officer, Hiroki Yamamoto, with advice from large Japanese companies such as NTT Docomo, Inc. and NEC Communication Systems, Ltd., and academia representatives such as Professor Shudo who is currently affiliated with Kyoto University, among others. We have verified the applicability of GLS in virtual space (Metaverse), financial domain and other domains. Currently, we are working with AMBITION DX HOLDINGS Co., Ltd., which is a listed company in Japan, to apply our GLS to an online lease signing system.

We aim to increase the number of use cases of GLS, and offer a general-purpose System Development Kit (“SDK”) for external engineers to improve GLS. SDKs are software development tools for developers to create applications for platforms and systems. Our mission is to keep updating GLS and make it an infrastructure in the coming Web3/metaverse-like data society.

We primarily generate revenue from our software and system development services and consulting and solution services. For the six months ended October 31, 2022 and 2021, and the fiscal years ended April 30, 2022 and 2021, we had total revenue of approximately JPY32.2 million (US$0.2 million), JPY190.8 million, JPY463.7 million (US$3.1 million) and JPY216.2 million, respectively. For the same fiscal periods, revenue

generated from our software and system development services accounted for approximately 35.3%, 46.2%, 50.6% and 44.1% of our total revenue, respectively, and revenue generated from our consulting and solution services accounted for approximately 64.7%, 53.8%, 49.4% and 55.9% of our total revenue, respectively. For the same fiscal periods, we had net loss of approximately JPY213.3 million (US$1.4 million), JPY644.4 million, JPY602.5 million (US$4.1 million) and JPY70.5 million, respectively.

Our Strengths

We believe the following competitive advantages are essential for our success and differentiate us from our competitors:

•

Our transformative blockchain-based technology GLS;

•

Dedicated talent team; and

•

Trusted relationships with business partners.

Our Growth Strategies

In the mid to long term, we plan to introduce GLS to customers in various industries and expect to generate more revenue from systems based on GLS through the existing and future revenue sharing arrangements with our clients. After that, we plan to complete a general-purpose GLS-SDK, and create an environment where GLS becomes a foundational technology of the data society, allowing our Company to secure infrastructure fees or licensing income.

We have verified the applicability of GLS in various domains, including, but not limited to, the following:

•

the application of Structured Query Language to GLS based on a demonstration test with NEC Communication Systems, Ltd.;

•

the application of GLS to online identity verification and authentication;

•

the application of GLS to an online lease signing system based on the cooperation with AMBITION DX HOLDINGS Co., Ltd.;

•

the application of GLS in the financial domain;

•

the application of GLS in virtual space (Metaverse); and

•

the application of GLS in an NFT (non-fungible token) platform.

“Microsoft for Startups” is a program that supports a selected group of startups. Once selected by the program, such startups would gain recognition and publicity in the technological industry, receive support for technologies such as Azure, and gain access to various resources for business expansion. In February 2021, we were selected by “Microsoft for Startups” in recognition of the wide applicability of our GLS, for collaboration efforts with Microsoft to optimize the environment for ultra-high-speed next-generation hybrid databases using GLS.

In the future, we hope to generate revenue by applying GLS to the following domains, the details of which are being finalized:

•

Insurance: It takes time to verify the authenticity of information at the time of screening or switching insurance policies. It requires explanatory actions to sign insurance contracts. We believe that GLS, which can verify identity and manage contractual data, will facilitate the completion of insurance transactions and enable smooth, accurate, and quick switching of insurance policies.

•

Energy: Rapid processing of records of electricity generated by individuals and companies and transaction records are required. We believe GLS will enable the required rapid processing.

•

Entertainment: Entertainment, especially online gaming, requires rapid processing of a large number of transactions conducted among a large number of users, user identity verification and in-game activity records. We believe GLS will enable such processing.

•

Supply chain: It is difficult to fully grasp and control the movement of goods from production sites to consumers in real time. By implementing blockchain technology throughout the supply chain, companies can securely record movements in real time based on accurate information. We believe GLS will provide fast real-time data management that enables companies involved in the supply chain to obtain meaningful information.

•

Trade: Multi-party collaboration, among importers, exporters, shipping companies, and customs offices, is required to accurately record the large volume of processed goods. We believe GLS will provide fast real-time data management that enables companies involved in the trade domain to obtain meaningful information.

To achieve these goals, we will invest in research and development of GLS, secure talented human resources, and actively pursue alliances with partner companies, aiming to become a company that functions as one of the world’s infrastructures.

Corporate History and Structure

Our Company was incorporated in Japan on May 1, 2018 as a stock corporation pursuant to the laws of Japan. The following chart illustrates our corporate structure as of the date of this prospectus and upon completion of this offering assuming no exercise of the over-allotment option (for purpose of the illustration of this chart only, we assume the Selling Shareholders do not sell any ADSs representing Ordinary Shares upon closing of this offering):

LOGO

Notes: all percentages reflect the equity interests held by each of our shareholders.

(1)

Represents 4,000,000 Ordinary Shares held by Themis Capital GK, which is 100% owned by Satoshi Kobayashi, our chief executive officer and representative director, as of the date of this prospectus.

(2)

Represents an aggregate of 4,377,135 Ordinary Shares held by 53 shareholders of our Company, each one of which holds less than 5% of our equity interests, as of the date of this prospectus.

(3)

The percentage of Ordinary Shares prior to this offering does not include up to an aggregate of 3,035,000 Ordinary Shares issuable upon the exercise of options outstanding as of the date of this prospectus. The percentage of Ordinary Shares to be owned after this offering is based on 13,839,400 Ordinary Shares outstanding as of the date of this prospectus and the issuance of 1,200,000 Public Offering ADSs representing 1,200,000 Ordinary Shares in the offering based on the assumed initial public offering price of $5.00, and does not include up to an aggregate of 3,035,000 Ordinary Shares issuable upon the exercise of options outstanding as of the date of this prospectus.

For details of our principal shareholders’ ownership, please refer to the beneficial ownership table in “Principal Shareholders” beginning on page 96 of this prospectus.

Corporate Information

Our principal executive office is located at 5-7-11, Ueno, Taito-ku, Tokyo, Japan 110-0005, and our telephone number is +81 03-5614-0978. Our website is https://e-arly.works/. Information contained on, or available through, our website does not constitute part of, and is not deemed incorporated by reference into, this prospectus. Our agent for service of process in the United States is Cogency Global Inc., at 122 East 42nd Street, 18th Floor, New York, NY 10168.

Summary of Risk Factors

Our business is subject to multiple risks and uncertainties, as more thoroughly described in “Risk Factors” starting on page 14 of this prospectus and elsewhere in this prospectus. We urge you to read “Risk Factors” and this prospectus in full. Our principal risks may be summarized as follows.

Risks Related to Our Business

Risks and uncertainties related to our business include, but are not limited to, the following:

•

Blockchain is a nascent and rapidly changing technology and there remains relatively small use of blockchain technology in the commercial marketplace. The slowing or stopping of the development or acceptance of blockchain technology may adversely affect our business (see the disclosure beginning on page 14 of this prospectus);

•

If we are unable to apply technology effectively in driving value for our customers through blockchain-based solutions, our business could be adversely affected (see the disclosure beginning on page 14 of this prospectus);

•

Our technology is dependent on telecommunications infrastructure and the performance of devices equipped with blockchain (see the disclosure beginning on page 15 of this prospectus);

•

We may experience operational system failures or interruptions that could materially harm our ability to conduct our operations (see the disclosure beginning on page 16 of this prospectus);

•

If we are not able to successfully compete, our business will be materially harmed (see the disclosure beginning on page 16 of this prospectus);

•

Competitors will likely attempt to imitate our services, products and technology. If we are unable to protect or preserve our proprietary rights, our business may be harmed (see the disclosure beginning on page 16 of this prospectus);

•

If one or more competitors obtain patents covering technology critical to the operation of our business, we may infringe on the intellectual property rights of others (see the disclosure beginning on page 17 of this prospectus);

•

If our vendors and third-party service providers experience difficulties, our business could be adversely affected (see the disclosure beginning on page 18 of this prospectus);

•

Our revenues are dependent on a limited number of major customers, and the loss of any such customer or the inability of any such customer to make payments to us as due, could have a material adverse effect on our business, results of operations and financial condition (see the disclosure beginning on page 18 of this prospectus); and

•

We may not have sufficient insurance to cover potential losses and claims (see the disclosure beginning on page 20 of this prospectus).

Risks Related to this Offering and the Trading Market

In addition to the risks described above, we are subject to general risks and uncertainties related to this offering and the trading market of the ADSs, including, but not limited to, the following:

•

An active trading market for the ADSs may not develop (see the disclosure beginning on page 22 of this prospectus);

•

You will experience immediate and substantial dilution in the net tangible book value of Ordinary Shares underlying the ADSs purchased (see the disclosure beginning on page 22 of this prospectus);

•

After the completion of this offering, share ownership will remain concentrated in the hands of our management, who will continue to be able to exercise a direct or indirect controlling influence on us (see the disclosure beginning on page 22 of this prospectus);

•

The sale or availability for sale of substantial amounts of the ADSs could adversely affect their market price (see the disclosure beginning on page 22 of this prospectus);

•

The market price of the ADSs may be volatile or may decline regardless of our operating performance, and you may not be able to resell your ADSs at or above the initial public offering price (see the disclosure beginning on page 23 of this prospectus);

•

There may be substantial sales of our ADSs by the Selling Shareholders after the effective date of the registration statement of which this prospectus forms a part, which could have a material adverse effect on the price of our ADSs after this offering (see the disclosure beginning on page 24 of this prospectus);

•

If we fail to implement and maintain an effective system of internal control, we may fail to meet our reporting obligations or be unable to accurately report our results of operations or prevent fraud, and investor confidence and the market price of the ADSs may be materially and adversely affected (see the disclosure beginning on page 24 of this prospectus); and

•

We will incur substantial increased costs as a result of being a public company (see the disclosure beginning on page 25 of this prospectus).

Impact of the COVID-19 Pandemic on our Operations and Financial Performance

During fiscal year ended April 30, 2020, the COVID-19 pandemic had some negative impact on our business operations when delay in sales activities occurred due to the inability to conduct scheduled in-person sales activities. Since fiscal year 2021, the COVID-19 pandemic has had no impact on our business operations. To respond to the COVID-19 pandemic and to protect the safety of our employees, we follow the Tokyo Metropolitan Government’s policy on controlling COVID-19, encourage mask wearing within the office, ventilate the office regularly, and have suspended large group events. See “Risk Factors—Risks Related to Our Business—Our business may be adversely affected by the impact of coronavirus, other epidemics or pandemics, acts of God, wars, insurrections, riots, infrastructure failures, and other force majeure events” beginning on page 20 of this prospectus.

Implications of Being an Emerging Growth Company

As a company with less than US$1.235 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act.

As long as we remain an emerging growth company, we may rely on exemptions from some of the reporting requirements applicable to public companies that are not emerging growth companies. In particular, as an emerging growth company, we:

•

may present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations;

•

are not required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives, which is commonly referred to as “compensation discussion and analysis”;

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are not required to obtain an attestation and report from our auditors on our management’s assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

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are not required to obtain a non-binding advisory vote from our shareholders on executive compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,” “say-on frequency” and “say-on-golden-parachute” votes);

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are exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and chief executive officer pay ratio disclosure;

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are eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act; and

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will not be required to conduct an evaluation of our internal control over financial reporting until our second annual report on Form 20-F following the effectiveness of our initial public offering.

We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under §107 of the JOBS Act.

Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions until we no longer meet the definition of an emerging growth company. We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.235 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering of the Public Offering ADSs; (c) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the United States Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our Ordinary Shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

Foreign Private Issuer Status

We are a foreign private issuer within the meaning of the rules under the Exchange Act. As such, we are exempt from certain provisions applicable to United States domestic public companies. For example:

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we are not required to provide as many Exchange Act reports, or as frequently, as a domestic public company;

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for interim reporting, we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies;

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we are not required to provide the same level of disclosure on certain issues, such as executive compensation;

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we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information;

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we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; and

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we are not required to comply with Section 16 of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction.

Controlled Company

Upon completion of this offering, Mr. Satoshi Kobayashi, our chief executive officer and representative director, will beneficially own approximately 52.35% of the aggregate voting power of our outstanding Ordinary Shares assuming no exercise by the underwriters of their over-allotment option, or 51.84% assuming full exercise of the over-allotment option, in each case, excluding 48,000 and 55,200 Ordinary Shares, respectively, underlying the Representative’s Warrants and based on an assumed initial public offering price of US$5.00 per ADS. As a result, we will be deemed a “controlled company” for the purpose of the Nasdaq listing rules. As a controlled company, we are permitted to elect to rely on certain exemptions from the obligations to comply with certain corporate governance requirements, including the requirements that:

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a majority of our board of directors consist of independent directors;

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our director nominees be selected or recommended solely by independent directors; and

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we have a nominating and corporate governance committee and a compensation committee that are composed entirely of independent directors with a written charter addressing the purposes and responsibilities of the committees.

As a foreign private issuer, however, Nasdaq corporate governance rules allow us to follow corporate governance practice in our home country, Japan, with respect to appointments to our board of directors and committees. We intend to follow home country practice as permitted by Nasdaq rather than rely on the “controlled company” exception to the corporate governance rules. See “Risk Factors—Risks Relating to this Offering and the Trading Market—Because we are a foreign private issuer and intend to take advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.” Accordingly, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

THE OFFERING

Securities offered by us

1,200,000 ADSs representing 1,200,000 Ordinary Shares, based on an assumed initial public offering price of $5.00.

Over-allotment option

We have granted to the underwriters an option, exercisable within forty-five (45) days from the closing of this offering, to purchase up to an aggregate of 180,000 additional ADSs, based on an assumed initial public offering price of $5.00.

Price per ADS

$5.00 per ADS. The actual initial public offering price may be at, above or below such assumed initial public offering price and will be determined at pricing based on, among other factors, the general condition of the securities markets at the time of this offering. See “Underwriting— Determination of Initial Public Offering Price” for more information.

Ordinary Shares outstanding prior to completion of this offering⁽¹⁾

13,839,400 Ordinary Shares

ADSs outstanding immediately after this offering⁽¹⁾

1,200,000 ADSs assuming no exercise of the underwriters’ over-allotment option and excluding 48,000 ADSs underlying the Representative’s Warrants

1,380,000 ADSs assuming full exercise of the underwriters’ over-allotment option and excluding 55,200 ADSs underlying the Representative’s Warrants

Ordinary Shares outstanding immediately after this offering⁽²⁾

15,039,400 Ordinary Shares assuming no exercise of the underwriters’ over-allotment option and excluding 48,000 Ordinary Shares underlying the Representative’s Warrants

15,219,400 Ordinary Shares assuming full exercise of the underwriters’ over-allotment option and excluding 55,200 Ordinary Shares underlying the Representative’s Warrants

Representative’s Warrants

The registration statement of which this prospectus forms a part also registers the Ordinary Shares underlying Representative’s Warrants to purchase up to an aggregate of 55,200 ADSs representing 4% of the total number of the Public Offering ADSs sold in this offering, including ADSs sold to cover over-allotments, if any (based on an assumed initial public offering price of $5.00 per ADS), as a portion of the underwriting compensation payable to the underwriters in connection with this offering of the Public Offering ADSs.

The Representative’s Warrants will be exercisable at any time, and from time to time, in whole or in part, commencing on the date of commencement of sales of the offering of the Public Offering ADSs

for a period of three years, at an exercise price of $6.25 per ADS (125% of the assumed initial public offering price per ADS in this offering of the Public Offering ADSs). See “Underwriting — Representative’s Warrants” for more information.

Listing

We have applied to have the ADSs listed on Nasdaq. At this time, Nasdaq has not yet approved our application to list our ADSs. The closing of this offering is conditioned upon Nasdaq’s final approval of our listing application, and there is no guarantee or assurance that our ADSs will be approved for listing on Nasdaq.

Proposed ticker symbol

“ELWS”

The ADSs

Each ADS represents one Ordinary Share.

The depositary or its nominee will be the holder of the Ordinary Shares underlying the ADSs and you will have the rights of an ADS holder as provided in the deposit agreement among us, the depositary, and all holders and beneficial owners of ADSs issued thereunder.

We do not expect to pay dividends in the foreseeable future. If, however, we declare dividends on our Ordinary Shares, the depositary will distribute the cash dividends and other distributions it receives on our Ordinary Shares after deducting its fees and expenses in accordance with the terms set forth in the deposit agreement.

You may surrender your ADSs to the depositary to withdraw the Ordinary Shares underlying your ADSs. The depositary will charge you a fee for such exchange.

We may amend or terminate the deposit agreement for any reason without your consent. Any amendment that imposes or increases fees or charges or which materially prejudices any substantial existing right you have as an ADS holder will not become effective as to outstanding ADSs until 30 days after notice of the amendment is given to ADS holders. If an amendment becomes effective, you will be bound by the deposit agreement as amended if you continue to hold your ADSs.

To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled “Description of American Depositary Shares.” We also encourage you to read the deposit agreement, which will be filed as an exhibit to the registration statement of which this prospectus forms a part.

Depositary

The Bank of New York Mellon

Use of proceeds

We estimate that the net proceeds to us from this offering of the Public Offering ADSs will be approximately $5.6 million (or $6.4 million if the underwriters exercise in full their option to purchase

additional ADSs), assuming an initial public offering price of $5.00 per ADS, after deducting the underwriting discounts and estimated offering expenses payable by us.

We intend to use the net proceeds from this offering of the Public Offering ADSs as follows: approximately 50% of the net proceeds for investment in the research and development of GLS and GLS-SDK, approximately 30% of the net proceeds for recruitment of global talents, and approximately 20% of the net proceeds for strengthening our corporate governance systems and the investment in businesses engaged in the development of blockchain-based products and services. We will not receive any proceeds from the sale of the Shareholder ADSs by the Selling Shareholders. See “Use of Proceeds” on page 33 for more information.

Lock-up

We have agreed not to, for a period of six months from the closing of this offering, offer, issue, sell, contract to sell, encumber, grant any option for the sale of, or otherwise dispose of, except in this offering, any of our ADSs, Ordinary Shares or securities that are substantially similar to our ADSs, Ordinary Shares. All officers, directors, and principal shareholders (defined as owners of five percent or more of the Company’s Ordinary Shares, including securities owned through warrants, options, or convertible securities), other than the Selling Shareholders, have agreed with the underwriters, subject to certain exceptions, not to sell, transfer, or dispose of, directly or indirectly, any of the ADSs, our Ordinary Shares, or securities convertible into or exercisable or exchangeable for the ADSs or our Ordinary Shares for a period of six months from the closing of this offering. See “Shares Eligible for Future Sale” and “Underwriting” for more information.

Risk factors

The ADSs offered hereby involve a high degree of risk. You should read “Risk Factors,” beginning on page 14 for a discussion of factors to consider before deciding to invest in the ADSs.

Payment and Settlement

The underwriters expect to deliver the Public Offering ADSs against payment therefor through the facilities of the Depository Trust Company (“DTC”) on [●], 2023.

⁽¹⁾

The number of ADSs to be outstanding immediately after this offering does not include an aggregate of 2,338,400 Shareholder ADSs, based on an assumed initial public offering price of $5.00. The actual number of ADSs to be outstanding following this offering will be determined based on the actual initial public offering price.

⁽²⁾

The number of Ordinary Shares to be outstanding immediately prior to and after this offering is based on 13,839,400 Ordinary Shares outstanding as of the date of this prospectus and does not include up to an aggregate of 3,035,000 Ordinary Shares issuable upon the exercise of options outstanding as of the date of this prospectus.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that reflect our current expectations and views of future events, all of which are subject to risks and uncertainties. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. 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 statements are likely to address our growth strategy, financial results, and financial needs. You must carefully consider any such statements and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety 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 results may vary materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

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assumptions about our future financial and operating results, including revenue, income, expenditures, cash balances, and other financial items;

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our ability to execute our growth strategies, including our ability to meet our goals;

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current and future economic and political conditions;

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our capital requirements and our ability to raise any additional financing which we may require;

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our ability to attract customers and further enhance our brand recognition;

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our ability to hire and retain qualified management personnel and key employees in order to enable us to develop our business;

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the COVID-19 pandemic;

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trends and competition in the blockchain industry; and

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other assumptions described in this prospectus underlying or relating to any forward-looking statements.

We describe certain material risks, uncertainties, and assumptions that could affect our business, including our financial condition and results of operations, under “Risk Factors.” We base our forward-looking statements on our management’s beliefs and assumptions based on information available to our management 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, you should be careful about relying on any forward-looking statements.

The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we refer to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

This prospectus contains references to market data and industry forecasts and projections, which were 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 therein has been

obtained from sources believed to be reliable, but that the accuracy and completeness of that information is not guaranteed. Although we believe such information to be accurate, we have not independently verified the data from these sources. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and additional uncertainties and risks regarding the other forward-looking statements in this prospectus due to a variety of factors, including those described in this section, the section entitled “Risk Factors,” and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in the forecasts and estimates.

ENFORCEABILITY OF CIVIL LIABILITIES

We are a stock company organized under Japanese law. Substantially all of our directors and our corporate auditors reside in Japan and significantly all of our assets and the assets of such persons are located outside of the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us or these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

We have appointed Cogency Global Inc. as our agent to receive service of process with respect to any action brought against us in the United States District Court for the Southern District of New York under the federal securities laws of the United States or of any state in the United States or any action brought against us in the Supreme Court of the State of New York in the County of New York under the securities laws of the State of New York.

Our Japanese legal counsel has advised us that there is uncertainty as to whether the courts of Japan would (i) recognize or enforce judgments of United States courts obtained against us or our directors or senior management predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or (ii) entertain original actions brought in Japan against us or our directors or senior management predicated upon the securities laws of the United States. The Civil Execution Act of Japan and the Code of Civil Procedure require Japanese courts to deny requests for the enforcement of judgments of foreign courts if foreign judgments fail to satisfy the requirements prescribed by the Civil Execution Act and the Code of Civil Procedure, including that:

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the jurisdiction of the foreign court be recognized under laws, regulations, treaties, or conventions;

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proper service of process be made on relevant defendants, or relevant defendants be given appropriate protection if such service is not received;

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the judgment and proceedings of the foreign court must not be repugnant to public policy as applied in Japan; and

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there exists reciprocity as to the recognition by a court of the relevant foreign jurisdiction of a final judgment of a Japanese court.

No treaties exist between the U.S. and Japan that would generally allow any U.S. judgments to be recognized or enforced in Japan. In addition, reciprocity is judged by a Japanese court on a case-by-case basis as to whether a court of the jurisdiction in question (i.e., a court of the state or country that has rendered the judgment in question) would recognize or enforce a final judgment of the same type or kind rendered by a Japanese court, based on effectively the same process as applied in Japan (i.e., without re-examining the merit of the case, subject to public policy). Japanese courts have admitted reciprocity in relation to judgments rendered by a federal court in Hawaii, and state courts in Washington DC, New York, California, Texas, Nevada, Minnesota, Oregon, and Illinoi, respectively (mainly relating to monetary claims), but there is no guarantee that reciprocity will be admitted with respect to U.S. judgments rendered in any other state or of any kind or type. Therefore, judgments of U.S. courts of civil liabilities predicated solely upon the federal and state securities laws of the United States may not satisfy these requirements.

RISK FACTORS

An investment in the ADSs involves a high degree of risk. Before deciding whether to invest in the ADSs, you should consider carefully the risks described below, together with all of the other information set forth in this prospectus, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes. If any of these risks actually occurs, our business, financial condition, results of operations or cash flow could be materially and adversely affected, which could cause the trading price of the ADSs to decline, resulting in a loss of all or part of your investment. The risks described below and discussed in other parts of this prospectus are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business. You should only consider investing in the ADSs if you can bear the risk of loss of your entire investment.

Risks Related to Our Business

Blockchain is a nascent and rapidly changing technology and the use of blockchain technology in the commercial marketplace remains relatively small. The slowing or stopping of the development or acceptance of blockchain technology may adversely affect our business.

Blockchain is an emerging technology that offers new capabilities. The development of blockchain technology is a new and rapidly evolving industry that is subject to a high degree of uncertainty. The capabilities of blockchain technology have not been fully confirmed. The utilization of blockchain technology may face opposition by certain participants in the market, who may criticize blockchain technology for its slow processing speed, poor real-time data processing capacity and burdensome learning costs, among other things. In addition, blockchain technology is subject to technical risks such as forking. Most blockchain networks operate based on some form of open-source software. An open-source project is not represented, maintained or monitored by an official organization or authority. Because of the nature of open-source software projects, it may be easier for third parties not affiliated with the issuer to introduce weaknesses or bugs into the core infrastructure elements of the blockchain network. This could result in the corruption of the open-source code which may result in the loss or theft of blockchain assets.

Factors affecting the further development of blockchain industry include, without limitation:

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continued worldwide growth in the adoption and use of blockchain technology;

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the maintenance and development of the open-source software protocol of blockchain networks;

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changes in consumer demographics;

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changes in public tastes and preferences;

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the popularity or acceptance of blockchain networks and assets; and

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government and quasi-government regulation of blockchain networks and assets, including any restrictions on access, operation and use of blockchain networks and assets.

Our business model is dependent on continued investment in and development of the blockchain industry and related technologies. If investments in the blockchain industry become less attractive to investors, innovators, and developers, or if blockchain networks and assets do not gain public acceptance or are not adopted and used by a substantial number of individuals, companies and other entities, it could have a material adverse impact on our prospects and operations.

If we are unable to apply technology effectively in driving value for our customers through blockchain-based solutions, our business could be adversely affected.

Our success depends on our ability to apply our proprietary blockchain technology, Grid Ledger System (“GLS”), develop new products and services, and improve the performance and cost-effectiveness of the existing

products and services, in each case in ways that address current and anticipated customer requirements, industry needs and future trends. Such success is dependent upon several factors, including technology effectiveness, functionality, competitive pricing, licensing and integration with existing and emerging technologies. The blockchain industry is characterized by rapid technological changes. If we fail to develop and implement technology solutions and technical expertise that keep pace with changes in technology, industry standards, and customer preferences, our value proposition could be adversely affected. We may not be successful in anticipating or responding to these developments on a timely and cost-effective basis and our ideas may not be accepted in the marketplace. The effort to gain technological expertise and develop new technologies in our business may require us to incur significant expenses. In addition, GLS may not gain acceptance or recognition in the market which is dominated by more established and conventional technologies, even though we believe GLS is superior to the conventional blockchains. Our unique advantage created by GLS may be threatened by intensified competition in the market if our competitors invent similar technologies in the future. Any of these events could result in a material adverse effect on our operating results, customer relationships, and business.

We may not be able to adequately evaluate the risks associated with the NFT platform, Animap.

NFTs, or non-fungible tokens, are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. Similar to cryptocurrency, NFTs are issued, stored, and traded on a blockchain network. Different from cryptocurrency, NFTs are unique and cannot be replaced with other like-kind assets. Traditional digital products can be easily duplicated and distributed without the ability to determine their authenticity. In comparison, NFTs are unique and can be distributed and traded with the ability to prove their authenticity and ownership. We were selected by Hakuhodo DY Music & Pictures Inc. (“Hakuhodo”) to develop a platform called Animap where Hakuhodo sells its NFTs. Hakuhodo is the sole owner of Animap and independently manages the daily operation of Animap. Hakuhodo obtains permission from copyright owners to convert their copyrighted works into NFTs, handles inquiries, complaints, purchase cancellations, refunds and requests as well as provides other customer support for Animap users. We own certain intellectual property rights in the system used to develop Animap. We do not own, operate or maintain Animap, nor do we have any custody, ownership interests or intellectual property rights in the NFTs that are sold on Animap.

Because the market for NFTs is relatively nascent, it is difficult to predict how the legal and regulatory framework around NFTs will develop and how such developments will impact Animap. Further, market acceptance of NFTs is uncertain because buyers may be unfamiliar or uncomfortable with transacting in digital assets and assessing the value of NFTs. Animap is also subject to cybersecurity risks. For example, a perpetrator could seek to obtain the private key associated with a digital wallet holding an NFT to access and sell the NFT without valid authorization, and the owner of the NFT may have limited recourse due to the nature of blockchain transactions and of cybercrimes generally. In addition, an unauthorized party may acquire the necessary credentials to access user accounts. The safeguards we have implemented or may implement on Animap in the future to protect against cybersecurity threats may be insufficient. The occurrence of any of these risks could materially and adversely affect our business, financial condition, results of operations, and prospects.

Our technology is dependent on telecommunications infrastructure and the performance of devices equipped with blockchain.

The success of our blockchain-based products and services will depend on the continued development of a stable telecommunications infrastructure with the necessary speed, data capacity and security, complementary products such as high-speed networking equipment for providing reliable internet access and services, and other devices that are equipped with blockchain. There is no assurance that the relevant infrastructure and devices will continue to be able to support the demands placed on it by the growth of blockchain technology. There is also no assurance that the infrastructure or complementary products or services necessary to support the blockchain technology will be developed in a timely manner, or that such development will not incur substantial costs to adapt to changing technologies. The failure of these platforms and devices or their development could materially and adversely affect our business, financial condition and results of operation.

Cybersecurity incidents may materially and adversely affect our business.

Security breaches, computer malware and computer hacking attacks have been a prevalent concern since the launch of blockchain technology. To reduce security concerns, GLS employs intermediate processing nodes, which are independent of the nodes that make up the blockchain network and process the actual transactions. Even if the intermediate processing nodes are stopped, the transactions cannot be tampered with. To reduce the impact of attacks on intermediate processing nodes and any unauthorized access, GLS allows the use of firewalls and other means to prevent cyberattacks, thereby providing security. However, our security system and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of an employee of ours, or otherwise. Techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be designed to remain dormant until a predetermined event. Outside parties may also attempt to fraudulently induce employees of ours to disclose sensitive information in order to gain access to our infrastructure. Any such breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation, and a loss of confidence in the services we provide, which in turn could have an adverse effect on our business.

We may experience operational system failures or interruptions that could materially harm our ability to conduct our operations.

We rely on the capacity, reliability and security of third-party systems and software to support our operations. For example, we employ Google Drive to process, transmit and store critical information. The systems of third-party providers may experience material interruptions or failures due to a variety of events beyond our control, including but not limited to, natural disasters, telecommunications failures, employee or customer error or misuse, targeted attacks, unauthorized access, fraud, computer viruses, denial of service attacks, terrorism, firewall or encryption failures and other security problems. If any of the systems do not operate properly, are compromised or are disabled, we could suffer adverse impact on our operations.

If we are not able to successfully compete, our business will be materially harmed.

We design, upgrade, and maintain technology systems for our customers. We expect to encounter competition in our business, including from entities having substantially greater capital and resources and offering a wider range of products and services. Many of our competitors may have greater financial, marketing, technological and personnel resources than we do, and may offer a wider range of bundled services, have broader name recognition, and have larger customer bases than we do.

Our ability to develop competitive advantages will require continued improvement in GLS, enhancements to our products, investment in the development of our services, and additional marketing activities. There can be no assurance that we will timely implement changes into our technology, that we will have resources to make sufficient investments in the development of our services, that our competitors will not devote significantly more resources to competing services, or that we will otherwise be successful in developing market share. If competitors offer superior services, or implement changes in a timelier and more cost-effective manner, our market share could be affected, and this would adversely impact our business and results of operations.

Competitors will likely attempt to imitate our services, products and technology. If we are unable to protect or preserve our proprietary rights, our business may be harmed.

As our business continues to expand, our competitors will likely imitate our products, services, and technology. Only a portion of the intellectual property used in the operation of our business lines is patentable, and therefore we rely on trade and service marks, copyrights, trade secrets, and other forms of intellectual property protection. We also rely on confidentiality agreements with employees, consultants, suppliers, third-party service providers, and others to protect our intellectual property and proprietary rights.

Nevertheless, the steps we take to protect our intellectual property and proprietary rights against infringement or other violation may be inadequate. There is no assurance that others will not independently develop technology

with the same or similar function to any proprietary technology that we rely on. We may experience difficulty in effectively limiting the unauthorized use of our intellectual property and proprietary rights. We could incur significant costs and management distraction in pursuing claims to enforce our intellectual property and proprietary rights through litigation. If we are unable to protect or preserve the value of our intellectual property and proprietary rights for any reason, our brand and reputation could be damaged and our business, financial condition, and results of operations could be materially adversely affected.

Negative publicity could damage our business.

Developing and maintaining our reputation is critical to attracting and retaining customers and investors. Our success depends on our ability to successfully maintain and improve our technology and systems to meet the functionality, performance, reliability and speed requirements of our customers. Negative publicity regarding our Company, our technology, our key personnel, or blockchain technology generally, whether based upon fact, allegation or perception and whether justified or not, could give rise to reputational risk which could significantly harm our business prospects.

If one or more competitors obtain patents covering technology critical to the operation of our business, we may infringe on the intellectual property rights of others.

If one or more other persons, companies or organizations has or obtains a valid patent covering technology critical to the operation of our business, there can be no assurance that such entity would be willing to license such technology at acceptable prices or at all, which could have a material adverse effect on our business, financial condition and results of operations.

Due to the fundamentally open-source nature of blockchain technology, we may not always be able to determine that we are using or accessing protected information or software. In addition, patent applications are in some cases maintained in secrecy until patents are issued. The publication of discoveries in scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications were filed. Because patents can take many years to issue, there may currently be pending applications of which we are unaware that may later result in issued patents that our products infringe.

We could expend significant resources defending against patent infringement and other intellectual property right claims, which could require us to divert resources away from our operations. Any damages we are required to pay or injunctions against our continued use of such intellectual property in resolution of such claims may cause a material adverse effect to our business, financial condition and results of operations.

If we are unable to successfully identify, hire and retain skilled individuals, our business will be adversely affected.

Our growth is based, in part, on our ability to attract and retain highly skilled professionals and software engineers. We aim to motivate and retain qualified employees. However, we may face difficulties in recruiting and retaining employees of a caliber consistent with our business strategy because of competition from other companies. If our employees are unsatisfied with what we offer, such as remuneration packages or working environment, we may not be able to retain qualified employees or replace them with personnel of appropriate skill sets and personal attributes at comparable costs. In such event, we may need to expend additional resources to retain or replace suitable employees.

As of the date of this prospectus, we are not subject to any employment-related claims. However, we may be subject to various employment-related claims from time to time, such as individual actions or government enforcement actions relating to wage-hour, labor standards, or healthcare and benefit issues. Such actions, if brought against us and successful in whole or in part, may materially and adversely affect our business or results of operations.

The loss of key personnel could have a material adverse effect on us.

Our success depends solely on the continued services of key personnel, particularly our management and officers, who have extensive market knowledge and long-standing industry relationships. Our management team has approximately 100 years of combined experience working with corporations of various operating scales across different industries. Our reputation among and our relationships with key customers are the result of a significant investment of time and effort by our management to build credibility in a highly specialized industry. The loss of services of any member of management could diminish our business, growth opportunities, and our relationships with key customers.

We could be the victim of employee misconduct.

There is a risk that our employees or contractors could engage in fraud, conflicts of interest, unauthorized disclosure of confidential information, or other misconduct that adversely affects our business. Furthermore, our employees could make errors in recording or executing transactions for customers which would cause us to enter into transactions that customers may disavow and refuse to settle. It is not always possible to deter misconduct by our employees, and the precautions we take to prevent and detect misconduct may not be effective in all cases. Our ability to detect and prevent errors or misconduct by entities with which we do business may be even more limited. Such misconduct could subject us to financial losses and materially harm our reputation, financial condition and operating results.

If our vendors and third-party service providers experience difficulties, our business could be adversely affected.

We outsource some operational activities and depend on relationships with vendors and third-party service providers. For example, we employ external engineers for certain outsourced systems development and maintenance projects. Our operations could be interrupted or disrupted if our vendors and third-party service providers, or even the vendors of such vendors and third-party service providers, experience operational or other systems difficulties, terminate their service, fail to comply with regulations, raise their prices, or dispute key intellectual property rights sold or licensed to or developed for our Company. If any of these events happen, and we are unable to replace vendors and service providers, on a timely basis or at all, our operations could be interrupted. If an interruption were to continue for a significant period, our business, financial condition and results of operations could be adversely affected. Even if we can replace vendors and third-party providers, it may be at a higher cost, which could also adversely affect our business, financial condition and results of operations.

For the six months ended October 31, 2022, we had five customers with sales revenue of more than JPY500,000, and our top three customers contributed to 88.9% of our total sales revenue, accounting for 62.1%, 15.2%, and 11.6% of our total sales revenue, respectively. For the six months ended October 31, 2021, we had eight customers with sales revenue of more than JPY500,000, and our top three customers contributed to 92.6% of our total sales revenue, accounting for 52.4%, 32.9%, and 7.3% of our total sales revenue, respectively. For the fiscal year ended April 30, 2022, we had 10 customers with sales revenue of more than JPY1,000,000, and our top three customers contributed to 81.5% of our total sales revenue, accounting for 47.4%, 25.9%, and 8.2% of our total sales revenue, respectively. For the fiscal year ended April 30, 2021, we had eight customers with sales revenue of more than JPY1,000,000, and our three major customers contributed to 91.6% of our total sales revenue, accounting for 46.3%, 42.0%, and 3.3% of our total sales revenue, respectively. Although we do not heavily rely upon any one customer for the majority of our revenue, our revenue is dependent on a limited number of customers who account for a large percentage of our contractually committed capacity. If one or more of our significant customers fail to make payments to us or does not honor their contractual commitments, our revenue and results of operations would be materially and adversely affected.

In addition, our reliance on any individual significant customer may give that customer a degree of pricing leverage against us when negotiating contracts and terms of services with us. The loss of any of our major customers, or a significant decrease in the extent of the services that they outsource to us or the level of prices we offer, could materially and adversely affect our financial condition and results of operations.

Any of our customers could experience a downturn in their business, which in turn could result in their inability or failure to make timely payments to us pursuant to their contracts with us. In the event of any customer default, our liquidity could be adversely impacted. These risks would be particularly significant if one of our major customers were to experience adverse effects to its business and defaults under their contracts with us.

We may have difficulty executing our growth strategy and maintaining our growth effectively.

Our growth requires additional investment in personnel, facilities, information technology infrastructure, and financial and management systems and controls and may place a significant strain on our management and resources. Our growth strategy also may subject us to increased legal, compliance and regulatory obligations. There is no assurance that our growth efforts will be successful. We may not be able to implement important strategic initiatives in accordance with our expectations, including that the strategic initiatives could result in additional unanticipated costs, which may result in an adverse impact on our business and financial results. Unless our growth results in an increase in our revenues that is proportionate to the increase in our costs associated with our growth, our future profitability could be adversely affected.

We intend to explore acquisitions, other investments and strategic alliances. We may not be successful in identifying opportunities or in integrating the acquired businesses. Any such transaction may not produce the results we anticipate, which could adversely affect our business.

We intend to explore and pursue acquisitions, strategic partnerships, joint ventures and other alliances to strengthen our business and grow our Company in the future. The market for acquisitions and strategic opportunities is highly competitive. In addition, these transactions entail numerous operational and financial risks, including but not limited to difficulties in valuing acquired businesses, combining personnel and firm cultures, integrating acquired products, services and operations, achieving anticipated synergies that were inherent in our valuation assumptions, exposure to unknown material liabilities, the potential loss of key vendors, clients or employees of acquired companies, incurrence of substantial debt or dilutive issuance of equity securities to pay for acquisitions, higher-than expected acquisition or integration costs, write-downs of assets or impairment charges, increased amortization expenses and decreased earnings, revenue or cash flow from dispositions.

If we need to seek additional financing but are not able to do so on commercially acceptable terms, our liquidity and financial condition will be adversely affected.

As of the date of this prospectus, we have entered into two loan agreements with Kiraboshi Bank for an aggregate loan amount of JPY85 million (US$571,890) and as of the date of this prospectus, the outstanding principal balance of JPY44,668,000 (US$300,532) has not been settled. We entered into an overdraft agreement with Resona Bank, Ltd on August 31, 2022 and as of the date of this prospectus, the outstanding principal balance of JPY100 million (US$672,812) has not been settled. In addition, we entered into a loan agreement with Shoko Chukin Bank, Ltd for an aggregate loan amount of JPY50 million (US$336,406) on October 28, 2022 and as of the date of this prospectus, the outstanding principal balance of JPY44,050,000 (US$296,374) has not been settled. The viability of our business is dependent on the availability of adequate capital to develop and maintain our business. We will need to continue to invest in our operations for the foreseeable future to carry out our business plan. If we do not attract customers and does not achieve the expected operating results, we will need to seek additional financing or revise our business plan. Our ability to borrow additional funds may be impacted by financial lending institutions’ ability or willingness to lend to us on commercially acceptable terms. If we have low levels of operating cash flow together with limited access to capital or credit in the future, it could have an

impact on our ability to meet our capital requirements, invest in our software and infrastructure, engage in strategic initiatives, make acquisitions or strategic investments in other companies, react to changing economic and business conditions, repay our outstanding debt, or make dividend payments. Such outcomes could have an adverse effect on our business, financial condition and operating results.

Operational risk may materially and adversely affect our performance.

Operational risk is the risk of an adverse outcome resulting from inadequate or failed internal processes, people, systems or external events. Our exposure to operational risk arises from routine processing errors, as well as extraordinary incidents, such as major system failures or legal and regulatory matters. Because our business lines are reliant on both technology and human expertise and execution, we are exposed to material operational risks arising from a number of factors, including, but not limited to, human error, processing and communication errors, errors of third-party service providers, counterparties or other third parties, failed or inadequate processes, design flaws and technology or system failures and malfunctions. Operational errors or significant operational delays could have a materially negative impact on our ability to conduct its business or service its clients, which could adversely affect our results of operations.

We may not have sufficient insurance to cover potential losses and claims.

We currently maintain insurance coverage against the risk of property damage caused by fires, lightning strikes, explosions, riots, vehicle collisions, thefts, and flooding. We also maintain earthquake insurance coverage. While we believe that there have not been instances when we had to incur losses, damages, and liabilities because of the lack of insurance coverage, there may be such instances in the future, which may in turn adversely affect our financial condition and results of operations.

We may become involved in legal and other proceedings from time to time and may suffer significant liabilities or other losses as a result.

As of the date of this prospectus, we are not a party to any material lawsuits and we are not aware of any threats of lawsuits against our company that are anticipated to have a major impact on our business. From time to time, we may become involved in disputes with the provision of our products and services or other aspects of our business and operations, including labor disputes with employees and contract disputes with our customers. These disputes may lead to legal or other proceedings and may result in substantial costs and diversion of resources and management’s attention. Disputes and legal and other proceedings may require substantial time and expense to resolve, which could divert valuable resources, such as management time and working capital, delay our planned projects, and increase our costs. Third parties that are found liable to us may not have the resources to compensate us for our incurred costs and damages. We could also be required to pay significant costs and damages if we do not prevail in any such disputes or proceedings.

General economic, political and market conditions may have an adverse impact on our operating performance, results of operations and cash flow.

Our business is influenced by a range of factors that are beyond our control including general economic and business conditions and legal, regulatory, and political developments. Challenging economic conditions worldwide have from time to time contributed, and may continue to contribute, to slowdowns in the information technology industry at large. Weakness in the economy could have a negative effect on our business, operations and financial condition, including decreases in revenue and operating cash flow, and inability to attract future equity and debt financing on commercially reasonable terms. Additionally, in a down-cycle economic environment, we may experience the negative effects of a slowdown in the usage of our blockchain technology. The impact of global events, including the ongoing conflict between Russia and Ukraine, may also negatively impact our Company.

Our business may be adversely affected by the impact of coronavirus, other epidemics or pandemics, acts of God, wars, insurrections, riots, infrastructure failures, and other force majeure events.

Public health epidemics or outbreaks could adversely impact our business. In early 2020, an outbreak of the novel strain of a coronavirus, which causes a disease named COVID-19, spread worldwide. As a result of the coronavirus pandemic, governments and industries have instituted drastic actions to contain the coronavirus or treat its impact. Such actions, including bans on international and domestic travel, quarantines, and prohibitions on accessing work sites, have caused significant disruptions to global and local economies and have led to dramatic volatility in the capital markets. In April 2020, the Japanese government issued the Declaration of a State of Emergency, whereby the Japanese government ordered non-essential activities and businesses across Japan to close as a preemptive safeguard against the COVID-19 pandemic. This adversely impacted many business sectors across Japan, especially in Tokyo. During the fiscal year ended April 30, 2020, the COVID-19 pandemic had some negative impact on our business operations, when delay in our sales activities occurred due to the inability to conduct scheduled in-person sales activities. Since fiscal year 2021, the COVID-19 pandemic has had no impact on our business operations.

In addition, acts of terrorism, labor activism or unrest, and other geo-political unrest could cause disruptions in the business, the businesses of partners, or the economy as a whole. In the event of a natural disaster, including a major earthquake, blizzard, or hurricane, or a catastrophic event such as a fire, power loss, or telecommunications failure, we may be unable to continue operations and may endure system interruptions, reputational harm, delays in development of our systems, lengthy interruptions in service, breaches of data security, and loss of critical data, all of which could have an adverse effect on future operating results.

The regulatory regimes governing blockchain technologies are uncertain, and new regulations or policies may materially adversely affect the development of blockchain.

Initially, it was unclear how blockchain technologies and the businesses and activities utilizing such technologies would fit into the current web of government regulation. As blockchain technologies have grown in popularity and in market size, international, federal, state and local regulatory agencies have begun to clarify their position. Various legislative and executive bodies in the United States and in other countries have shown that they intend to adopt legislation to regulate blockchain technologies. However, according to our Japanese legal counsel, there are no laws or regulations in Japan that restrict or regulate blockchain technologies per se as of the date of this prospectus.

New or changing laws and regulations or interpretations of existing laws and regulations may materially and adversely impact the development and growth of blockchain technologies. The imposition of restrictions on blockchains could adversely affect our business.

Our compliance and risk management programs might not be effective and may result in outcomes that could adversely affect our reputation, financial condition and operating results.

Our ability to comply with applicable laws and rules is largely dependent on our establishment and maintenance of compliance, review and reporting systems, as well as our ability to attract and retain qualified compliance and other risk management personnel. There is no assurance that our compliance policies and procedures will always be effective or that we will always be successful in monitoring or evaluating our risks. In the case of alleged non-compliance with applicable laws or regulations, we could be subject to investigations and judicial or administrative proceedings that may result in substantial penalties or civil lawsuits, including by customers, for damages, which could be significant. Any of these outcomes may adversely affect our reputation, financial condition and operating results.

We have limited experience operating as a public company.

We have limited experience conducting our operations as a public company. We may encounter operational, administrative, and strategic difficulties as we adjust to operating as a public company. This may cause us to

react more slowly than our competitors to industry changes and may divert our management’s attention from running our business or otherwise harm our operations. In addition, since we are becoming a public company, our management team will need to develop the expertise necessary to comply with the numerous regulatory and other requirements applicable to public companies, including requirements relating to corporate governance, listing standards and securities and investor relationships issues. As a public company, our management will have to evaluate our internal controls system with new thresholds of materiality, and to implement necessary changes to our internal controls system. We cannot guarantee that we will be able to do so in a timely and effective manner.

Risks Related to this Offering and the Trading Market

An active trading market for the ADSs may not develop.

We have applied to list the ADSs on the Nasdaq Capital Market. We have no current intention to seek a listing for our Ordinary Shares on any other stock exchange. Prior to this offering, there has not been a public market for the ADSs or our Ordinary Shares, and there is no assurance that an active public market for the ADSs will develop or be sustained after this offering. If an active public market for the ADSs does not develop following the completion of this offering, the market price and liquidity of the ADSs may be materially and adversely affected. The initial public offering price for our ADSs will be determined by negotiation between us and the underwriters based upon several factors, and we can provide no assurance that the trading price of our ADSs after this offering will not decline below the initial public offering price. As a result, investors in our securities may experience a significant decrease in the value of their ADSs.

You will experience immediate and substantial dilution in the net tangible book value of Ordinary Shares underlying the Public Offering ADSs purchased.

The initial public offering price of the Public Offering ADSs is substantially higher than the pro forma net tangible book value per Ordinary Share underlying the ADS. Consequently, when you purchase Public Offering ADSs in this offering, upon completion of the offering of the Public Offering ADSs you will incur immediate dilution of US$4.51 per Ordinary Share underlying the Public Offering ADS, based on an assumed initial public offering price of US$5.00 per ADS and assuming the underwriters’ over-allotment option is not exercised. In addition, you may experience further dilution to the extent that additional Ordinary Shares or ADSs are issued upon exercise of outstanding options we may grant from time to time.

We anticipate that our directors and executive officers will together beneficially own approximately 57.97% of our Ordinary Shares issued and outstanding after the completion of this offering, assuming the underwriters do not exercise their over-allotment option, or 57.40% assuming the underwriters exercise their over-allotment option in full, in each case, excluding 48,000 and 55,200 Ordinary Shares, respectively, underlying the Representative’s Warrants and based on an assumed initial public offering price of US$5.00 per ADS. As a result, these shareholders, acting together, will have significant influence over all matters that require approval by our shareholders, including the election of directors and approval of significant corporate transactions. Corporate action might be taken even if other shareholders, including those who purchase ADSs in this offering, oppose them. This concentration of ownership might also have the effect of delaying or preventing a change of control of our Company that other shareholders may view as beneficial.

The sale or availability for sale of substantial amounts of the ADSs could adversely affect their market price.

Sales of substantial amounts of the ADSs in the public market after the completion of this offering, or the perception that these sales could occur, could adversely affect the market price of the ADSs and could materially

impair our ability to raise capital through equity offerings in the future. Resales of the ADSs in the public market during this offering by the Selling Shareholders in this offering may cause the market price of our ADSs to decline. The ADSs sold in this offering of the Public Offering ADSs and all of the Shareholder ADSs will be freely tradable without restriction or further registration under the Securities Act, and certain Ordinary Shares held by our existing shareholders, except Ordinary Shares underlying the ADSs offered by the Selling Shareholders, may also be sold in the public market in the future subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. As of the date of this prospectus, 13,839,400 of our Ordinary Shares are outstanding. There will be 1,200,000 ADSs (representing 1,200,000 Ordinary Shares) issued and outstanding immediately following the consummation of this offering, assuming no exercise of the underwriters’ over-allotment option or the Representative’s Warrants, or 1,380,000 ADSs (representing 1,380,000 Ordinary Shares) if the underwriters exercise their over-allotment option in full, based on an assumed initial public offering price of $5.00. Such numbers of ADSs do not include the Shareholder ADSs.

In connection with this offering, our directors, executive officers, and holders of 5% or more of our Ordinary Shares, other than the Selling Shareholders, have agreed not to sell any Ordinary Shares, ADSs, or similar securities for six months from the date of this prospectus without the prior written consent of the Representative, subject to certain exceptions. However, the Representative may release these securities from these restrictions at any time, subject to applicable regulations of the Financial Industry Regulatory Authority, Inc. (“FINRA”). We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of the ADSs.

If securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding the ADSs, the price of the ADSs and trading volume could decline.

Any trading market for the ADSs may depend in part on the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade us, the price of the ADSs would likely decline. If one or more of these analysts cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of the ADSs and the trading volume to decline.

The market price of the ADSs may be volatile or may decline regardless of our operating performance, and you may not be able to resell your ADSs at or above the initial public offering price.

The initial public offering price for the Public Offering ADSs will be determined through negotiations between the underwriters and us and may vary from the market price of the ADSs following our initial public offering of the Public Offering ADSs. If you purchase the ADSs in our initial public offering, you may not be able to resell those ADSs at or above the initial public offering price. There is no assurance that the initial public offering price of the ADSs, or the market price following our initial public offering, will equal or exceed prices in privately negotiated transactions of our Ordinary Shares that have occurred from time to time prior to our initial public offering. The market price of the ADSs may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

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actual or anticipated fluctuations in our revenue and other operating results;

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the financial projections we may provide to the public, any changes in these projections, or our failure to meet these projections;

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actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

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announcements by us or our competitors of significant products, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;

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price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;

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the trading volume of the ADSs on Nasdaq;

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sales of the ADSs or Ordinary Shares by us, our executive officers and directors, or our shareholders or the anticipation that such sales may occur in the future;

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lawsuits threatened or filed against us; and

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other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

There may be substantial sales of our ADSs by the Selling Shareholders after the effective date of this registration statement of which this prospectus forms a part, which could have a material adverse effect on the price of our ADSs after this offering.

The registration statement of which this prospectus forms a part also registers on behalf of the Selling Shareholders an aggregate of 2,338,400 ADSs representing 2,338,400 Ordinary Shares issued to the Selling Shareholders previously issued by us, based on an assumed initial public offering price of US$5.00 per ADS. In connection with this offering and the Company’s registration of the Shareholder ADSs, each of the Selling Shareholders have agreed that, and have provided a representation to the Company to the effect that, they will immediately consider selling some portion (or even all) of their respective Shareholder ADSs if requested by the underwriters in order to create an orderly, liquid market for the ADSs after the offering of the Public Offering ADSs. The Selling Shareholders, however, will not be required to sell any or all of their respective Shareholder ADSs even if requested to do so by the underwriters, or, conversely, the Selling Shareholders may choose to sell their respective Shareholders ADSs at their own initiative.

Other than as described above, there are currently no agreements or understandings in place with the Selling Shareholders to restrict the sale of the Shareholder ADSs after the effective date of the registration statement of which this prospectus forms a part. Sales of a substantial number of ADSs representing our Ordinary Shares by the Selling Shareholders at such time, independent of any request by the underwriters, could cause the market price of our ADSs to drop (possibly below the initial public offering price of the Public Offering ADSs in this offering) and could impair our ability to raise capital in the future by selling additional Company securities.

Upon completion of this offering, we will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”) will require that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F. In addition, once we cease to be an “emerging growth company,” as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are

documented, designed, operated, or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational, and financial resources and systems for the foreseeable future. We may be unable to complete our evaluation testing and any required remediation in a timely manner.

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented, or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of the ADSs. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations, and civil or criminal sanctions. We may also be required to restate our financial statements for prior periods. In connection with the audit of our financial statements as of and for the fiscal years ended April 30, 2021 and 2022, we and our independent registered public accounting firm identified one material weakness in our internal control over financial reporting, which is related to lack of qualified personnel equipped with relevant U.S. GAAP and SEC reporting experience. We intend to undertake measures to address the identified material weakness. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Internal Control Over Financial Reporting” for more information.

We will incur substantial increased costs as a result of being a public company.

Upon consummation of this offering, as a public company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and Nasdaq, impose various requirements on the corporate governance practices of public companies. Compliance with these rules and regulations increases our legal and financial compliance costs and makes some corporate activities more time-consuming and costlier. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers.

We are an “emerging growth company,” as defined in the JOBS Act and will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least US$1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of the ADSs that is held by non-affiliates equals or exceeds US$700 million as of the prior December 31, and (2) the date on which we have issued more than US$1.0 billion in non-convertible debt during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 in the assessment of the emerging growth company’s internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies.

After we are no longer an “emerging growth company,” or until five years following the completion of our initial public offering, whichever is earlier, we expect to incur significant additional expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a public company, we will be required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures.

As a foreign private issuer, we intend to follow home country practice even though we will be considered a “controlled company” under Nasdaq corporate governance rules, which could adversely affect our public shareholders.

Following this offering, Mr. Satoshi Kobayashi, our chief executive officer, will continue to own more than a majority of the voting power of our outstanding Ordinary Shares. Under the Nasdaq corporate governance rules, a company of which more than 50% of the voting power is held by an individual, group, or another company is a “controlled company” and may elect not to comply with certain Nasdaq corporate governance standards, including the requirements that:

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a majority of its board of directors consist of independent directors;

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its director nominations be made, or recommended to the full board of directors, by its independent directors or by a nominations committee that is comprised entirely of independent directors and that it adopt a written charter or board resolution addressing the nominations process; and

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it has a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

As a foreign private issuer, however, Nasdaq corporate governance rules allow us to follow corporate governance practice in our home country, Japan, with respect to appointments to our board of directors and committees. We intend to follow home country practice as permitted by Nasdaq rather than rely on the “controlled company” exception to the corporate governance rules. See “—Because we are a foreign private issuer and intend to take advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.” Accordingly, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

We do not intend to pay dividends for the foreseeable future.

We currently intend to retain most, if not all, of our available funds and any future earnings after this offering to fund the operation, development, and growth of our business and, as a result, we do not expect to declare or pay any dividends in the foreseeable future. Therefore, you should not rely on an investment in the ADSs as a source for any future dividend income. Accordingly, the return on your investment in the ADSs will likely depend entirely upon any future price appreciation of the ADSs. There is no assurance that the ADSs will appreciate in value after this offering or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in the ADSs and you may even lose your entire investment in the ADSs.

Our management has broad discretion to determine how to use the net proceeds raised in this offering of the Public Offering ADSs and may use them in ways that may not enhance our results of operations or the price of the ADSs.

We anticipate that we will use the net proceeds from this offering of the Public Offering ADSs as follows: approximately 50% of the net proceeds from this offering of the Public Offering ADSs for investment in the research and development of GLS, approximately 30% of the net proceeds from this offering of the Public Offering ADSs for the recruitment of global talents, and approximately 20% of the net proceeds from this offering of the Public Offering ADSs for the strengthening of corporate governance systems and the investment in businesses engaged in the development of blockchain-based products and services, although as of the date of this prospectus, we have not identified, or engaged in any material discussions regarding, any potential target. Our management will have significant discretion as to the use of the net proceeds to us from this offering of the Public Offering ADSs and could spend the proceeds in ways that do not improve our results of operations or enhance the market price of the ADSs. We will not receive any of the proceeds from the sale of the ADSs by the Selling Shareholders pursuant to this prospectus.

Rights of shareholders under Japanese law may be different from rights of shareholders in other jurisdictions.

Our articles of incorporation and the Companies Act of Japan (Act No. 86 of 2005, as amended), or the Companies Act, govern our corporate affairs. Legal principles relating to matters such as the validity of corporate procedures, directors’ and executive officers’ fiduciary duties, and obligations and shareholders’ rights under Japanese law may be different from, 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 as extensive as shareholders’ rights under the law of other countries. For example, under the Companies Act, only holders of 3% or more of our total voting rights or our outstanding 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 Japanese joint-stock corporation may have in response to an unsolicited takeover bid, and such uncertainty may be more pronounced than that in other jurisdictions.

As holders of ADSs, you may have fewer rights than holders of our Ordinary Shares and must act through the depositary to exercise those rights.

The rights of shareholders under Japanese law to take actions, including voting their shares, receiving dividends and distributions, bringing derivative actions, examining our accounting books and records, and exercising appraisal rights, are available only to shareholders of record. ADS holders are not shareholders of record. The depositary, through its custodian agents, is the record holder of our Ordinary Shares underlying the ADSs. ADS holders will not be able to bring a derivative action, examine our accounting books and records, or exercise appraisal rights through the depositary.

Holders of ADSs may exercise their voting rights only in accordance with the provisions of the deposit agreement. If we instruct the depositary to ask for your voting instructions, upon receipt of voting instructions from the ADS holders in the manner set forth in the deposit agreement, the depositary will make efforts to vote the Ordinary Shares underlying the ADSs in accordance with the instructions of the ADS holders. The depositary and its agents may not be able to send voting instructions to ADS holders or carry out their voting instructions in a timely manner. Furthermore, the depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast, or for the effect of any such vote. As a result, holders of ADSs may not be able to exercise their right to vote.

Direct acquisition of our Ordinary Shares is subject to a prior filing requirement under recent amendments to the Japanese Foreign Exchange and Foreign Trade Act and related regulations.

Under recent amendments in 2019 to the Japanese Foreign Exchange and Foreign Trade Act and related regulations (which we refer to as “FEFTA”), direct acquisition of our Ordinary Shares by a foreign investor (as defined herein under “Japanese Foreign Exchange Controls and Securities Regulations”) could be subject to the prior filing requirement under FEFTA. A foreign investor wishing to acquire direct ownership of our Ordinary Shares will be required to make a prior filing with the relevant governmental authorities through the Bank of Japan and wait until clearance for the acquisition is granted by the applicable governmental authorities, which approval may take up to 30 days and could be subject to further extension. Without such clearance, the foreign investor will not be permitted to acquire our Ordinary Shares directly. There is no assurance that the applicable Japanese governmental authorities will grant such clearance in a timely manner or at all.

ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiff(s) in any such action.

The deposit agreement governing the ADSs representing our Ordinary Shares provides that, to the fullest extent permitted by applicable law, owners and holders of ADSs irrevocably waive the right to a jury trial for any claim that they may have against us or the depositary arising from or relating to our Ordinary Shares, the ADSs, or the deposit agreement, including any claim under the U.S. federal securities laws.

However, ADS holders will not be deemed, by agreeing to the terms of the deposit agreement, to have waived our or the depositary’s compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder. In fact, ADS holders cannot waive our or the depositary’s compliance with U.S. federal securities laws and the rules and regulations promulgated thereunder. If we or the depositary opposed a demand for jury trial relying on jury trial waiver mentioned above, it is up to the court to determine whether such waiver was enforceable considering the facts and circumstances of that case in accordance with the applicable state and federal law.

If this jury trial waiver provision is prohibited by applicable law, an action could nevertheless proceed under the terms of the deposit agreement with a jury trial. To our knowledge, the enforceability of a jury trial waiver under the federal securities laws has not been finally adjudicated by a federal court or by the United States Supreme Court. Nonetheless, we believe that a jury trial waiver provision is generally enforceable under the laws of the State of New York, which govern the deposit agreement, or by a federal or state court in the City of New York. In determining whether to enforce a jury trial waiver provision, New York courts will consider whether the visibility of the jury trial waiver provision within the agreement is sufficiently prominent such that a party has knowingly waived any right to trial by jury. We believe that this is the case with respect to the deposit agreement and the ADSs. In addition, New York courts will not enforce a jury trial waiver provision in order to bar a viable setoff or counterclaim sounding in fraud or one which is based upon a creditor’s negligence in failing to liquidate collateral upon a guarantor’s demand, or in the case of an intentional tort claim, none of which we believe are applicable in the case of the deposit agreement or the ADSs. If you or any other owners or holders of ADSs bring a claim against us or the depositary relating to the matters arising under the deposit agreement or the ADSs, including claims under federal securities laws, you or such other owner or holder may not have the right to a jury trial regarding such claims, which may limit and discourage lawsuits against us or the depositary. If a lawsuit is brought against us or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may have different outcomes compared to that of a jury trial, including results that could be less favorable to the plaintiff(s) in any such action.

Nevertheless, if the jury trial waiver provision is not enforced, to the extent a court action proceeds, it would proceed under the terms of the deposit agreement with a jury trial. No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any owner or holder of ADSs or by us or the depositary of compliance with any substantive provision of U.S. federal securities laws and the rules and regulations promulgated thereunder.

Holders of ADSs may not receive distributions on our Ordinary Shares or any value for them if it is illegal or impractical to make them available to such holders.

Subject to the terms of the deposit agreement, the depositary has agreed to pay holders of ADSs the cash dividends or other distributions it or the custodian for the ADSs receives on the Ordinary Shares or other deposited securities after deducting its fees and expenses and any taxes or other government charges. Holders of ADSs will receive these distributions in proportion to the number of our Ordinary Shares that such ADSs represent. However, the depositary is not responsible for making such payments or distributions if it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act, but that are not properly registered or distributed pursuant to an applicable exemption from registration. The depositary is not responsible for making a distribution available to any holders of ADSs if any government approval or registration required for such distribution cannot be obtained after reasonable efforts made by the depositary. We have no obligation to take any other action to permit distributions on our Ordinary Shares to holders of ADSs. This means that holders of ADSs may not receive the distributions we make on our Ordinary Shares if it is illegal or impractical to make them available to such holders. These restrictions may materially reduce the value of the ADSs.

Holders of ADSs may be subject to limitations on transfer of their ADSs.

ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer, or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

We may amend the deposit agreement without consent from holders of ADSs and, if such holders disagree with our amendments, their choices will be limited to selling the ADSs or cancelling and withdrawing the underlying Ordinary Shares.

We may agree with the depositary to amend the deposit agreement without consent from holders of ADSs. If an amendment increases fees to be charged to ADS holders or prejudices a substantial existing right of ADS holders, it will not become effective until 30 days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, ADS holders are considered, by continuing to hold their ADSs, to have agreed to the amendment and to be bound by the amended deposit agreement. If holders of ADSs do not agree with an amendment to the deposit agreement, their choices will be limited to selling the ADSs or cancelling and withdrawing the underlying Ordinary Shares. No assurance can be given that a sale of ADSs could be made at a price satisfactory to the holder in such circumstances.

We are incorporated in Japan, and it may be more difficult to enforce judgments obtained in courts outside Japan.

We are incorporated in Japan as a joint-stock corporation with limited liability. All of our directors are non-U.S. residents, and a substantial portion of our assets and the personal assets of our directors and executive officers are located outside the United States. As a result, when compared to a U.S. company, it may be more difficult for investors to effect service of process in the United States upon us or to enforce against us, our directors or executive officers, judgments obtained in U.S. courts predicated upon civil liability provisions of the federal or state securities laws of the U.S. or similar judgments obtained in other courts outside Japan. There is doubt as to the enforceability in Japanese courts, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated solely upon the federal and state securities laws of the United States.

Dividend payments and the amount you may realize upon a sale of our Ordinary Shares or the ADSs that you hold will be affected by fluctuations in the exchange rate between the U.S. dollar and the Japanese yen.

Cash dividends, if any, in respect of our Ordinary Shares represented by the ADSs will be paid to the depositary in Japanese yen and then converted by the depositary or its agents into U.S. dollars, subject to certain conditions and the terms of the deposit agreement. Accordingly, fluctuations in the exchange rate between the Japanese yen and the U.S. dollar will affect, among other things, the amounts a holder of ADSs will receive from the depositary in respect of dividends, the U.S. dollar value of the proceeds that a holder of ADSs would receive upon sale in Japan of our Ordinary Shares obtained upon cancellation and surrender of ADSs and the secondary market price of ADSs. Such fluctuations will also affect the U.S. dollar value of dividends and sales proceeds received by holders of our Ordinary Shares.

If we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting, and other expenses that we would not incur as a foreign private issuer.

We expect to qualify as a foreign private issuer upon the completion of this offering. As a foreign private issuer, we will be exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy

statements, and our executive officers, directors, and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States domestic issuers, and we will not be required to disclose in our periodic reports all of the information that United States domestic issuers are required to disclose. While we currently expect to qualify as a foreign private issuer immediately following the completion of this offering, we may cease to qualify as a foreign private issuer in the future, in which case we would incur significant additional expenses that could have a material adverse effect on our results of operations.

Because we are a foreign private issuer and intend to take advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.

Nasdaq listing rules require listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we intend to follow home country practice in lieu of the above requirements. The corporate governance practice in our home country, Japan, does not require a majority of our board to consist of independent directors. Thus, although a director must act in the best interests of the company, it is possible that fewer board members will be exercising independent judgment and the level of board oversight on the management of our company may decrease as a result. In addition, Nasdaq listing rules also require U.S. domestic issuers to have an audit committee and a compensation committee and a nominating/corporate governance committee composed entirely of independent directors, and an audit committee with a minimum of three members.

We, as a foreign private issuer, are not subject to these requirements. Consistent with corporate governance practices in Japan, we do not have a standalone compensation committee or nomination and corporate governance committee of our board. As a result of these exemptions, investors would have less protection than they would have if we were a domestic issuer. Nasdaq listing rules may require shareholder approval for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and material revisions to those plans, certain ordinary share issuances. We intend to comply with the requirements of Nasdaq listing rules in determining whether shareholder approval is required on such matters.

If we cannot satisfy, or continue to satisfy, the initial listing requirements and other rules of Nasdaq, the ADSs may not be listed or may be delisted, which could negatively impact the price of the ADSs and your ability to sell them.

We have applied to list the ADSs on Nasdaq in connection with this offering of Public Offering ADSs. There is no assurance that we will be able to meet those initial listing requirements at that time. Even if the ADSs are listed on Nasdaq, there is no assurance that the ADSs will continue to be listed on Nasdaq. We will not proceed with this offering if the ADSs are not approved for listing on Nasdaq.

In addition, following this offering, in order to maintain our listing on Nasdaq, we will be required to comply with certain rules of Nasdaq, including those regarding minimum stockholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. Even if we initially meet the listing requirements and other applicable rules of Nasdaq, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy Nasdaq criteria for maintaining our listing, the ADSs could be subject to delisting.

If Nasdaq subsequently delists the ADSs from trading, we could face significant consequences, including:

•

a limited availability for market quotations for the ADSs;

•

reduced liquidity with respect to the ADSs;

•

a determination that the ADS is a “penny stock,” which will require brokers trading in the ADSs to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for the ADSs;

•

limited amount of news and analyst coverage; and

•

a decreased ability to issue additional securities or obtain additional financing in the future.

We are an “emerging growth company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this will make it more difficult to compare our performance with other public companies.

We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This will make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Because we are an “emerging growth company,” we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and the ADSs.

For as long as we remain an “emerging growth company,” as defined in the JOBS Act, we will elect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of shareholder approval of any golden parachute payments not previously approved. Because of these lessened regulatory requirements, our shareholders would be left without information or rights available to shareholders of other public companies. If some investors find the ADSs less attractive as a result, there may be a less active trading market for the ADSs and the ADS price may be more volatile.

If we are classified as a passive foreign investment company, United States taxpayers who own the ADSs or our Ordinary Shares may have adverse United States federal income tax consequences.

A non-U.S. corporation such as ourselves will be classified as a passive foreign investment company (“PFIC”) for any taxable year if, for such year, either:

•

at least 75% of our gross income for the year is passive income; or

•

the average percentage of our assets (determined at the end of each quarter) during the taxable year which produce passive income or which are held for the production of passive income is at least 50%.

Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business), and gains from the disposition of passive assets.

If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. taxpayer who holds the ADSs or our Ordinary Shares, the U.S. taxpayer may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements.

Depending on the amount of cash we raise in this offering, together with any other assets held for the production of passive income, it is possible that, for our 2022 taxable year or for any subsequent year, more than 50% of our assets may be assets which produce passive income, in which case we would be deemed a PFIC, which could have adverse U.S. federal income tax consequences for U.S. taxpayers who are shareholders. We will make this determination following the end of any particular tax year.

The classification of certain of our income as active or passive, and certain of our assets as producing active or passive income, and hence whether we are or will become a PFIC, depends on the interpretation of certain United States Treasury Regulations as well as certain IRS guidance relating to the classification of assets as producing active or passive income. Such regulations and guidance are potentially subject to different interpretations. If due to different interpretations of such regulations and guidance the percentage of our passive income or the percentage of our assets treated as producing passive income increases, we may be a PFIC in one or more taxable years.

U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS ABOUT THE PFIC RULES, THE POTENTIAL APPLICABILITY OF THESE RULES TO THE COMPANY CURRENTLY AND IN THE FUTURE, AND THEIR FILING OBLIGATIONS IF THE COMPANY IS A PFIC.

USE OF PROCEEDS

Based upon an assumed initial public offering price of US$5.00 per ADS, we estimate that we will receive net proceeds from this offering of the Public Offering ADSs, after deducting the estimated underwriting discounts and the estimated offering expenses payable by us, of approximately US$5.6 million, assuming the underwriters do not exercise their over-allotment option, and US$6.4 million if the underwriters exercise their over-allotment option in full.

We plan to use the net proceeds we receive from this offering of the Public Offering ADSs for the following purposes:

•

approximately 50% of the net proceeds from this offering of the Public Offering ADSs for investment in the research and development of GLS and GLS-SDK. GLS is a parallel processing blockchain technology that allows for fast transaction approval. Currently, we are developing a system for a client to verify the functionality of GLS, and we believe the following expenses are necessary to verify the functionality of GLS: programming costs for performance testing, server fees, personnel costs and outsourcing costs for testing, and personnel costs for research based on the testing;

•

approximately 30% of the net proceeds from this offering of the Public Offering ADSs for the recruitment of global talents, especially those who have a perspective about global strategies and overseas business development; and

•

approximately 20% of the net proceeds from this offering of the Public Offering ADSs for the strengthening of internal governance systems and the investment in businesses engaged in the development of blockchain-based products and services, although as of the date of this prospectus, we have not identified, or engaged in any material discussions regarding, any potential target.

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering of the Public Offering ADSs. Our management, however, will have flexibility and discretion to apply the net proceeds of this offering of the Public Offering ADSs. See “Risk Factors—Risks Relating to this Offering and the Trading Market—Our management has broad discretion to determine how to use the net proceeds raised in this offering of the Public Offering ADSs and may use them in ways that may not enhance our results of operations or the price of the ADSs.” To the extent that the net proceeds we receive from this offering of the Public Offering ADSs are not immediately used for the above purposes, we intend to invest our net proceeds received from this offering of the Public Offering ADSs in short-term, interest-bearing bank deposits or debt instruments.

Each $1.00 increase (decrease) in the assumed public offering price of $5.00 per Public Offering ADS would increase (decrease) the net proceeds to us from this offering of the Public Offering ADSs by approximately $1.1 million, assuming the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts payable by us. We may also increase or decrease the number of ADSs we are selling in this offering. An increase (decrease) of 100,000 in the number of ADSs offered by us in this offering, as set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering of the Public Offering ADSs by approximately $0.5 million, assuming the assumed initial public offering price of $5.00 per ADS remains the same, and after deducting the underwriting discounts payable by us. Any increase or decrease in the estimated proceeds from the offering is not expected to have a material effect on our operations given the discretion we will have in the application and use thereof.

We will not receive any proceeds from the sale of the ADSs by the Selling Shareholders that occur pursuant to the registration statement of which this prospectus forms a part.

DIVIDEND POLICY

Since our inception, we have not declared or paid cash dividends on our Ordinary Shares. Any decision to pay dividends in the future will be subject to a number of factors, including our financial condition, results of operations, the level of our retained earnings, capital demands, general business conditions, and other factors our board of directors may deem relevant. We currently intend to retain most, if not all, of our available funds and any future earnings after this offering to fund the operation, development, and growth of our business, and, as a result, we do not expect to pay any dividends in the foreseeable future. Consequently, we cannot give any assurance that any dividends may be declared and paid in the future.

If declared, holders of our outstanding shares on a dividend record date will be entitled to the full dividend declared without regard to the date of issuance of the shares or any subsequent transfer of the shares. Payment of declared annual dividends in respect of a particular year, if any, will be made in the following year after approval by our shareholders at the annual general meeting of shareholders, subject to certain provisions of our articles of incorporation and the Companies Act. See “Description of Share Capital.”

Subject to the terms of the deposit agreement for the ADSs, you will be entitled to receive dividends on our Ordinary Shares represented by ADSs to the same extent as the holders of our Ordinary Shares, less the fees and expenses payable under the deposit agreement in respect of, and any Japanese tax applicable to, such dividends. See “Taxation—Japanese Taxation” and “Description of American Depositary Shares.” The depositary will generally convert the Japanese yen it receives into U.S. dollars and distribute the U.S. dollar amounts to holders of ADSs. Cash dividends on our Ordinary Shares, if any, will be paid in Japanese yen.

CAPITALIZATION

The following table sets forth our capitalization as of October 31, 2022:

•

on an actual basis; and

•

on an as adjusted basis to reflect the issuance and sale of 1,200,000 ADSs representing 1,200,000 Ordinary Shares by us in this offering of the Public Offering ADSs, based on an assumed initial public offering price of US$5.00 per ADS, after deducting the estimated underwriting discounts and the estimated offering expenses payable by us, assuming no exercise of the underwriters’ over-allotment option; and

•

on an as adjusted basis to reflect the issuance and sale of 1,380,000 ADSs representing 1,380,000 Ordinary Shares by us in this offering of the Public Offering ADSs, based on an assumed initial public offering price of US$5.00 per ADS, after deducting the estimated underwriting discounts and the estimated offering expenses payable by us, assuming the full exercise of the underwriters’ over-allotment option.

You should read this table in conjunction with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes included elsewhere in this prospectus:


	October 31, 2022
	Actual			As adjusted (Over- allotment option not exercised)⁽¹⁾			As adjusted (Over- allotment option exercised in full)⁽¹⁾
	$			$			$
Cash and cash equivalents	$	3,138,114		$	8,718,114		$	9,555,114

Short-term loans		—			—			—
Long-term loans, including current portion	$	1,353,737		$	1,353,737		$	1,353,737
Finance lease liabilities, including current portion		—			—			—

Shareholders’ Equity:
Ordinary Shares, 55,300,000 Ordinary Shares authorized, 13,839,400 Ordinary Shares issued and outstanding, actual; 15,039,400 Ordinary Shares issued and outstanding, as adjusted assuming the over-allotment option is not exercised; and 15,219,400 Ordinary Shares issued and outstanding, as adjusted assuming the over-allotment option is exercised in full	$	672,812		$	1,872,812		$	2,052,812
Additional paid-in capital	$	11,452,063		$	15,025,028		$	15,682,028
Accumulated deficit	$	(9,585,199	)	$	(9,585,199	)	$	(9,585,199	)

Total Shareholders’ Equity	$	2,539,676		$	7,312,641		$	8,149,641

Total Capitalization	$	3,893,413		$	8,666,378		$	9,503,378

(1)

The as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing. We estimate that such net proceeds will be approximately $5.6 million, assuming the underwriters do not exercise their over-allotment option, and $6.4 million if the underwriters exercise their over-allotment option in full.

A US$1.00 increase (decrease) in the assumed initial public offering price of US$5.00 per ADS, would increase (decrease) each of total shareholders’ equity and total capitalization by US$1.1 million if the underwriters’ over-allotment option is not exercised, or US$1.3 million if the underwriters’ over-allotment option is exercised in full, assuming the number of the Public Offering ADSs offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and estimated expenses payable by us. An increase (decrease) of 100,000 Public Offering ADSs in the number of the Public Offering ADSs offered by us would increase (decrease) each of total shareholders’ equity and total capitalization by US$0.5 million if the underwriters’ over-allotment option is not exercised, or US$0.5 million if the underwriters’ over-allotment option is exercised in full, based on an assumed initial public offering price of US$5.00 per ADS, and after deducting the estimated underwriting discounts and estimated expenses payable by us.

DILUTION

If you invest in the ADSs, your interest will be diluted for each ADS you purchase to the extent of the difference between the initial public offering price per ADS and our net tangible book value per Ordinary Share underlying the ADS after this offering of the Public Offering ADSs. Dilution results from the fact that the initial public offering price per ADS is substantially in excess of the net tangible book value per Ordinary Share attributable to the existing shareholders for our presently outstanding Ordinary Shares.

Our net tangible book value as of October 31, 2022 was US$1,732,641, or US$0.13 per Ordinary Share as of that date and US$0.13 per ADS. Net tangible book value represents the amount of our total tangible assets, less the amount of our total liabilities. Dilution is determined by subtracting net tangible book value per Ordinary Share, after giving effect to the additional proceeds we will receive from this offering of the Public Offering ADSs, based on the assumed initial public offering price of US$5.00 per ADS, and after deducting underwriting discounts and estimated offering expenses payable by us.

After giving effect to our sale of 1,200,000 ADSs offered in this offering of the Public Offering ADSs based on the assumed initial public offering price of US$5.00 per ADS after deduction of the estimated underwriting discounts and the estimated offering expenses payable by us, and assuming the underwriters’ over-allotment option is not exercised, our as adjusted net tangible book value as of October 31, 2022, would have been US$7.3 million, or US$0.49 per Ordinary Share. This represents an immediate increase in net tangible book value of US$0.36 per Ordinary Share to the existing shareholders, and an immediate dilution in net tangible book value of US$4.51 per Ordinary Share underlying the ADS to investors purchasing ADSs in this offering of the Public Offering ADSs.

The following table illustrates such dilution:


Over-allotment option not exercised	Per Ordinary Share
Assumed Initial public offering price per Ordinary Share	$	5.00
Net tangible book value per Ordinary Share as of October 31, 2022	$	0.13
As adjusted net tangible book value per Ordinary Share attributable to payments by new investors	$	0.36
As adjusted net tangible book value per Ordinary Share immediately after this offering	$	0.49
Amount of dilution in net tangible book value per Ordinary Share to new investors in the offering	$	4.51

After giving effect to our sale of 1,380,000 ADSs offered in this offering of the Public Offering ADSs based on the assumed initial public offering price of US$5.00 per ADS after deduction of the estimated underwriting discounts and the estimated offering expenses payable by us, and assuming the underwriters’ over-allotment option is exercised in full, our as adjusted net tangible book value as of October 31, 2022, would have been US$8.1 million, or US$0.54 per Ordinary Share. This represents an immediate increase in net tangible book value of US$0.41 per Ordinary Share to the existing shareholders, and an immediate dilution in net tangible book value of US$4.46 per Ordinary Share underlying the ADS to investors purchasing ADSs in this offering of the Public Offering ADSs.

The following table illustrates such dilution:



Over-allotment option exercised in full	Per Ordinary Share
Assumed Initial public offering price per Ordinary Share	$	5.00
Net tangible book value per Ordinary Share as of October 31, 2022	$	0.13
As adjusted net tangible book value per Ordinary Share attributable to payments by new investors	$	0.41
As adjusted net tangible book value per Ordinary Share immediately after this offering	$	0.54
Amount of dilution in net tangible book value per Ordinary Share to new investors in the offering	$	4.46

The as adjusted information discussed above is illustrative only.

A US$1.00 increase (decrease) in the assumed initial public offering price of US$5.00 per ADS would increase (decrease) our pro forma as adjusted net tangible book value after giving effect to this offering of the Public Offering ADSs by US$1.1 million, increase (decrease) the pro forma as adjusted net tangible book value per Ordinary Share after giving effect to this offering of the Public Offering ADSs by US$0.07 per Ordinary Share, and decrease (increase) the dilution in pro forma as adjusted net tangible book value per Ordinary Share to new investors in this offering of the Public Offering ADSs by US$0.93 per Ordinary Share, assuming no change to the number of ADSs offered by us as set forth on the front cover of this prospectus, and after deducting underwriting discounts and estimated offering expenses payable by us.

An increase (decrease) of 100,000 ADSs in the number of ADSs offered by us would increase (decrease) our pro forma as adjusted net tangible book value after giving effect to this offering of the Public Offering ADSs by US$0.5 million, increase (decrease) the pro forma as adjusted net tangible book value per Ordinary Share after giving effect to this offering of the Public Offering ADSs by US$0.03 per Ordinary Share, and decrease (increase) the dilution in pro forma as adjusted net tangible book value per Ordinary Share to new investors in this offering of the Public Offering ADSs by US$0.03 per Ordinary Share, based on an assumed initial public offering price of US$5.00 per ADS, and after deducting underwriting discounts and estimated offering expenses payable by us.

The following tables summarize, on a pro forma as adjusted basis as of October 31, 2022, the differences between existing shareholders and the new investors with respect to the number of Ordinary Shares (in the form of ADSs) purchased from us, the total consideration paid and the average price per Ordinary Share before deducting the estimated underwriting discounts and the estimated offering expenses payable by us.


Over-allotment option not exercised	Ordinary Shares purchased					Total consideration					Average price per Ordinary		Average price per
Over-allotment option not exercised	Number		Percent			Amount		Percent			Share		ADS
	($ in thousands)
Existing shareholders		13,839,400		92.0	%	$	4,368		42.1	%	$	0.32	$	0.32
New investors		1,200,000		8.0	%	$	6,000		57.9	%	$	5.00	$	5.00

Total		15,039,400		100.0	%	$	10,368		100.0	%	$	0.69	$	0.69


Over-allotment option exercised in full	Ordinary Shares purchased					Total consideration					Average price per Ordinary		Average price per
Over-allotment option exercised in full	Number		Percent			Amount		Percent			Share		ADS
	($ in thousands)
Existing shareholders		13,839,400		90.9	%	$	4,368		38.8	%	$	0.32	$	0.32
New investors		1,380,000		9.1	%	$	6,900		61.2	%	$	5.00	$	5.00

Total		15,219,400		100.0	%	$	11,268		100.0	%	$	0.74	$	0.74

The pro forma as adjusted information as discussed above is illustrative only. Our net tangible book value following the completion of this offering of the Public Offering ADSs is subject to adjustment based on the actual initial public offering price of our Ordinary Shares and other terms of this offering of the Public Offering ADSs determined at the pricing.

CORPORATE HISTORY AND STRUCTURE

Corporate History

Our Company was incorporated in Japan on May 1, 2018 as a stock corporation pursuant to the laws of Japan.

Corporate Structure

The following chart illustrates our corporate structure as of the date of this prospectus and upon completion of this offering assuming no exercise of the over-allotment option (for purpose of the illustration of this chart only, we assume the Selling Shareholders do not sell any ADSs representing Ordinary Shares upon closing of this offering):

LOGO

Notes: all percentages reflect the equity interests held by each of our shareholders.

(1)

Represents 4,000,000 Ordinary Shares held by Themis Capital GK, which is 100% owned by Satoshi Kobayashi, our chief executive officer and representative director, as of the date of this prospectus.

(2)

Represents an aggregate of 4,377,135 Ordinary Shares held by 53 shareholders of our Company, each one of which holds less than 5% of our equity interests, as of the date of this prospectus.

(3)

For details of our principal shareholders’ ownership, please refer to the beneficial ownership table in “Principal Shareholders.”

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our results of operations and financial condition in conjunction with our financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors,” “Disclosure Regarding Forward-Looking Statements” and elsewhere in this prospectus.

Overview

We are a Japanese company operating our proprietary private blockchain technology, Grid Ledger System (“GLS”), to leverage blockchain technology in various applications in a range of industries.

We primarily generate revenue from our software and system development services and consulting and solution services.

Through our software and system development services, we serve companies that have digital assets and intend to leverage these assets for the purposes of creating new businesses and new systems. We develop systems that are tailored to the specific needs of each customer.

Through our consulting services, we assist companies that rely on our technical expertise and seek our advice on various technological issues. We may be requested by our customers to offer advice regarding new system development, or analyze the existing systems and advise as to how to transform and improve the existing systems. Our consulting advice is written into a work completion report, which is presented to each customer at the end of the contract term. Through our solution services, we work with companies that seek to update their existing data and digital technology, add additional functions to their systems, and transform their businesses, operations, and processes. The companies that purchase our solution services are repeat customers for whom we have developed systems and who return to us for additional services.

Illustrative examples of our delivered systems and services include an advertisement tracking system, questionnaire creation and collection system, contract data management platform (AMBITION-Sign), and NFT trading platform (Animap).

For the six months ended October 31, 2022 and 2021, and the fiscal years ended April 30, 2022 and 2021, we had total revenue of approximately JPY32.2 million (US$0.2 million), JPY190.8 million, JPY463.7 million (US$3.1 million) and JPY216.2 million, respectively. For the same fiscal periods, revenue generated from our software and system development services accounted for approximately 35.3%, 46.2%, 50.6% and 44.1% of our total revenue, respectively, and revenue generated from our consulting and solution services accounted for approximately 64.7%, 53.8%, 49.4% and 55.9% of our total revenue, respectively. For the same fiscal periods, we had net loss of approximately JPY213.3 million (US$1.4 million), JPY644.4 million, JPY602.5 million (US$4.1 million) and JPY70.5 million, respectively.

Key Factors Affecting Our Results of Operations

We believe the following key factors may affect our financial condition and results of operations:

The development or acceptance of blockchain technology in the commercial marketplace

Blockchain is an emerging technology that offers new capabilities which are not fully proven in use. The development of blockchain technology is a new and rapidly evolving industry that is subject to a high degree of uncertainty. Factors affecting the further development of blockchain industry include, without limitation:

•

continued worldwide growth in the adoption and use of blockchain technology;

•

the maintenance and development of the open-source software protocol of blockchain networks;

•

changes in consumer demographics;

•

changes in public tastes and preferences;

•

the popularity or acceptance of blockchain networks and assets; and

•

government and quasi-government regulation of blockchain networks and assets, including any restrictions on access, operation and use of blockchain networks and assets.

Our ability to apply the technology effectively in driving value for our customers through blockchain-based solutions

Our success depends on our ability to apply our proprietary blockchain technology GLS, develop new products and services, and improve the performance and cost-effectiveness of the existing products and services, in each

case in ways that address current and anticipated customer requirements, industry needs and future trends. Such success is dependent upon several factors, including technology effectiveness, functionality, competitive pricing, licensing and integration with existing and emerging technologies. The blockchain industry is characterized by rapid technological changes. If we fail to develop and implement technology solutions and technical expertise that keep pace with changes in technology, industry standards, and customer preferences, our value proposition could be adversely affected. We may not be successful in anticipating or responding to these developments on a timely and cost-effective basis and our ideas may not be accepted in the marketplace. Additionally, the effort to gain technological expertise and develop new technologies in our business may require us to incur significant expenses. Any of these events could result in a material adverse effect on our operating results, customer relationships, and business.

Telecommunications infrastructure and the performance of devices equipped with blockchain

Our ability to face cybersecurity incidents

Our ability to conduct our operations when facing operational system failures or interruptions

We rely on the capacity, reliability and security of third-party systems and software to support our operations. For example, we employ Google Drive to process, transmit and store critical information. The systems of third-party providers may experience material interruptions or failures due to a variety of events beyond our control, including but not limited to, natural disasters, telecommunications failures, employee or customer error or misuse. If any of the systems do not operate properly, are compromised or are disabled, we could suffer adverse impact on our operations.

Our ability to compete successfully

of products and services. Many of our competitors may have greater financial, marketing, technological and personnel resources than we do, and may offer a wider range of bundled services, have broader name recognition, and have larger customer bases than we do.

Our ability to retain major customers and acquire new customers

For the six months ended October 31, 2022, we had five customers with sales revenue of more than JPY500,000, and our top three customers contributed to 88.9% of our total sales revenue, accounting for 62.1%, 15.2%, and 11.6% of our total sales revenue, respectively. For the six months ended October 31, 2021, we had eight customers with sales revenue of more than JPY500,000, and our top three customers contributed to 92.6% of our total sales revenue, accounting for 52.4%, 32.9%, and 7.3% of our total sales revenue, respectively. For the fiscal year ended April 30, 2022, our top three customers contributed to 81.5% of our total sales revenue, accounting for 47.4%, 25.9%, and 8.2% of our total sales revenue, respectively. For the fiscal year ended April 30, 2021, our three major customers contributed to 91.6% of our total sales revenue, accounting for 46.3%, 42.0%, and 3.3% of our total sales revenue, respectively. Although we do not heavily rely upon any one customer for the majority of our revenue, our revenue is dependent on a limited number of customers who account for a large percentage of our contractually committed capacity. If one or more of our significant customers fail to make payments to us or does not honor their contractual commitments, our revenue and results of operations would be materially and adversely affected.

A down-cycle economic environment

The impact of COVID-19

coronavirus pandemic, governments and industries have instituted drastic actions to contain the coronavirus or treat its impact. Such actions, including bans on international and domestic travel, quarantines, and prohibitions on accessing work sites, have caused significant disruptions to global and local economies and have led to dramatic volatility in the capital markets. In April 2020, the Japanese government issued the Declaration of a State of Emergency, whereby the Japanese government ordered non-essential activities and businesses across Japan to close as a preemptive safeguard against the COVID-19 pandemic. This adversely impacted many business sectors across Japan, especially in Tokyo. During the fiscal year ended April 30, 2020, the COVID-19 pandemic had some negative impact on our business operations, when delay in our sales activities occurred due to the inability to conduct scheduled in-person sales activities. Since fiscal year 2021, the COVID-19 pandemic has had no impact on our business operations.

Results of Operations

The following table sets forth our selected profit or loss data, both in absolute amount and as a percentage of total revenue, for the periods indicated. This information should be read together with our financial statements and related notes included elsewhere in this prospectus. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.


	For the year ended April 30, 2022								For the year ended April 30, 2021					Fluctuation
	US$			JPY					JPY					JPY		%
OPERATING REVENUES
Software and system development services		1,579,309			234,732,715		50.6	%		95,270,416		44.1	%		139,462,299		146.4	%
Consulting and solution services		1,540,645			228,986,136		49.4	%		120,941,032		55.9	%		108,045,104		89.3	%

TOTAL OPERATING REVENUES		3,119,954			463,718,851		100.0	%		216,211,448		100.0	%		247,507,403		114.5	%
COST OF REVENUES		(729,191	)		(108,379,683	)	-23.4	%		(33,542,166	)	-15.5	%		-74,837,517		223.1	%

GROSS PROFIT		2,390,763			355,339,168		76.6	%		182,669,282		84.5	%		172,669,886		94.5	%
OPERATING EXPENSES:
Selling and marketing expenses		(200,012	)		(29,727,815	)	-6.4	%		(41,985,446	)	-19.4	%		12,257,631		-29.2	%
General and administrative expenses		(1,358,921	)		(201,976,446	)	-43.6	%		(150,918,716	)	-69.8	%		-51,057,730		33.8	%
Stock-based compensation expenses		(4,507,838	)		(670,000,000	)	-144.5	%		(56,000,000	)	-25.9	%		-614,000,000		1096.4	%
Research and development expenses		(173,274	)		(25,753,717	)	-5.6	%		(22,893,105	)	-10.6	%		-2,860,612		12.5	%

TOTAL OPERATING EXPENSES		(6,240,045	)		(927,457,978	)	-200.0	%		(271,797,267	)	-125.7	%		-655,660,711		241.2	%

LOSS FROM OPERATIONS		(3,849,282	)		(572,118,810	)	-123.4	%		(89,127,985	)	-41.2	%		-482,990,825		541.9	%
Government subsidies		—			—		0.0	%		4,776,746		2.2	%		-4,776,746		-100.0	%
Interest expenses, net		(8,469	)		(1,258,722	)	-0.3	%		(1,448,138	)	-0.7	%		189,416		-13.1	%
Other (expense) income, net		(1,046	)		(155,434	)	0.0	%		99,841		0.0	%		-255,275		-255.7	%
Loss from equity method investment		—			—		0.0	%		(440,272	)	-0.2	%		440,272		-100.0	%
LOSS BEFORE INCOME TAXES		(3,858,797	)		(573,532,966	)	-123.7	%		(86,139,808	)	-39.8	%		-487,393,158		565.8	%
Provision for income tax		(194,722	)		(28,941,602	)	-6.2	%		15,622,026		-7.2	%		-44,563,628		285.3	%
NET LOSS		(4,053,519	)		(602,474,568	)	-129.9	%		(70,517,782	)	-32.6	%		-531,956,786		754.4	%


	For the six months ended October 31, 2022								For the six months ended October 31, 2021					Fluctuation
	USD			JPY					JPY					JPY		%
OPERATING REVENUES
Software and system development services		76,421			11,358,517		35.3	%		88,164,636		46.2	%		-76,806,119		-87.1	%
Consulting and solution services		140,268			20,847,940		64.7	%		102,598,343		53.8	%		-81,750,403		-79.7	%

TOTAL OPERATING REVENUES		216,689			32,206,457		100.0	%		190,762,979		100.0	%		-158,556,522		-83.1	%

COST OF REVENUES		(136,109	)		(20,229,847	)	-62.8	%		(31,813,892	)	-16.7	%		11,584,045		-36.4	%

GROSS PROFIT		80,580			11,976,610		37.2	%		158,949,087		83.3	%		-146,972,477		-92.5	%
OPERATING EXPENSES:
Selling and marketing expenses		(76,477	)		(11,366,838	)	-35.3	%		(14,072,537	)	-7.4	%		2,705,699		-19.2	%
General and administrative expenses		(1,094,035	)		(162,606,424	)	-504.9	%		(90,777,197	)	-47.6	%		-71,829,227		79.1	%
Stock-based compensation expenses		—			—		0.0	%		(670,000,000	)	-351.2	%		670,000,000		-100.0	%
Research and development expenses		(337,987	)		(50,234,955	)	-156.0	%		(13,008,668	)	-6.8	%		-37,226,287		286.2	%

TOTAL OPERATING EXPENSES		(1,508,499	)		(224,208,217	)	-696.2	%		(787,858,402	)	-413.0	%		563,650,185		-71.5	%

LOSS FROM OPERATIONS		(1,427,919	)		(212,231,607	)	-659.0	%		(628,909,315	)	-329.7	%		416,677,708		-66.3	%
Interest expenses, net		(4,714	)		(700,617	)	-2.2	%		(658,128	)	-0.3	%		-42,489		6.5	%
Other expense, net		(1,438	)		(213,799	)	-0.6	%		(700,400	)	-0.4	%		486,601		-69.5	%
LOSS BEFORE INCOME TAXES		(1,434,071	)		(213,146,023	)	-661.8	%		(630,267,843	)	-330.4	%		417,121,820		-66.2	%
Provision for income tax		(1,359	)		(201,966	)	-0.6	%		(14,176,660	)	-7.4	%		13,974,694		-98.6	%
NET LOSS		(1,435,430	)		(213,347,989	)	-662.4	%		(644,444,503	)	-337.8	%		431,096,514		-66.9	%

Revenue

The following table sets forth the breakdown of our revenue by category, both in absolute amount and as a percentage of the total revenue for each category for the periods indicated:


	Year Ended April 30, 2022							Year Ended April 30, 2021					Fluctuation
	USD		JPY		%			JPY		%			JPY		%
Software and system development services		1,579,309		234,732,715		50.6	%		95,270,416		44.1	%		139,462,299		146.4	%
Consulting and solution services		1,540,645		228,986,136		49.4	%		120,941,032		55.9	%		108,045,104		89.3	%

Total		3,119,954		463,718,851		100.0	%		216,211,448		100.0	%		247,507,403		114.5	%

Our net revenue increased by approximately JPY247.5 million, or 114.5%, from JPY216.2 million for the fiscal year ended April 30, 2021 to JPY463.7 million (US$3.1 million) for the fiscal year ended April 30, 2022. The increase of revenue was mainly due to the following:

The revenue generated from our software and system development services accounted for 50.6% and 44.1% of our total revenue for the fiscal years ended April 30, 2022 and 2021, respectively. The revenue from software and system development services increased by JPY139.5 million, or 146.4%, from JPY95.3 million for the fiscal year ended April 30, 2021 to JPY234.7 million (US$1.6 million) for the fiscal year ended April 30, 2022. The increase in revenue from software and system development services was mainly attributable to the increase in the number of new development projects.

The revenue generated from our consulting and solution services accounted for 49.4% and 55.9% of our total revenue for the fiscal years ended April 30, 2022 and 2021, respectively. The revenue from consulting and solution services increased by JPY108.0 million, or 89.3%, from JPY120.9 million for the fiscal year ended April 30, 2021 to JPY229.0 million (US$1.5 million) for the fiscal year ended April 30, 2022. The increase in revenue from consulting and solution services was mainly because some of our development projects were completed in 2021 and it increased the demand for subsequent maintenance and operating services.


	Six Months Ended October 31, 2022							Six Months Ended October 31, 2021					Fluctuation
	USD		JPY		%			JPY		%			JPY		%
Software and system development services		76,421		11,358,517		35.3	%		88,164,636		46.2	%		-76,806,119		-87.1	%
Consulting and solution services		140,268		20,847,940		64.7	%		102,598,343		53.8	%		-81,750,403		-79.7	%

Total		216,689		32,206,457		100.0	%		190,762,979		100.0	%		-158,556,522		-83.1	%

Our net revenue decreased by approximately JPY158.6 million, or 83.1%, from JPY190.8 million for the six months ended October 31, 2021 to JPY32.2 million (US$0.2 million) for the six months ended October 31, 2022. The decrease of revenue was mainly due to the following:

The revenue generated from our software and system development services accounted for 35.3% and 46.2% of our total revenue for the six months ended October 31, 2022 and 2021, respectively. The revenue from software and system development services decreased by JPY76.8 million, or 87.1%, from JPY88.2 million for the six months ended October 31, 2021 to JPY11.4 million (US$0.08 million) for the six months ended October 31, 2022. The decrease in revenue from software and system development services was mainly because in the fiscal year of 2021, we entered into a number of contracts to the extent that we were unable to devote substantial resources to research and development activities; most of such contracts were for terms of one year or less and expired during 2022. During the fiscal year of 2022, we are more selective in entering into contracts and conducting projects in which we devote our resources, and we are engaged in research and development projects that are expected to generate revenue in the future.

The revenue generated from our consulting and solution services accounted for 64.7% and 53.8% of our total revenue for the six months ended October 31, 2022 and 2021, respectively. The revenue from consulting and solution services decreased by JPY81.8 million, or 79.7%, from JPY102.6 million for the six months ended October 31, 2021 to JPY20.8 million (US$0.1 million) for the six months ended October 31, 2022. The decrease in revenue from consulting and solution services was mainly because in the fiscal year of 2021, we entered into a number of contracts to the extent that we were unable to devote substantial resources to research and development activities; most of such contracts were for terms of one year or less and expired during 2022. During the fiscal year of 2022, we are more selective in entering into contracts and conducting projects in which we devote our resources, and we are engaged in research and development projects that are expected to generate revenue in the future.

Cost of Revenue

The following table sets forth the breakdown of our cost of revenue by category, both in absolute amount and as a percentage of the cost of revenue, for the periods indicated:


	Year Ended April 30, 2022							Year Ended April 30, 2021					Fluctuation
	USD		JPY		%			JPY		%			JPY		%
Staff cost		231,944		34,473,809		31.8	%		23,674,455		70.6	%		10,799,354		45.6	%
Outsourced staff cost		378,734		56,291,194		51.9	%		6,165,500		18.4	%		50,125,694		813.0	%
Telecommunication cost		105,615		15,697,664		14.5	%		1,988,154		5.9	%		13,709,510		689.6	%
Rental expense		10,643		1,581,841		1.5	%		1,533,735		4.6	%		48,106		3.1	%
Others		2,255		335,175		0.3	%		180,322		0.5	%		154,853		85.9	%

Total		729,191		108,379,683		100.0	%		33,542,166		100.0	%		74,837,517		223.1	%

Cost of revenue primarily comprises (1) staff cost; (2) outsourced staff cost; (3) telecommunication cost; (4) rental expense; and (5) others. Cost of revenue increased by JPY74.8 million, or 223.1%, from JPY33.5 million for the fiscal year ended April 30, 2021 to JPY108.4 million (US$0.7 million) for the fiscal year ended April 30, 2022. Such increase was primarily attributable to the increases in staff cost and outsourced staff cost.


	Six Months Ended October 31, 2022							Six Months Ended October 31, 2021					Fluctuation
	USD		JPY		%			JPY		%			JPY		%
Staff cost		41,433		6,158,184		30.4	%		12,011,105		37.8	%		-5,852,921		-48.7	%
Outsourced staff cost		59,601		8,858,450		43.8	%		15,248,805		47.9	%		-6,390,355		-41.9	%
Telecommunication cost		29,469		4,379,954		21.7	%		3,907,046		12.3	%		472,908		12.1	%
Rental expense		4,877		724,932		3.6	%		561,628		1.8	%		163,304		29.1	%
Others		729		108,327		0.5	%		85,308		0.3	%		23,019		27.0	%

Total		136,109		20,229,847		100.0	%		31,813,892		100.0	%		-11,584,045		-36.4	%

Cost of revenue decreased by JPY11.6 million, or 36.4%, from JPY31.8 million for the six months ended October 31, 2021 to JPY20.2 million (US$0.1 million) for the six months ended October 31, 2022. Such decrease was primarily attributable to JPY12.2 million decrease in staff cost and outsourced staff cost.

Gross Profit/Loss

As a result of changes in revenue and cost of revenue, our gross profit increased by JPY172.7 million, or 94.5%, from JPY182.7 million for the fiscal year ended April 30, 2021 to JPY355.3 million (US$2.4 million) for the fiscal year ended April 30, 2022. The following table sets forth a breakdown of gross profit by services offered for the fiscal years ended April 30, 2022 and 2021:


	Year Ended April 30, 2022				Year Ended April 30, 2021		Fluctuation
	USD		JPY		JPY		JPY		%
Software and system development services		1,085,315		161,310,365		91,266,231		70,044,133		76.7	%
Consulting and solution services		1,305,448		194,028,803		91,403,051		102,625,753		112.3	%

Total		2,390,763		355,339,168		182,669,282		172,669,886		94.5	%

Our gross profit decreased by JPY147.0, or 92.5%, from JPY158.9 million for the six months ended October 31, 2021 to JPY12.0 million (US$0.1 million) for the six months ended October 31, 2022. The following table sets forth a breakdown of gross profit by services offered for the six months ended October 31, 2022 and 2021:


	Six Months Ended October 31, 2022						Six Months Ended October 31, 2021		Fluctuation
	USD			JPY			JPY		JPY		%
Software and system development services		(17,019	)		(2,529,462	)		68,575,643		-71,105,105		-103.7	%
Consulting and solution services		97,599			14,506,072			90,373,444		-75,867,372		-83.9	%

Total		80,580			11,976,610			158,949,087		-146,972,477		-92.5	%

Operating Expenses

The following table sets forth our operating expenses, both in absolute amount and as a percentage of the total operating expenses, for the periods indicated:


	Year Ended April 30, 2022							Year Ended April 30, 2021					Fluctuation
	USD		JPY		%			JPY		%			JPY		%
Selling expenses		200,012		29,727,815		3.2	%		41,985,446		15.4	%		-12,257,631		-29.2	%
General and administrative expenses		1,358,921		201,976,446		21.8	%		150,918,716		55.5	%		51,057,730		33.8	%
Stock-based compensation expenses		4,507,838		670,000,000		72.2	%		56,000,000		20.6	%		614,000,000		1096.4	%
Research and development expenses		173,274		25,753,717		2.8	%		22,893,105		8.4	%		2,860,612		12.5	%

Total		6,240,045		927,457,978		100.0	%		271,797,267		100.0	%		655,660,711		241.2	%

Selling expenses

Selling expenses include (1) salaries and benefits of our sales and marketing staff, and (2) others, such as advertising expense and other related payment for our sales and marketing staff. Selling expenses decreased by JPY12.3 million, or 29.2%, from JPY42.0 million for the fiscal year ended April 30, 2021 to JPY29.7 million (US$0.2 million) for the fiscal year ended April 30, 2022. Such decreases were primarily attributable to the decreases in our sales office headcount. The following table sets forth the breakdown of selling expenses, both in absolute amount and as a percentage of the total selling expenses, for the periods indicated:


	Year Ended April 30, 2022							Year Ended April 30, 2021					Fluctuation
	USD		JPY		%			JPY		%			JPY		%
Staff salaries and benefits		200,012		29,727,815		100.0	%		38,958,586		92.8	%		-9,230,771		-23.7	%
Others		—		—		0.0	%		3,026,860		7.2	%		-3,026,860		-100.0	%

Total		200,012		29,727,815		100.0	%		41,985,446		100.0	%		-12,257,631		-29.2	%

General and administrative expenses

Administrative expenses include (1) salaries and benefits of our management, finance, operations and other staff and outsourced administrative staff; (2) professional service fee; (3) office expense for our operating; (4) rental expense; (5) transportation fee and (6) others, including depreciation and amortization, taxes and duties. The

general and administrative expenses increased by JPY51.1 million, or 33.8%, from JPY150.9 million for the fiscal year ended April 30, 2021 to JPY202.0 million (US$1.4 million) for the fiscal year ended April 30, 2022. Such increase was primarily attributable to the increase of our professional service fee. The following table sets forth the breakdown of general and administrative expenses, both in absolute amount and as a percentage of the total general and administrative expenses, for the periods indicated:


	Year Ended April 30, 2022							Year Ended April 30, 2021					Fluctuation
	USD		JPY		%			JPY		%			JPY		%
Staff salaries and benefits		702,685		104,440,158		51.7	%		95,974,189		63.6	%		8,465,969		8.8	%
Professional service fee		466,961		69,404,375		34.4	%		32,341,680		21.4	%		37,062,695		114.6	%
Office expense		50,642		7,526,856		3.7	%		8,291,888		5.5	%		-765,032		-9.2	%
Rental expense		47,801		7,104,654		3.5	%		7,668,055		5.1	%		-563,401		-7.3	%
Transportation fee		30,028		4,463,061		2.2	%		3,370,267		2.2	%		1,092,794		32.4	%
Others		60,804		9,037,342		4.5	%		3,272,637		2.2	%		5,764,705		176.1	%

Total		1,358,921		201,976,446		100.0	%		150,918,716		100.0	%		51,057,730		33.8	%

Stock-based compensation expenses

On July 1, 2019, the shareholders and board of directors of the Company approved the 2019 trust-type stock option plan (the “2019 Trust-type Plan”), which has an exercise period of 10 years from July 4, 2019 to July 3, 2029. Under the “2019 Trust-type Plan,” the Company is committed to issue 2,000,000 Ordinary Shares (retrospectively restated to include the effects of the share split of 50-for-1 and 100-for-1 on July 16, 2019 and on October 25, 2021, respectively) of the Company to its eligible employees, officers, directors or any other individual as determined by the board of directors. The stock-based compensation expenses increased by JPY614.0 million, or 1096.4%, from JPY56.0 million for the fiscal year ended April 30, 2021 to JPY670.0 million (US$4.5 million) for the fiscal year ended April 30, 2022. See our financial statements and the related notes included elsewhere in this prospectus for more information.

Research and development expenses


	Year Ended April 30, 2022							Year Ended April 30, 2021					Fluctuation
	USD		JPY		%			JPY		%			JPY		%
Staff cost		106,894		15,887,724		61.7	%		21,021,092		91.8	%		-5,133,368		-24.4	%
Outsourced staff cost		31,659		4,705,466		18.3	%		—		0.0	%		4,705,466		100.0	%
Telecommunication cost		28,067		4,171,560		16.2	%		983,623		4.3	%		3,187,937		324.1	%
Rental expense		5,832		866,825		3.4	%		772,257		3.4	%		94,568		12.2	%
Others		822		122,142		0.5	%		116,133		0.5	%		6,009		5.2	%

Total		173,274		25,753,717		100.0	%		22,893,105		100.0	%		2,860,612		12.5	%

Research and development expenses include (1) salaries and benefits of our research development staff; (2) outsourced development cost; and (3) other miscellaneous expenses for our research and development department, such as telecommunication expenses and rental and utility expenses. Research and development expenses increased by JPY2.9 million, or 12.5%, from JPY22.9 million for the fiscal year ended April 30, 2021 to JPY25.8 million (US$0.2 million) for the fiscal year ended April 30, 2022. Such increase was primarily attributable to the increase in outsourced development cost and telecommunication cost as a result of our business expansion.

The following table sets forth our operating expenses, both in absolute amount and as a percentage of the total operating expenses, for the periods indicated:


	Six Months Ended October 31, 2022							Six Months Ended October 31, 2021					Fluctuation
	USD		JPY		%			JPY		%			JPY		%
Selling expenses		76,477		11,366,838		5.1	%		14,072,537		1.8	%		-2,705,699		-19.2	%
General and administrative expenses		1,094,035		162,606,424		72.5	%		90,777,197		11.5	%		71,829,227		79.1	%
Stock-based compensation expenses		—		—		0.0	%		670,000,000		85.0	%		-670,000,000		-100.0	%
Research and development expenses		337,987		50,234,955		22.4	%		13,008,668		1.7	%		37,226,287		286.2	%

Total		1,508,499		224,208,217		100.0	%		787,858,402		100.0	%		-563,650,185		-71.5	%

Selling expenses

Selling expenses decreased by JPY2.7 million, or 19.2%, from JPY14.1 million for the six months ended October 31, 2021 to JPY11.4 million (US$0.08 million) for the six months ended October 31, 2022. Such decreases were primarily attributable to the decreases in our sales office headcount. The following table sets forth the breakdown of selling expenses, both in absolute amount and as a percentage of the total selling expenses, for the periods indicated:


	Six Months Ended October 31, 2022							Six Months Ended October 31, 2021					Fluctuation
	USD		JPY		%			JPY		%			JPY		%
Staff salaries and benefits		73,604		10,939,743		96.2	%		14,072,537		100.0	%		-3,132,794		-22.3	%
Others		2,873		427,095		3.8	%		—		0.0	%		427,095		100	%

Total		76,477		11,366,838		100.0	%		14,072,537		100.0	%		-2,705,699		-19.2	%

General and administrative expenses

The general and administrative expenses increased by JPY71.8 million, or 79.1%, from JPY90.8 million for the six months ended October 31, 2021 to JPY162.6 million (US$1.1 million) for the six months ended October 31, 2022. Such increase was primarily attributable to (i) an increase in the amount of JPY23.6 million in our staff cost and outsourced staff cost, and (ii) an increase in the amount of JPY46.8 million in our professional service fee related to our IPO. The following table sets forth the breakdown of general and administrative expenses, both in absolute amount and as a percentage of the total general and administrative expenses, for the periods indicated:


	Six Months Ended October 31, 2022							Six Months Ended October 31, 2021					Fluctuation
	USD		JPY		%			JPY		%			JPY		%
Staff salaries and benefits		439,378		65,304,810		40.2	%		48,582,067		53.5	%		16,722,743		34.4	%
Professional service fee		508,159		75,527,663		46.4	%		28,698,591		31.6	%		46,829,072		163.2	%
Office expense		54,504		8,100,978		5.0	%		3,548,606		3.9	%		4,552,372		128.3	%
Outsourced staff cost		46,114		6,853,918		4.2	%		—		0.0	%		6,853,918		100.0	%
Rental expense		18,198		2,704,682		1.7	%		3,873,976		4.3	%		-1,169,294		-30.2	%
Transportation fee		13,852		2,058,842		1.3	%		2,176,889		2.4	%		-118,047		-5.4	%
Others		13,830		2,055,531		1.3	%		3,897,068		4.3	%		-1,841,537		-47.3	%

Total		1,094,035		162,606,424		100.0	%		90,777,197		100.0	%		71,829,227		79.1	%

Stock-based compensation expenses

On July 1, 2019, the shareholders and board of directors of the Company approved the 2019 trust-type stock option plan (the “2019 Trust-type Plan”), which has an exercise period of 10 years from July 4, 2019 to July 3, 2029. Under the “2019 Trust-type Plan,” the Company is committed to issue 2,000,000 Ordinary Shares (retrospectively restated to include the effects of the share split of 50-for-1 and 100-for-1 on July 16, 2019 and on October 25, 2021, respectively) of the Company to its eligible employees, officers, directors or any other individual as determined by the board of directors. The stock-based compensation expenses decreased by JPY670.0 million, or 100.0%, from JPY670.0 million for the six months ended October 31, 2021 to nil for the six months ended October 31, 2022. See our financial statements and the related notes included elsewhere in this prospectus for more information.

Research and development expenses


	Six Months Ended October 31, 2022							Six Months Ended October 31, 2021					Fluctuation
	USD		JPY		%			JPY		%			JPY		%
Staff cost		77,485		11,516,606		22.9	%		9,784,458		75.2	%		1,732,148		17.7	%
Outsourced staff cost		223,381		33,201,088		66.1	%		—		0.0	%		33,201,088		100.0	%
Telecommunication cost		31,277		4,648,627		9.3	%		2,551,233		19.6	%		2,097,394		82.2	%
Rental expense		4,667		693,718		1.4	%		591,368		4.6	%		102,350		17.3	%
Others		1,177		174,916		0.3	%		81,609		0.6	%		93,307		114.3	%

Total		337,987		50,234,955		100.0	%		13,008,668		100.0	%		37,226,287		286.2	%

Research and development expenses increased by JPY37.2 million, or 286.2%, from JPY13.0 million for the six months ended October 31, 2021 to JPY50.2 million (US$0.3 million) for the six months ended October 31, 2022. Such increase was primarily attributable to the increase of staff cost and outsourced staff cost for GLS research and development. During the six months ended October 31, 2021, we had a number of development projects that required a significant amount of time and resources, resulting in our limited capacity for GLS research and development. For the six months ended October 31, 2022, we expanded our research and development efforts with the intention to further improve GLS functions.

Government subsidies

Other income, net decreased by 100.0%, from JPY4.8 million for the year ended April 30, 2021 to nil for the year ended April 30, 2022, which was mainly attributable to the decrease in the rental and telecommunication subsidies. The rental subsidy was provided by the Japanese Ministry of Economy, Trade and Industry to certain corporate tenants that were facing a decrease in sales due to the impact of the COVID-19 pandemic. The telecommunication subsidy was provided by the Tokyo Shigoto Foundation to support the telecommunication of certain businesses that were affected by the COVID-19 pandemic. Other income, net was nil for each of the six months ended October 31, 2022 and 2021.

Income tax provisions

Income tax provisions was JPY28.9 million (US$0.2 million) for the fiscal year ended April 30, 2022, as compared to income tax provisions of JPY15.6 million for the fiscal year ended April 30, 2021. Such increase resulted from our business expansion. Income tax provisions decreased by JPY14.0 million, or 98.6%, from JPY14.2 million for the six months ended October 31, 2021 to JPY0.2 million (US$0.001 million) for the six months ended October 31, 2022. Such decrease resulted from the decrease of our revenue.

Net loss

As a result of the foregoing reasons, we reported a net loss of JPY602.5 million (US$4.1 million) for the fiscal year ended April 30, 2022, as compared to a net loss of JPY70.5 million for the fiscal year ended April 30, 2021. We reported a net loss of JPY213.3 million (US$1.4 million) for the six months ended October 31, 2022, as compared to a net loss of JPY644.4 million for the six months ended October 31, 2021.

Liquidity and Capital Resources

Our primary source of liquidity historically has been cash generated from our business operations, bank loans, equity contributions from our shareholders and borrowings, which have historically been sufficient to meet our working capital and capital expenditure requirements.

As of October 31, 2022, April 30, 2022 and 2021, our cash and cash equivalents were JPY466.4 million (US$3.1 million), JPY657.4 million (US$4.4 million) and JPY364.3 million, respectively. Our cash and cash equivalents consist of cash at bank.

The following table sets forth the breakdown and terms of our outstanding borrowings as of April 30, 2022 and 2021.

Maturity date

Interest
rate

April 30,
2022

April 30,
2021

Kiraboshi bank*

November 2024-March 2030

1.60

JPY 58,668,000

JPY 69,668,000

The following table sets forth the breakdown and terms of our outstanding borrowings as of October 31, 2022 and April 30, 2022.


	Maturity date	Interest rate			October 31, 2022	April 30, 2022
Kiraboshi bank*	November 2024-March 2030		1.60	%	JPY 51,668,000	JPY58,668,000
Resona Bank Ltd.*	April 2023		1.48	%	JPY100,000,000	—
Shoko Chukin Bank, Ltd.	September 2027		2.69	%	JPY 50,000,000	—

*	Guaranteed by Mr. Satoshi Kobayashi.

We believe that our existing cash and cash equivalents, anticipated cash raised from financings, and anticipated cash flow from operations, together with the net proceeds from this offering of the Public Offering ADSs, will be sufficient to meet our anticipated cash needs for at least the next 12 months from the date of this prospectus. We believe that our existing cash and cash equivalents will be sufficient to support our planned operations for the next 13 months, and that our existing cash and cash equivalents, together with anticipated cash flow from our sales projects, will be sufficient to meet our operating needs for the next 27 months. However, the exact amount of proceeds we use for our operations and expansion plans will depend on the amount of cash generated from our operations and any strategic decisions we may make that could alter our expansion plans and the amount of cash necessary to fund these plans. We may, however, decide to enhance our liquidity position or increase our cash reserve for future investments through additional capital and finance funding. We may need additional cash resources in the future if we experience changes in business conditions or other developments, or if we find and wish to pursue opportunities for investments, acquisitions, capital expenditures or similar actions. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

Our ability to manage our working capital, including receivables and other assets and liabilities and accrued liabilities, may materially affect our financial condition and results of operations.

The following table sets forth our selected cash flow data for the fiscal years ended April 30, 2022 and 2021:


	Year Ended April 30, 2022				Year Ended April 30, 2021
	US$		JPY		JPY
Net cash flows provided by operating activities		674,606		100,266,688		34,521,751
Net cash flows provided by (used in) investing activities		25,313		3,762,358		(611,152	)
Net cash flows provided by financing activities		1,272,516		189,134,000		91,518,000
Net increase in cash, cash equivalents and restricted cash		1,972,435		293,163,046		125,428,599
Cash, cash equivalents and restricted cash at the beginning of the year/period		2,450,751		364,255,055		238,826,456

Cash, cash equivalents and restricted cash at the end of the year/period		4,423,186		657,418,101		364,255,055

Operating Activities

Net cash provided by operating activities for the fiscal year ended April 30, 2022 was JPY100.3 million (US$0.7 million), which primarily reflected our loss of JPY602.5 million (US$4.1 million) as mainly adjusted for: (1) share based compensation of JPY670.0 million (US$4.5 million), (2) deferred income taxes adjustments of JPY16.0 million (US$0.1 million) and changes in working capital. Adjustment for changes in working capital primarily consisted of (1) JPY31.6 million (US$0.2 million) decrease of account receivables, net, (2) JPY28.1 million (US$0.2 million) increase of income taxes payables, and (3) JPY24.0 million (US$0.2 million) increase of accrued liabilities and other payables.

Net cash provided by operating activities for the fiscal year ended April 30, 2021 was JPY34.5 million, which primarily reflected our net loss of JPY70.5 million as mainly adjusted for as mainly adjusted for: (1) share based compensation of JPY56.0 million, (2) deferred income taxes benefit adjustments of JPY15.9 million and changes in working capital. Adjustment for changes in working capital primarily consisted of (1) JPY54.4 million increase of account receivables, net, and (2) JPY10.2 million increase of accrued liabilities and other payables.

Investing Activities

Net cash provided by investing activities for the fiscal year ended April 30, 2022 was JPY3.8 million (US$0.03 million), mainly attributable to purchase of property and equipment of JPY1.0 million (US$0.01 million) and disposal of long-term investment of JPY4.6 million (US$0.03 million).

Net cash used in investing activities for the fiscal year ended April 30, 2021 was JPY0.6 million, mainly attributable to purchase of property and equipment of JPY0.6 million.

Financing Activities

Net cash provided by financing activities for the fiscal year ended April 30, 2022 was JPY189.1 million (US$1.3 million), mainly attributable to proceeds from issuance of Ordinary Shares to shareholders in the amount of JPY200.1 million (US$1.3 million) and repayment of long-term loan in the amount of JPY11.0 million (US$0.07 million).

Net cash provided by financing activities for the fiscal year ended April 30, 2021 was JPY91.5 million, mainly attributable to proceeds from issuance of Ordinary Shares to shareholders in the amount of JPY103.5 million and repayment of long-term loan in the amount of JPY12.0 million.

The following table sets forth our selected cash flow data for the six months ended October 31, 2022 and 2021:


	Six months Ended October 31, 2022						Six months Ended October 31, 2021
	US$			JPY			JPY
Net cash flows used in operating activities		(1,435,870	)		(213,413,362	)		(9,826,107	)
Net cash flows provided by (used in) investing activities		(4,288	)		(637,314	)		4,327,142
Net cash flows provided by financing activities		155,086			23,050,431			195,134,000
Net increase (decrease) in cash, cash equivalents and restricted cash		(1,285,072	)		(191,000,245	)		189,635,035
Cash, cash equivalents and restricted cash at the beginning of the year/period		4,423,186			657,418,101			364,255,055

Cash, cash equivalents and restricted cash at the end of the year/period		3,138,114			466,417,856			553,890,090

Operating Activities

Net cash used in operating activities for the six months ended October 31, 2022 was JPY213.4 million (US$1.4 million), which primarily reflected our loss of JPY213.3 million (US$1.4 million) as mainly adjusted for: (1) depreciation expense of JPY0.3 million (US$0.002 million) and changes in working capital. Adjustment for changes in working capital primarily consisted of (1) JPY64.5 million (US$0.4 million) decrease of account receivables, net, (2) JPY22.9 million (US$0.2 million) increase of prepayments, and (3) JPY38.4 million (US$0.3 million) decrease of income tax payables.

Net cash used in operating activities for the six months ended October 31, 2021 was JPY9.8 million, which primarily reflected our net loss of JPY644.4 million as mainly adjusted for: (1) share based compensation of JPY670.0 million, (2) deferred income taxes expense adjustments of JPY7.9 million and changes in working capital. Adjustment for changes in working capital primarily consisted of (1) JPY59.2 million increase of account receivables, net, and (2) JPY7.6 million increase of income tax payable.

Investing Activities

Net cash used in investing activities for the six months ended October 31, 2022 was JPY0.6 million (US$0.004 million), mainly attributable to purchase of property and equipment of JPY0.6 million (US$0.004 million).

Net cash provided by investing activities for the six months ended October 31, 2021 was JPY4.3 million, mainly attributable to proceeds from liquidation of equity method investments JPY4.6 million, partially offset by purchase of property and equipment of JPY0.2 million.

Financing Activities

Net cash provided by financing activities for the six months ended October 31, 2022 was JPY23.1 million (US$0.2 million), mainly attributable to proceeds from loans in the amount of JPY150.0 million (US$1.0 million), partially offset by repayment of loan in the amount of JPY7.0 million (US$0.05 million) and payments on deferred IPO costs in the amount of JPY119.9 million (US$0.8 million).

Net cash provided by financing activities for the six months ended October 31, 2021 was JPY195.1 million, mainly attributable to proceeds from issuance of Ordinary Shares to shareholders in the amount of JPY200.1 million and repayment of long-term loan in the amount of JPY5.0 million.

Capital Expenditures

We made capital expenditures of JPY1.0 million (US$0.01 million) and JPY0.6 million in the fiscal years of 2022 and 2021, respectively. We made capital expenditures of JPY0.6 million (US$0.004 million) and JPY0.2 million in the six months ended October 31, 2022 and 2021, respectively. In these periods, our capital expenditures were mainly used for procurement of office equipment and leasehold improvements.

We plan to fund our future capital expenditures with our existing cash balance and proceeds from this offering of the Public Offering ADSs. We will continue to make capital expenditures to meet the expected growth of our business, including for office equipment, leasehold improvements.

Internal Control Over Financial Reporting

Prior to this offering, we were a private company with limited accounting and financial reporting personnel and other resources to address our internal controls and procedures. In connection with the audit of our financial statements as of and for the fiscal years ended April 30, 2021 and 2022, we and our independent registered public accounting firm identified one material weakness in our internal control over financial reporting. As defined in the standards established by the Public Company Accounting Oversight Board of the United States, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness identified is related to lack of qualified staff equipped with relevant U.S. GAAP and SEC reporting experience.

We intend to undertake measures to improve our internal control over financial reporting to address the material weakness identified, including: (1) hiring more qualified staff equipped with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework, (2) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel, and (3) enhancing our internal audit function as well as engaging an external consulting firm to help us assess our compliance readiness under rule 13a-15 of the Exchange Act and improve overall internal control. We have entered into an advisory agreement with a certified public accountant who has experience in working for a publicly traded company and expertise in U.S. GAAP and SEC reporting. And our new Chief Financial Officer who has various accounting qualifications including the Association of Chartered Certified Accountants qualification. In the future, we plan to hire more talented personnel with even more experience and expertise to enhance our internal control system.

However, we cannot assure you that we will remediate our material weaknesses in a timely manner. The process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligation. See “Risk Factors—Risks Relating to Our Business and Industry—If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent fraud, and investor confidence and the market price of the ADSs may be materially and adversely affected.”

As a company with less than US$1.235 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, in the assessment of the emerging growth company’s internal control over financial reporting.

Contractual Obligations and Commitments

The following table sets forth our contractual obligations as of April 30, 2022:

Payment due by period

Total

Less than one
year

One to
three
years

Three to
five years

More than
five years

Long-term loan

JPY 58,668,000

12,000,000

22,105,000

10,008,000

14,555,000

Operating lease obligations

JPY 11,836,250

8,355,000

3,481,250

—

Total

JPY 70,504,250

20,355,000

25,586,250

10,008,000

14,555,000

The following table sets forth our contractual obligations as of October 31, 2022:

Payment due by period

Total

Less than one
year

One to
three
years

Three to
five years

More than
five years

Long-term loan

JPY 201,668,000

122,200,000

38,007,000

28,991,000

12,470,000

Operating lease obligations

JPY 7,658,750

7,658,750

—

Total

JPY 209,326,750

129,858,750

38,007,000

28,991,000

12,470,000

Trend Information

Other than as disclosed elsewhere in this prospectus, we are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material effect on our net revenue, income from continuing operations, profitability, liquidity, or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

Off Balance Sheet Commitments and Arrangements

We have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.

Quantitative and Qualitative Disclosures about Market Risks

Concentration of Credit Risk

Financial instruments that potentially expose us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. We place our cash and cash equivalents with financial institutions with high credit ratings and quality.

We conduct credit evaluations of customers, and generally do not require collateral or other security from our customers. We establish an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers.

Liquidity Risk

Our policy is to regularly monitor our liquidity requirements and our compliance with lending covenants, to ensure that we maintain sufficient reserves of cash and readily realizable marketable securities and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term. See “—Liquidity and Capital Resources” for details.

Inflation

Inflation does not materially affect our business or the results of our operations.

Critical Accounting Policies

An accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.

We prepare our financial statements in conformity with the U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates.

The following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our financial statements and accompanying notes and other disclosures included in this prospectus. When reviewing our financial statements, you should consider our selection of critical accounting policies, the judgments and other uncertainties affecting the application of such policies, and the sensitivity of reported results to changes in conditions and assumptions.

Revenue Recognition

The Company adopted Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”), on May 1, 2020 using the modified retrospective approach. Results for reporting periods beginning after May 1, 2020 are presented under ASC Topic 606 while prior period amounts are not adjusted and continue to be presented under the Company’s historic accounting under ASC Topic 605. The Company’s accounting for revenue remains substantially unchanged. There were no cumulative effect adjustments for service contracts in place prior to May 1, 2020. The effect from the adoption of ASC Topic 606 was not material to the Company’s financial statements.

The Company recognizes revenue as it satisfies a performance obligation when its client obtains control of promised services, in an amount that reflects the consideration that the entity expects to receive in exchange for those services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the services it transfers to the client.

The Company applies practical expedient when sales taxes are collected from clients, meaning sales tax is recorded net of revenue, instead of cost of revenue, which are subsequently remitted to governmental authorities and are excluded from the transaction price. The Company does not offer rights of refund of previously paid or delivered amounts, rebates, rights of return or price protection. In all instances, the Company limits the amount of revenue recognized to the amounts for which it has the right to bill its’ clients.

The Company is a principal and records revenue on a gross basis when the Company is primarily responsible for fulfilling the service, has discretion in establishing pricing and controls the promised service before transferring that service to clients.

The Company derives its revenues from two sources: (1) revenue from software and system development services and (2) revenue from consulting and solution services. All of the Company’s contracts with clients do not contain cancellable and refund-type provisions.

(1)

Software and system development services

The contracts are typically fixed priced and do not provide any post contract client support or upgrades. The Company designs, develops, and integrates software and systems based on clients’ specific needs. Upon delivery of the software and systems, the Company generally requires client acceptance. The Company assesses that software and system development services are considered as one performance obligation as the clients do not obtain benefit for each separate service. The duration of the development period is short, usually less than one year.

The Company’s software and system development service revenue is generated primarily from contracts with state-owned enterprises. The contracts contain negotiated billing terms which generally include multiple payment phases throughout the contract term and a portion of contract amount usually is billed upon the completion of the related projects. Pursuant to the contract terms, the Company has enforceable right on payments for the work performed.

The Company’s revenue from software and system development contracts are generally recognized over time as the Company’s performance creates or enhances the project controlled by the clients and the control is transferred continuously to the Company’s clients. The Company uses an input method based on cost incurred as the Company believes that this method most accurately reflects the Company’s progress toward satisfaction of the performance obligation, which usually takes less than one year. Under this method, the Company could appropriately measure the fulfillment of a performance obligation. Assumptions, risks and uncertainties inherent in the estimates used to measure progress could affect the amount of revenue, receivables and deferred revenue at each reporting period.

Incurred costs include all direct material, labor and subcontract costs, and those indirect costs related to application development performance, such as indirect labor, supplies, and tools. Cost-based input method requires the Company to make estimates of revenue and costs to complete the service. In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the application development, including materials, labor, and other system costs. The Company’s estimates are based upon the professional knowledge and experience of the Company’s engineers and project managers to assess the contract’s schedule, performance, and technical matters. The Company has adequate cost history and estimating experience, and with respect to which management believes it can reasonably estimate total development costs. If the estimated costs are greater than the related revenue, the Company recognizes the entire estimated loss in the period the loss becomes known and can be reasonably estimated. Changes in estimates for software and system development services include but are not limited to cost forecast changes and change orders. The cumulative effect of changes in estimates is recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. To date, the Company has not incurred a material loss on any contracts. However, as a policy, provisions for estimated losses on such engagements will be made during the period in

which a loss becomes probable and can be reasonably estimated. If contract modifications result in additional goods or services that are distinct from those transferred before the modification, they are accounted for prospectively as if the Company entered into a new contract. If the goods or services in the modification are not distinct from those in the original contract, sales and gross profit are adjusted using the cumulative catch-up method for revisions in estimated total contract costs and contract values.

(2)

Consulting and solution services

Revenue from consulting and solution services is primarily comprised of fixed-fee contracts, which require the Company to provide professional consulting and solution services over contract terms beginning on the commencement date of each contract, which is the date its service is made available to clients. Billings to the clients are generally on a monthly or quarterly basis over the contract term, which is typically 1 to 12 months. The consulting and solution services contracts typically include a single performance obligation. The revenue from consulting and solution services is recognized over the contract term as clients receive and consume benefits of such services as provided.

Revenue includes reimbursements of travel and out-of-pocket expense, with equivalent amounts of expense recorded in cost of revenue.

Practical Expedient and Exemptions

The Company does not disclose the value of unsatisfied performance obligations within one year by applying the right to invoice practical expedient provided by ASC 606-10-55-18.

Segment reporting

ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major clients in financial statements for detailing the Company’s business segments. Based on the criteria established by ASC 280, the Company’s chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer, who reviews results when making decisions about allocating resources and assessing performance of the Company. As a whole and hence, the Company has only one reportable segment. The Company does not distinguish between markets or segments for the purpose of internal reporting. As the Company’s long-lived assets are substantially located in Japan, no geographical segments are presented.

Operating leases

The Company adopted ASC Topic 842, Lease (“ASC 842”) on May 1, 2021, using the modified retrospective method. The Company determines if an arrangement is a lease at inception. Leases are classified as operating or finance leases in accordance with the recognition criteria in ASC 842-20-25. The Company’s leases do not contain any material residual value guarantees or material restrictive covenants.

The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any expired or existing leases as of the adoption date. Lastly, the Company elected the short-term lease exemption for all contracts with lease term of 12 months or less.

At the commencement date of a lease, the Company determines the classification of the lease based on the relevant factors present and records a right-of-use (“ROU”) asset and lease liability for operating lease. ROU assets acquired through lease represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and lease liabilities

are calculated as the present value of the lease payments not yet paid. If the rate implicit in the Company’s leases is not readily available, the Company uses an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. This incremental borrowing rate reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. ROU assets include any lease prepayments and are reduced by lease incentives. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease terms are based on the non-cancellable term of the lease.

Leases with an initial lease term of 12 months or less are not recorded on the balance sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term.

Income taxes

The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes were incurred during the years ended April 30, 2022 and 2021 and the six months ended October 31, 2022 and 2021. The Company does not believe there was any uncertain tax provision as of April 30, 2022 and October 31, 2022.

Recently Adopted or Issued Accounting Pronouncements

The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging growth company, or EGC, and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.

In June 2016, the FASB amended guidance related to the impairment of financial instruments as part of ASU2016-13 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which will be effective January 1, 2020. The guidance replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, which clarified that receivables from operating leases are not within the scope of Topic 326 and instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842. On May 15, 2019, the FASB issued ASU 2019-05, which provides transition relief for entities adopting the Board’s credit losses standard, ASU 2016-13. Specifically, ASU 2019-05 amends ASU 2016-13 to allow companies to irrevocably elect, upon adoption of ASU 2016-13, the fair value option for financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of the credit losses guidance in ASC 326-20, (3) are eligible for the fair value option under ASC 825-10, and (4) are not held-to-maturity debt securities. For entities that have adopted ASU 2016-13, the amendments in ASU 2019-05 are effective for fiscal years beginning after December 15, 2019, including interim periods therein. An entity may early adopt the ASU in any interim period after its issuance if the entity has adopted ASU 2016-13. For all other entities, the effective date will be the same

as the effective date of ASU 2016-13. In November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses.” ASU 2019-11 is an accounting pronouncement that amends ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The ASU 2019-11 amendment provides clarity and improves the codification to ASU 2016-03. The pronouncement would be effective concurrently with the adoption of ASU 2016-03. The pronouncement is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. In February 2020, the FASB issued ASU No. 2020-02, which provides clarifying guidance and minor updates to ASU No. 2016-13—Financial Instruments—Credit Loss (Topic 326) (“ASU 2016-13”) and related to ASU No. 2016-02—Leases (Topic 842). ASU 2020-02 amends the effective date of ASU 2016-13, such that ASU 2016-13 and its amendments will be effective for the Company for interim and annual periods in fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact this ASU will have on its financial statements and related disclosures.

On December 18, 2019, the FASB issued ASU No. 2019-12, Income taxes (Topic 740), Simplifying the Accounting for Income Taxes. This guidance amends ASC Topic 740 and addresses several aspects including 1) evaluation of step-up tax basis of goodwill when there is not a business combination, 2) policy election to not allocate consolidated taxes on a separate entity basis to entities not subject to income tax, 3) accounting for tax law changes or rates during interim periods, 4) ownership changes from equity method investment to subsidiary or vice versa, 5) elimination of exception to intrapetrous allocation when there is gain in discontinued operations and a loss from continuing operations, and 6) treatment of franchise taxes that are partially based on income. The amendments in this Update are effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company is evaluating the impact of this guidance on its financial statements and related disclosures.

In October 2020, the FASB issued ASU 2020-08, “Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs.” The amendments in this Update represent changes to clarify the Codification. The amendments make the Codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. ASU 2020-08 is effective for the Company for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. All entities should apply the amendments in this Update on a prospective basis as of the beginning of the period of adoption for existing or newly purchased callable debt securities. These amendments do not change the effective dates for Update 2017-08. The Company is currently evaluating the impact of this new standard on the Company’s financial statements and related disclosures.

In October 2020, the FASB issued ASU 2020-10, “Codification Improvements.” The amendments in this Update represent changes to clarify the Codification or correct unintended application of guidance that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments in this Update affect a wide variety of Topics in the Codification and apply to all reporting entities within the scope of the affected accounting guidance. ASU 2020-10 is effective for the Company for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. The amendments in this Update should be applied retrospectively. The Company does not expect the adoption of this standard to have a material impact on its financial statements.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s balance sheets, statements of income and statements of cash flows.

INDUSTRY

All the information and data presented in this section have been derived from Frost & Sullivan (“Frost & Sullivan”)’s industry report commissioned by us in August 2022 entitled “Global and Japan’s Blockchain Market” (the “Frost & Sullivan Report”) unless otherwise noted. Frost & Sullivan has advised us that the statistical and graphical information contained herein is drawn from its database and other sources. The following discussion contains projections for future growth, which may not occur at the rates that are projected or at all.

OVERVIEW OF THE GLOBAL BLOCKCHAIN MARKET

Definition and introduction of blockchain technology

Blockchain is an open-source peer-to-peer decentralized digital ledger comprising a series of data blocks that are linked and secured using cryptography. In a blockchain, nodes validate transactions based on a protocol that determines the true state of the digital ledger. The digital ledger is continuously growing as new blocks are added to it to record the most recent transactions in a linear, chronological order. The information is stored across a network of nodes all over the world with no central intermediary involved.

Blockchain technology holds significant potential to dramatically disrupt a broad spectrum of industries beyond the storage and transfer of value. Blockchain technology also has the potential to turbocharge the effectiveness and profitability of most businesses, or even to revolutionize the world economy. Cryptocurrencies may be the most obvious application of blockchain technology, but the transparent and immutable nature of blockchain technology presents a multitude of practical use cases. For example, the blockchain-based application in financial services has the potential to revolutionize international payments, making them faster, cheaper, and more secure with lower counterparty risk, which would ultimately make our society more productive. Further, the trade finance blockchain platform can improve and accelerate the financing of international trade. Similarly, in the public sector, blockchain-based applications can allow for better traceability and proof of transaction and can manage the digital identity of people and ownership and transaction information on different assets such as real property and vehicles in order to increase efficiency and reduce fraud.

Competitive edges of blockchain technology against conventional technologies used in information management

Blockchain is on the verge of redefining traditional business models, and changing paradigms for data security, accountability, and transparency. The implications of blockchain are vast for organizations across various industries, ranging from healthcare and finance to manufacturing, retail, and bio-sciences. Among other things, the blockchain technology allows companies in different industries to redefine or create new business models by eliminating the verification process through intermediaries. Because blockchains are immutable, transparent, and highly secure, they also have the potential to significantly reduce fraud. As a result, blockchain technology has the potential to significantly increase transaction security.

According to Frost & Sullivan, the competitive edges of blockchain technology against conventional technologies used in information management include:

Data Security and Quality. Most conventional information management systems sufficiently log all the key events in the repository, which could easily be corrupted. Despite the high cost spent on data protection mechanisms, it is relatively easy for administrators or malicious parties to copy, delete, modify, or falsify a company’s log data. Applied to this scenario, blockchain provides a trusted, independent, and cost-efficient proof-mechanism that ensures that log entries cannot easily be deleted or altered. Blockchain’s distributed ledgers are increasingly being used to ensure both the integrity of the process and the legitimacy of log data involved in all transactions—everything from tracking inventory to confirming payments to verifying that all tasks were conducted thoroughly and accurately along the way.

Data Traceability. The traceability of data is how easily the records of the data can be traced in terms of history, location, or application. There is a considerable challenge for businesses in the food and pharmaceutical sector, as billions of dollars are lost every year through theft, fraud, and counterfeiting. Manufacturers and consumers in global supply chains are calling for more transparency and traceability to combat these losses. Blockchain technology has a number of qualities that can enhance traceability. For instance, tokens can be used to give each product a unique identifier on the blockchain, and any information of such product can be securely stored. Only authorized participants can be given access to the information on the blockchain. As blockchain is linear, a historical chain of events can be followed.

Real-Time Data Analysis. Running data analysis in real-time, and monitoring changes as they happen is an advantage to any organization with data assets because it serves as one of the most effective ways of safeguarding against fraud and theft in a data-driven industry. As blockchain is distributed and transparent by nature, businesses are able to notice any irregularities as they occur by using various business applications equipped with blockchain technology, and the irregularities can be viewed in spreadsheet documents. Blockchain technology also allows simultaneous collaboration on the same sets of data. In addition to security improvements, real-time data analysis can help organizations in various ways, including optimizing resources and matching supply with demand.

Data Sharing. In conventional information management systems, governments and large organizations often collect a vast amount of data of individuals and companies. However, these data cannot be easily tracked and shared across governments and organizations. Although the information could be stored in a central information repository where information could be shared across governments and organizations, the large amount of sensitive data stored in one location would be a likely target for cyber-attacks. The decentralized nature of blockchain allows data to be tracked and shared easily across organizations. Information can be stored in a blockchain database that individuals and companies can access online. Individuals can give the organization the authority to read or edit certain data, and they can share certain information with other organizations. The organizations can be given permission to write data, but the user retains ultimate control.

Types of blockchains

According to Frost & Sullivan, the major types of blockchain include:

Public Blockchain. Public blockchain is a truly distributed network that allows participants across the world to read, write and acknowledge the transactions. Each transaction is verified and synced by every node affiliated with the blockchain before such transaction is written into the system. While this mechanism makes public blockchain extremely secure, it also makes it slow. Bitcoin and Ether are two of the most well-known public blockchain networks.

Private Blockchain. Access permissions are kept centralized in private blockchain and an organization that runs a private blockchain can change or modify the rules and transactions at its will. This allows for much greater efficiency and transactions on a private blockchain are completed significantly faster. Potential applications include internal audit and clearing and settlements among banks within a union.

Consortium Blockchain. Consortium blockchain operates a partially centralized platform where the consensus process is controlled by a set of pre-selected nodes. The rights to participate in consortium blockchain platforms may be restricted to certain parties. Consortium blockchain platforms have many of the same advantages of a private blockchain, but operate under the leadership of a group instead of a single entity. This structure can be widely used in cross-industry or cross-border clearing, settlement and auditing.

Major industries applying blockchain technology and major application scenarios

According to Frost & Sullivan, the major industries applying blockchain technology and major application scenarios include:


Industry		Application Scenarios
Financial Services		• Financial messaging services • Payments • Distributed ledger and automation • Identity compliance

Entertainment & Media		• Assuring the unique value and security transaction of NFT • Avoiding fake tickets, ticket scalpers and bots of virtual events • Streaming digital rights management • Privacy protection and tracing

Retail		• Allowing for trade between buyer and sellers without the need of middlemen • No associated fees such as credit card fees, exchange rate, or service charges • Traceability and authenticity of products

Real Estate & Insurance		• More accurate and transparent data storage and management • Verification of identity and documents • Automation of process, reducing the need for agents’ involvement

Supply Chain Management		• Data and documents being recorded and shared in a transparent and tamperproof way, reducing exposure to fraud • Payment and automation of process using smart contracts • End-to-end tracking of orders and coordination among all parties

Global blockchain market size

As enterprises, financial institutions, and public sectors around the world continue to increase their investment in digital technology, along with a highlighted need for more resilient, and transparent financial, entertainment and communication services, the global blockchain market size, as measured by the total spending on blockchain technology, has reached USD6.7 billion in 2021, representing a CAGR of 65.2% since 2017, according to Frost & Sullivan.

With the expanded applications of blockchain technology and the promotion of supporting infrastructures, the total spending on blockchain technology will continue to grow at a robust pace throughout the forecast period with a CAGR of 46.2% from 2017 to 2026, totaling nearly USD44.7 billion in 2026, according to Frost & Sullivan.

LOGO

Policies and initiatives related to the global blockchain market

According to Frost & Sullivan, the policies and initiatives related to the global blockchain market include:


Country	Policies / Initiatives	Description
U.S.	National Strategy for Critical and Emerging Technologies	The strategy incorporates blockchain into regulatory technology to secure national infrastructure.

Japan	Payment Service Act	The Payment Service Act (the “Act”) strictly regulates bitcoin. In the Act, the legislation defines bitcoin as an asset-like value, not a currency. The amendment to the Act, which took effect on May 1, 2020, requires crypto asset custodians to register their company information with the Department of Finance regardless of whether they provide trading services.

OVERVIEW OF THE BLOCKCHAIN MARKET IN JAPAN

Development of blockchain market in Japan

Japan is one of the early adopters of blockchain technologies among major developed countries. Since 2010, blockchain technology began to gain increasing awareness as the trading activities of Bitcoin, the most well-known application built upon blockchain technology, increased. Back in 2015, official departments in Japan, such as the Ministry of Economy, Trade and Industry (METI), started to carefully evaluate the blockchain technologies and related services. Since then, both public and private sectors have jointly driven the rapid growth of blockchain technology in Japan. Nowadays, the Japanese government encourages blockchain innovation through a regulatory sandbox system, which aims to develop an environment in which businesses are able to conduct demonstration tests and pilot projects for new technologies and business models that are not envisaged

under the existing regulations with a limited number of participants and within the predetermined implementation periods. Blockchain is one of the four areas of particular focus in such regulation sandbox system.

Major industries applying blockchain technology and major application scenarios in Japan

Blockchain technology is increasingly gaining its popularity across various sectors in Japan. A variety of companies in Japan are exploring the opportunities of applying blockchain technologies to their businesses in a wide range of projects. While the financial service sector is the first adopter and the most common sector of applying blockchain technology, many other sectors such as agriculture, industrial, Internet and energy also have witnessed significant achievements of applying blockchain technology.

Major sectors, application scenarios, and use cases of blockchain technology in Japan are set forth below:


Sector	Application scenarios	Use cases
Financial services	• Payments • International transaction • insurance policy	• Global payment network service compatible with the Internet of Things (the “IoT”) and other new technologies • Prototype using distributed ledger technology to streamline international transaction agreements • Blockchain-based insurance policy for marine cargo insurance certificates

Media	• Advertising	• Blockchain-based advertisement management platform that can effectively address the challenges that traditional marketing industry faces, such as fraudulent bot traffic, reluctance to share data, difficulty of tracking advertisement placement.

Real Estate	• Real estate transaction management	• Blockchain-based platform which is deeply integrated into the whole process of real estate transactions, improving the efficiency, transparency, and reliability of transactions by utilizing smart contracts, e-signatures, and tamper-proof history storage.

Agriculture and industrial	• Supply chain management • Food traceability	• Trade financial platform using blockchain to streamline trading operation and improve supply chain efficiency • Blockchain-based platform that allows parties to trace the status of food from field to table

Internet	• Identity management • Intellectual property management	• Identity management system among various sharing economy services • Contents management system built upon smart contracts and other functions based on blockchain technology to trace the use of contents in digital format

Energy	• Payments, sales, trading, and distribution	• Peer-to-peer energy trading system

Market size of blockchain market in Japan

With the emergence of various startups dedicated to developing blockchain technologies and the accelerated commercialization of blockchain technologies, Japan’s blockchain technology market has witnessed tremendous growth during the past five years. The market size of Japan’s blockchain market, as measured by the total spending on blockchain technologies, increased exponentially from USD40 million in 2017 to USD700 million in 2021, representing a CAGR of 104.5% during the same period. The applications of blockchain technologies are expanding to a variety of industries, and many companies are investing more to unleash the value of blockchain technology in their industries. The total spending on blockchain technology in Japan is expected to continue to grow, and is predicted to increase to USD8.1 billion in 2026, representing a CAGR of 63.2% from 2021 to 2026.

LOGO

Driving forces for the blockchain market in Japan

According to Frost & Sullivan, the driving forces for the rapid development of the blockchain market in Japan include:

Continuous penetration of blockchain technology in various business applications. The continuous penetration of blockchain technology solutions has achieved massive popularity in the last few years for various business applications, such as payments, exchanges, smart contracts, documentation, and entertainment. Many startups have entered this market and started developing blockchain technology solutions.

Accelerated adoption of blockchain technology driven by digital transformation. Digital transformation refers to the use of digital technologies, such as mobile services, analytic tools, blockchain technology, big data, and cloud technologies to improve enterprises’ operating efficiency. A series of disruptions to industries during the COVID-19 pandemic were exacerbated by processes and procedures that were inefficient and outmoded, which speeded up the digital transformation of enterprises. As enterprises look at ways to address those inefficient and outmoded processes and procedures, they are recognizing that blockchain technology fix the existing problems and build entirely new markets and services. This has accelerated interest and investment in blockchain technology.

Integration of blockchain and emerging technologies. Blockchains now are able to integrate emerging technologies, such as Artificial Intelligence (the “AI”) and IoT, to provide actionable insights and prevent data breaches. For instance, blockchain solutions are able to create a decentralized network of IoT devices, which would eliminate the need for a central location to handle communication among devices. Blockchain-infused IoT adds a higher level of security to prevent data breaches and makes the IoT safer and smarter. Besides, blockchain’s digital record offers insight into the framework behind AI and the provenance of the data such AI uses, and improving trust in data integrity and in the recommendations that AI provides. Using blockchain to store and distribute AI models provides an audit trail, and pairing blockchain and AI can enhance data security.

Future trends of the blockchain market in Japan

According to Frost & Sullivan, the future trends of the blockchain market in Japan include:

Increasingly adoption of Blockchain-as-a-Service (the “BaaS”). BaaS is a type of cloud-based service that enables users to develop their own digital products by working with blockchain. Most of these digital products are smart contracts or applications that can work without any setup requirements of the complete blockchain-based infrastructure.

Rise of multi-chain interoperability solutions. Although blockchain harbors many advantages, this emerging technology is not without its challenges, such as the lack of interoperability among different blockchains. Interoperability is the ability to transfer data and value across individual chains. Because blockchains exist largely in silos, they are not able to communicate with each other. It means the strength of one chain cannot benefit other chains, or the limitation of a particular blockchain cannot be compensated by leveraging the features of another chain. With interoperability, the hundreds of scattered blockchain networks will finally be able to seamlessly transfer digital assets, such as cryptocurrencies, NFTs, and smart contracts, among each other.

COMPETITVE LANDSCAPE OF THE BLOCKCHAIN MARKET IN JAPAN

Major types of market players and their product and service offerings in the global market and in Japan

Blockchain technology has emerged as an enterprise-ready tool for innovation in recent years, particularly during the pandemic. As governments and businesses pursue high-impact use cases for blockchain, service providers have expanded their offerings to satisfy such demand. As it becomes more apparent that blockchain can break traditional industry boundaries, customers are looking for trusted partners to help them unlock value by utilizing blockchain technology. According to Frost & Sullivan, the major types of blockchain technology services in Japan mainly include: global tech companies, conventional enterprises, and dedicated blockchain technology companies:


Types of Company	Characteristics	Examples of Products and Services
Global Tech Companies	• Establishing partnerships with local enterprises to build integrated digital solutions or platforms	• BaaS • Technology corporation • Business consulting

Conventional Enterprises	• Embracing blockchain technology internally, or outsourcing its development in partnership with third parties, in order to maintain competitiveness	• In-house blockchain systems

Types of Company

Characteristics

Examples of Products and Services

Dedicated Blockchain Technology Companies

• Designing and building blockchain systems by utilizing their core technology

• Providing flexible and integrated blockchain related business engagement models for conventional enterprises, from consulting to implementation

• Software development

• Business consulting

• Insurance management

Competitive edges of different types of players

According to Frost & Sullivan, the competitive edges of major blockchain technology service providers in Japan include:


Types of Company		Competitive Edges
Global Tech Companies		• Global tech companies are backed by abundant industry experience, talent, and sufficient resources, to quickly explore new market. • Different with other players, global tech companies can provide blockchain technology services and products with their integrated solutions.

Conventional Enterprises		• Conventional enterprises typically develop industry-focused blockchain system and have a deeper industry know-how compared with other types of companies.

Dedicated Blockchain Technology Companies		• Dedicated blockchain technology companies have strong technical background in blockchain technology. • Compared with conventional enterprises which are industry focused, they have more industry experience in various industries. • They are willing to continuously optimizing and investing their products and seeking innovation opportunities.

SOURCE OF INFORMATION

During the preparation of the market research, which was commissioned by the Company in August 2022, Frost & Sullivan performed both (i) primary research, which involved in-depth interviews with leading industry participants and industry experts; and (ii) secondary research, which involved review of company reports, independent research reports and data based on Frost & Sullivan’s own research database. Projected data was obtained from historical data analysis plotted against macroeconomic data with reference to specific industry-related factors. Frost & Sullivan’s research was compiled based on the following assumptions: (i) the global and Japanese economies are likely to maintain a steady growth in the next decade; (ii) the global and Japanese social, economic and political environment is likely to remain stable in the forecast period from to 2022 to 2026, which ensures the stable and healthy development of the global and Japanese blockchain technology industry; and (iii) market drivers like continuous penetration of blockchain technology in various business applications are likely to drive Japan’s blockchain technology market.

BUSINESS

Overview

We are a blockchain-based technology company incorporated in Japan. We build products, deliver services, and develop solutions based on our proprietary Grid Ledger System (“GLS”) to leverage blockchain technology in various business settings, including advertisement tracking, online visitor management, and sales of non-fungible tokens. Our customers represent a diverse range of industries, such as information technology, shipping, real estate, entertainment, cosmetics, and chemical products. We primarily generate revenue from our software and system development services and consulting and solution services. For the six months ended October 31, 2022 and 2021, and the fiscal years ended April 30, 2022 and 2021, we had total revenue of approximately JPY32.2 million (US$0.2 million), JPY190.8 million, JPY463.7 million (US$3.1 million) and JPY216.2 million, respectively. For the same fiscal periods, revenue generated from our software and system development services accounted for approximately 35.3%, 46.2%, 50.6% and 44.1% of our total revenue, respectively, and revenue generated from our consulting and solution services accounted for approximately 64.7%, 53.8%, 49.4% and 55.9% of our total revenue, respectively. For the same fiscal periods, we had net loss of approximately JPY213.3 million (US$1.4 million), JPY644.4 million, JPY602.5 million (US$4.1 million) and JPY70.5 million, respectively. Our mission is to optimize business operations with our creative ideas and blockchain technology. We believe in a data centric future where blockchain technology will be indispensable and widely used, due to its efficiency, security, and reliability.

Industry Background

A distributed ledger is a ledger containing records of transactions between parties in a shared network. When a party in the network adds a transaction to the ledger, it is synchronized to other parties in the network through a consensus algorithm. The consensus algorithm enables transactions to be validated and confirmed without the need for a central point of authority. A validated transaction is added to the network in a permanent and immutable way. Every party in the network has simultaneous access to view the information, which is kept secure with the use of cryptographic functions.

A blockchain is a type of distributed ledger where transaction data is grouped into specific, time-stamped sets. Once consensus is reached for the data to go into a set, the set is sealed with a cryptographic signature, creating a sealed block. This block is then mathematically tied to the previous block on the ledger, forming a chain.

The potential benefits of blockchain technology include, among others:

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decentralization, where value is created from the removal of a need for a central point of control to verify transactions;

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efficiency, where transactions are processed and settled automatically between parties without an intermediary;

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transparency, where data is written into the blockchain to allow it to be shared publicly among parties in the network, thereby enabling more transparent data management;

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security, where data is written in a mechanism with the aim of ensuring its immutability; as a result of the provision of information that parties know to be verified and immutable, the value lost by a lack of trust between parties is reduced;

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stability, where data on blockchain is managed on multiple servers, or a peer-to-peer blockchain network, so that even if one server goes down, the service will continue stably as long as the other servers in the network are up and running;

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cost-effectiveness in equipment installation, maintenance, and inspection; currently the data necessary to provide services is stored on servers, which require high-performance servers to process the data in time depending on the number of service users, resulting in high initial installation costs. In contrast, with blockchain, the role of the server can be substituted for the user’s personal computer, and the

initial installation and ongoing service costs can be reduced without the need for a high-performance server; and

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privacy, where personal information is stored in an encrypted manner.

While blockchains have various benefits, we believe that the conventional blockchains cannot yet be widely applied in business settings. The issues associated with the conventional blockchains include, among others:

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slow processing speed due to their complexity and their encrypted, distributed nature;

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poor real-time data processing because data is not immediately fixed due to the lack of absolute finality, which is also known as a definite consensus algorithm. The conventional blockchains use the proof-of-work method, which validates and confirms transaction data based on the amount of computational effort expended. The proof-of-work method requires time for each server to send and receive information about the approvers of a transaction. If a majority of them approve a transaction, the transaction will be approved as correct, even if it is a wrong transaction and needs to be overturned. Thus, even if a transaction is approved in conventional blockchains, the transaction cannot enjoy the status of absolute finality and may be overturned later if it is a wrong transaction;

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impossible to complete an emergency stop, even if a serious problem occurs in the system, due to the lack of a kill switch; and

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burdensome learning costs due to the need to develop in a proprietary development language.

Our Technology

Since our inception in May 2018, we have focused on blockchain technology and developing systems with a view to making our proprietary GLS an infrastructural technology in the future. GLS can process a large number of transactions in real time at high speed while providing a high level of security.

In the past, GLS has been developed by our CTO, Hiroki Yamamoto, with collaboration efforts from the following partners:

NTT Docomo, Inc. In July 2018, we evaluated the data transfer speed from PC to PC using GLS under the 5G environment at the demonstration test site of NTT Docomo, Inc. and also evaluated the compatibility between 5G and blockchain. In December 2018, we participated in an exhibition hosted by NTT Docomo, Inc.

Professor Kazuyuki Shudo, who was an associate professor at Tokyo Institute of Technology and is now a professor at Kyoto University, has served as our advisor since November 2018. Professor Kazuyuki Shudo has a research lab on software and networks. With the advice of Professor Kazuyuki Shudo, we have improved the simultaneous processing of GLS and its resistance against malicious attacks. We have continually received academic reports and advice from Professor Kazuyuki Shudo.

NEC Communication Systems, Ltd. Since January 2020, we have started joint research with NEC Communication Systems. We conducted performance evaluation of the GLS node alone and with other RDB products when using Structured Query Language.

Other projects. We have been involved in other projects in various industries, such as applying GLS to online identity verification and authentication.

We believe that GLS is superior to the conventional blockchains, which provide a high level of security but are criticized for being slow in processing data reads and writes, especially when the number of parties in the network increases to a certain level. We have developed GLS to balance the trade-off between security and convenience and believe that GLS achieves both security performance and processing speed.

GLS is a hybrid blockchain that combines the technical advantages of both blockchain technology and database technology. Database technology provides the traditional infrastructure for data storage, collection, organization and processing, and enables the construction of systems. GLS demonstrates the following features:

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high processing speed. We believe GLS enables the construction of blockchain systems with high processing speed. The conventional blockchain systems slow down their processing speeds and require at least a few seconds to complete one transaction due to the need for enhanced security measures. The conventional blockchain systems generate blocks in series. In comparison, GLS generates blocks in parallel and the approval time for one transaction in GLS can reach 0.016 seconds while GLS offers enhanced security at the same time;

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parallel processing and auto-scale functions, which provide appropriate performance according to the user’s expansion and contraction needs. The conventional blockchain networks expand at random and consolidate processing in a single node, which represents one of the personal computers in a blockchain network. In comparison, GLS arranges nodes within the network in a circular fashion and reduces the processing load for each node by sharing the processing load among intermediate processing nodes, thereby accommodating the user’s different levels of needs;

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high tamper-resistance. The incorporation of blockchain technology ensures that data managed by GLS is more resistant to tampering and cannot be easily overwritten. Even if a tampering incident occurs, the record of when and by whom the data was tampered with can be traced;

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zero server downtime. The use of peer-to-peer blockchain network ensures that the services provided by GLS remain stable, even in the event of system maintenance or malicious cyber-attacks. To eliminate security concerns related to a single point of failure, GLS employs intermediate processing nodes, which are independent of the nodes that make up the blockchain network and process the actual transactions. Even if the intermediate processing nodes are stopped, the transactions cannot be tampered with. To reduce the impact of attacks on intermediate processing nodes and any unauthorized access, GLS allows the use of firewalls and other means to prevent cyberattacks, thereby providing transaction security;

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versatile applications. The conventional blockchains have limited commercial applications in part due to their lack of absolute finality. In comparison, we believe that GLS has a wider range of business applications partly because GLS enables finality by adopting a definite consensus algorithm;

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emergency stop. The conventional blockchains cannot be stopped in the event of emergencies because of their lack of a kill switch. In comparison, GLS can be stopped in an emergency due to the presence of a kill switch;

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lower construction, installation and maintenance costs compared to the conventional database infrastructure. The conventional database infrastructure often stores data on expensive high-performance servers. In comparison, GLS enables the storage of data on the user’s personal computer, thereby reducing the initial and ongoing costs of the services supported by GLS; and

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flexible fees. Generally, public blockchains are structured to charge fees for each transaction that occurs. We are enterprise-oriented and have a private blockchain GLS that allows us to process a large number of transactions at high speed, making it possible to set fees flexibly.

GLS was designed and developed as an integrated distributed computing management system that we believe will serve as the infrastructure for the latest technologies such as artificial intelligence, big data, and the Internet of Things. The services provided by GLS are limited to the scope of the current telecommunications infrastructure and the capabilities of blockchain-equipped devices, and we believe that future advances in telecommunications infrastructure and blockchain devices will further enhance the potential value of GLS.

We recognize that there is a lack of engineers who can handle blockchain in Japan, and we plan to increase the number of use cases for GLS and invest in researching and developing a universally usable SDK for GLS. We are a company that operates with an eye on the Web3. To that end, we hope that various applications using our blockchain technology will be developed and the industry as a whole will grow.

Products and Services

We derive our revenue primarily from our software and system development services and consulting and solution services. The revenue generated from our software and system development services in the six months ended October 31, 2022 and 2021, and the fiscal years of 2022 and 2021 was approximately JPY11.4 million (US$0.08 million), JPY88.2 million, JPY234.7 million (US$1.6 million) and JPY95.3 million, respectively, which accounted for approximately 35.3%, 46.2%, 50.6% and 44.1% of our total revenue, respectively. The revenue generated from our consulting and solution services in the same fiscal periods was approximately JPY20.8 million (US$0.1 million), JPY102.6 million, JPY229.0 million (US$1.5 million) and JPY120.9 million, respectively, which accounted for approximately 35.3%, 53.8%, 49.4% and 55.9% of our total revenue, respectively. For the same fiscal periods, we had net loss of approximately JPY213.3 million (US$1.4 million), JPY644.4 million, JPY602.5 million (US$4.1 million) and JPY70.5 million, respectively.

AMBITION-Sign is a system that facilitates the conclusion of real estate lease contracts in an online environment and streamlines the paperwork process. AMBITION-Sign is a response to the Japanese government’s recent legal changes that have authorized the real estate contracting process to be done online. AMBITION-Sign allows users to more easily sign contracts with sales representatives via videoconference using a smartphone or PC, and to receive, view, share, and sign confidential real estate contracts in a secure online environment. Our “GLS-SDK” is used because of the need to process transactions in real-time and at high speed. In addition, since real estate transactions involve confidential information, our GLS blockchain technology has been adopted to enhance the security of the information. GLS enables secure data management and provides identity verification and resistance to information leakage, tampering, and spoofing.

Animap is a trading platform for NFTs. NFTs, or non-fungible tokens, are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. Similar to cryptocurrency, NFTs are issued, stored, and traded on a blockchain network. Different from cryptocurrency, NFTs are unique and cannot be replaced with other like-kind assets. Traditional digital products can be easily duplicated and distributed without the ability to determine their authenticity. In comparison, NFTs are unique and can be distributed and traded with the ability to prove their authenticity and ownership. We entered into a system usage agreement with Hakuhodo DY Music & Pictures Inc. (“Hakuhodo”) to develop Animap. Pursuant to such agreement, Hakuhodo is the sole owner of Animap and independently manages the daily operation of Animap. Hakuhodo obtains license from copyright owners, converts their copyrighted works into NFTs within the scope of the license, sells the NFTs on Animap, handles inquiries, complaints, purchase cancellations, refunds and requests as well as provides other customer support for Animap users. We used our technological expertise to develop Animap based on the public blockchain Ethereum. We own certain intellectual property rights in the system used to develop Animap. We stress-tested Animap prior to its launch and stress test Animap at least once every six months from the date of its launch. We do not own, operate, or maintain Animap. The currently

available NFTs on Animap represent some popular Japanese IPs, such as Tatsunoko Production, Big Hat Monkeys, and Mentori. The NFTs are stored by Animap users through manners of their choice, the most common of which is Metamask. The copyright owners remain to be owners of the intellectual property rights in the underlying content represented by the NFTs. Hakuhodo maintains the royalty interest in, or intellectual property of, the NFTs that are offered on Animap. When the NFTs are sold, the ownership interests and intellectual property rights in the NFTs are transferred from Hakuhodo to the NFT buyers. We do not have any custody, ownership or intellectual property interests in the NFTs that are on Animap. In the event of disputes over the intellectual property underlying the NFTs, we believe it is unlikely for our Company to be a party to such disputes. As of the date of this prospectus, Animap users are allowed to purchase NFTs, but not transfer, distribute, or resell their NFTs on Animap. Animap users may resell their NFTs on secondary markets such as OpenSea and Rarible. Hakuhodo paid a software development fee in the amount of JPY37.9 million for us to develop Animap. We are entitled to a system usage fee, which is equal to a percentage of the NFT sales revenue, under the precondition that such revenue reaches a predetermined level. Since the launch of Animap in June 2022 and as of the date of this prospectus, that precondition has not been satisfied, and we have not received any revenue from the sale of NFTs on Animap. We do not accept and do not plan to accept payment for our services in the form of digital assets.

Business Model

We intend to generate recurring revenue through the provision of our services. Our revenue from software and system development contracts is generally recognized over time as our performance creates or enhances the project controlled by our clients and the control is transferred continuously to our clients. Our revenue from consulting and solution services is recognized over the contract term as our clients receive and consume benefits of such services as provided. The process for achieving our revenue is as follows:

Identifying business opportunities

We are introduced to customers through our sales team as well as personal connections of our board members and shareholders. We also use other marketing channels, such as participating in industry online programs and events. We evaluate our sales strategies and progress at least once per month.

We typically receive orders from customers who are interested in blockchain and hope to digitally transform their internal databases. To determine whether to accept an order, we consider whether the project has the potential to contribute to the customer’s future earnings, whether the project is profitable, whether the customer is credible and reputable, and whether a long-standing business relationship will be created with the customer.

Forming business cooperation

When a customer places an order with us, we invite the customer to consider whether the ordered system will contribute to the customer’s future earnings, whether it will reduce the customer’s costs, and whether the customer’s investment in the system is reasonable. We assist our customers with making well informed business decisions.

Our customers are of different operating scales, ranging from venture companies to multi-national businesses. Our customers represent a wide spectrum of industries, including information technology, shipping, real estate, animation production, cosmetics, and chemical industry, among others.

three customers contributed to 81.5% of our total sales revenue, accounting for 47.4%, 25.9%, and 8.2% of our total sales revenue, respectively. For the fiscal year ended April 30, 2021, we had eight customers with sales revenue of more than JPY1,000,000, and our three major customers contributed to 91.6% of our total sales revenue, accounting for 46.3%, 42.0%, and 3.3% of our total sales revenue, respectively. Although we derived a significant portion of our sales revenue from a limited number of customers, we did not heavily rely upon any one customer for the majority of our revenue.

The table below summarizes the major contract terms with our top three customers and their respective revenue percentages for the six months ended October 31, 2022.


Name	Percentage of the total revenue for the six months ended October 31, 2022	Major contract terms
Bullet Group Inc.	62.1%	1. Contract duration: 6-1-2021 to 5-31-2022 2. Service: system development and maintenance 3. Fees: JPY240 million (excluding tax) 4. Termination provisions: either party may terminate the contract if any of the following events occurs to the other party, including default, material breach, suspension of payment, bankruptcy, among others. 5. The monthly minimum fee is JPY20 million.

AIT CORPORATION	15.2%	1. Contract duration: 11-1-2021 to 10-25-2022 2. Service: system development 3. Fees: JPY37,680,000 (excluding tax) 4. Termination provisions: either party may terminate the contract if any of the following events occurs to the other party, including default, gross negligence, suspension of payment, bankruptcy, among others. 5. There are no minimum purchase requirements.

Nisshin Transportation Co., Ltd.	11.6%	1. Contract duration: 11-1-2021 to 10-25-2022 2. Service: system development 3. Fees: JPY25,120,000 (excluding tax) 4. Termination provisions: either party may terminate the contract if any of the following events occurs to the other party, including default, gross negligence, suspension of payment, bankruptcy, among others. 5. There are no minimum purchase requirements.

The table below summarizes the major contract terms with our top three customers and their respective revenue percentages for the fiscal year ended April 30, 2022.


Name	Percentage of the total revenue for the fiscal year 2022	Major contract terms
Bullet Group Inc.	47.4%	1. Contract duration: 6-1-2021 to 5-31-2022 2. Service: system development and maintenance 3. Fees: JPY240 million (excluding tax) 4. Termination provisions: either party may terminate the contract if any of the following events occurs to the other party, including default, material breach, suspension of payment, bankruptcy, among others. 5. The monthly minimum fee is JPY20 million.

Kyowa Corporation	25.9%	1. Contract duration: 6-1-2021 to 3-25-2022 2. Service: system development 3. Fees: JPY120 million 4. Termination provisions: either party may terminate the contract at any time. 5. There are no minimum purchase requirements.

Hakuhodo DY Music & Pictures Inc.	8.2%	1. Contract duration: 9-15-2021 to 3-31-2022 (automatically renewed) 2. Service: system development 3. Fees: JPY37.9 million 4. Termination provisions: either party may terminate the contract if any of the following events occurs to the other party, including material breach, impossibility of performance, suspension of business, bankruptcy, among others. 5. The minimum fee is JPY37.9 million.

The table below summarizes the major contract terms with our top three customers and their respective revenue percentages for the fiscal year ended April 30, 2021.


Name	Percentage of the total revenue for the fiscal year 2021	Major contract terms
Bullet Group Inc.	46.3%	1. Contract duration: 1-1-2021 to 2-25-2021, and 3-1-2021 to 4-25-2021 2. Service: system development and maintenance 3. Fees: JPY100 million 4. Termination provisions: either party may terminate the contract if any of the following events occurs to the other party, including default, gross negligence, suspension of payment, bankruptcy, among others. 5. There are no minimum purchase requirements.

AMMO Co., Ltd.	42.0%	1. Contract duration: 4-9-2021 to 4-30-2021 2. Service: solution 3. Fees: JPY90,909,091 (excluding tax) 4. Termination provisions: either party may terminate the contract if any of the following events occurs to the other party, including default, suspension of payment, suspension of business, bankruptcy, among others. 5. There are no minimum purchase requirements.

BG Technology Co., Ltd.	3.3%	1. Contract duration: 9-1-2020 to 12-31-2020 2. Service: consulting 3. Fees: JPY7.2 million 4. Termination provisions: either party may terminate the contract if any of the following events occurs to the other party, including default, gross negligence, suspension of payment, bankruptcy, among others. 5. There are no minimum purchase requirements.

Planning the project

In the planning phase, we enter into discussions with our customers and divide roles and responsibilities. We select specialists on our team and put them in charge of designing proposals, developing solutions, and providing

other incidental support to our customers. Our customers appoint points of contact and make them responsible for reviewing proposals, facilitating communications in the course of the projects, and inspecting solutions upon completion.

To ensure that our projects progress smoothly, detailed project schedules are typically set out in contracts with our customers. The delivery cycles range from 4 months to 12 months depending on the type of services and customization required. We consider many factors in ascertaining the project schedules, including the expected delivery date, the degree of difficulty, the availability of our resources, and the type of cooperation. The projects can be grouped into different categories by type of cooperation: independent projects where we work unassisted, joint projects where we work with engineers on the customer’s side, and outsourced projects where we employ external engineers.

We develop blockchain-based solutions tailored to the needs of each customer. To understand our customers’ issues, we interview our customers, engage a group of specialists across industries, study our customers’ business flow, and verify whether there are any areas where the ordered systems can solve the issues. We then evaluate the available proposals and discuss the solutions to be developed with our customers.

Working on the project

In the course of the projects, we strive to eliminate the discrepancies between the project progress and the project targets. We keep close communications with our customers for updates on the project progress. We hold regular meetings with our customers at least once per month to discuss the project progress and future plans. We also hold additional meetings as needed, for example where the customers need to immediately change their functional requirements.

We sometimes outsource some work to external engineers. To determine whether to outsource, we consider the availability of our resources, the outsourcing fee structures, and the technical requirements of ordered systems. The external engineers are responsible for ancillary support to our team and are not allowed to fulfill greater roles. To control the quality of outsourced work, our team evaluates the quality of the outsourced work each day and requires the external engineers to submit a work report each month, so that our team can confirm the outsourced work is executed efficiently in accordance with the project schedules.

As for engineering resources, we also work with a third-party company and involve them in the research and development of GLS, as well as in the development of our clients’ systems. Some of these engineers are graduates of Hanoi University of Technology, Vietnam’s leading university for IT professionals, majoring in information technology.

Completing the project

Payments for our products and services are typically made in installments. We believe that the advantages of installment payments include that we are compensated for the spent resources and that flexible adjustments are easy to make in response to new challenges and requirements in the course of the projects.

At the end of projects, we provide work completion reports to our customers. Our customers review the reports during the inspection period. When our customers have no objections to our products and services, they will stamp their names on the reports and deliver the reports to us to confirm project completion. When our customers do not sign the reports and raise no objections before the termination of the inspection period, the projects will also be considered completed.

Competition and Strengths

Market entry

The technological barrier to enter the blockchain industry is high, therefore many companies hesitate to enter this industry. To address the technological barrier associated with the blockchain technology, our company has collaborated with academia and business partners.

Another challenge in the blockchain industry is that it is difficult to balance the trade-off among speed, security and transparency. Other companies seek to develop their solutions to balance such trade-off but such development process can be lengthy and costly. Our company sought to balance the trade-off by combining the blockchain technology and the database technology. Our idea is unique and is subject to a pending patent application in Japan.

In addition, we believe that conventional blockchains are too slow to go beyond the realm of demonstration testing and achieve monetization in business settings. Companies equipped with the conventional blockchains are only able to create limited commercial value. Our company sought to overcome the technical issues of conventional blockchains and has developed our proprietary GLS, which we believe can be widely and flexibly applied in various business settings.

Market competition

We believe that we are one of the very few companies in Japan that are capable of commercializing the blockchain technology.

We do not believe that pricing is a major factor between competitors. We believe that our pricing is competitive and is not a barrier to growing the business.

However, the market for blockchain technology is developing and we anticipate new entrants to the market and competition to intensify in the future. Our future competitors may have greater resources than us and there can be no assurance that we will have the financial and operational resources necessary to carry out our business plan and successfully compete with our competitors.

Our strengths

We believe the following competitive advantages are essential for our success and differentiate us from our competitors.

Our transformative blockchain-based technology

GLS constitutes our core strength and demonstrates the following advantages compared to the conventional blockchains:

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faster processing speed. The conventional blockchains require at least a few seconds to generate a block and complete one transaction. For example, the cryptocurrency EOS requires 3 seconds, the Ethereum requires 15 seconds, and the Bitcoin requires 10 minutes. In comparison, the approval time for one transaction in GLS can reach 0.016 seconds depending on the design of systems;

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greater real-time data processing. The conventional blockchains are poor at processing real-time data because they lack absolute finality, also known as a definite consensus algorithm. Therefore, the conventional blockchains require some time to confirm that transactions are finalized and will not be reverted. In comparison, we believe that GLS resolves this issue and is better at processing and validating real-time data;

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flexible fee. The conventional public blockchains are structured to charge fees for each transaction that occurs. We have a private blockchain GLS that allows us to process a large number of transactions at high speed, making it possible to set fees flexibly; and

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wider business applications and proven track record. The conventional blockchains have limited business applications. In comparison, we believe that GLS can be widely applied in various business settings due to its processing speed, parallel processing, auto-scale functions, and other features. Our GLS realizes a cyclic network structure for nodes (computer devices participating in the blockchain network), making it easy for multiple nodes to simultaneously execute approval processes in parallel, thereby speeding up the transaction approval process and ensuring scalability.

Dedicated talent team

Our robust research and development team members are dedicated to blockchain research, operations, and development to support the improvement of blockchain technology. We, on occasions, consult with academia to keep abreast of the most recent advancement and technological issues of blockchain technology and to apply academic perspectives to system development. Our professional management team has approximately 100 years of combined experience working with corporations of various operating scales across different industries. Our management has cultivated business knowledge and expertise by undertaking diverse roles, including sales, business planning, consulting, accounting, and programming. We also have an agreement with a third-party company for external engineers, some of whom are graduates of Hanoi University of Technology, Vietnam’s leading school for IT professionals, majoring in information technology.

Trusted relationships with business partners

We value the trust that we have built with our customers and business partners, who work with us for advice, joint research, and system development. Some of our system development customers return to us for additional consulting and system maintenance services. Our system development business partners include companies in the real estate, entertainment, telecommunications, trade, e-commerce, chemical, advertising, and financial domains. We will continue to grow by leveraging the trust and expertise of the companies that we have worked with.

Growth Strategies

In the mid to long term, we plan to introduce GLS to customers in various industries and expect to generate more revenue from systems based on GLS through the existing and future revenue sharing arrangements with our clients. After that, we plan to complete a general-purpose GLS-SDK, and create an environment where GLS becomes the infrastructure of the data society, allowing our Company to secure infrastructure fees or licensing income.

We have verified the applicability of GLS in various domains, including, but not limited to, the following:

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the application of Structured Query Language to GLS based on a demonstration test with NEC Communication Systems, Ltd.;

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the application of GLS to online identity verification and authentication;

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the application of GLS to an online lease signing system based on the cooperation with AMBITION DX HOLDINGS Co., Ltd.;

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the application of GLS in the financial domain;

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the application of GLS in virtual space (Metaverse); and

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the application of GLS in an NFT platform.

In February 2021, we were selected by “Microsoft for Startups” in recognition of the wide applicability of GLS.

In the future, we hope to generate revenue by applying GLS to the following domains, the details of which are being finalized:

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Energy: Rapid processing of records of electricity generated by individuals and companies and transaction records are required. We believe GLS will enable the required rapid processing.

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Responses to COVID-19

During the fiscal year ended April 30, 2020, the COVID-19 pandemic had some negative impact on our business operations when delay in sales activities occurred due to the inability to conduct scheduled in-person sales activities. Since fiscal year 2021, the COVID-19 pandemic has had no impact on our business operations.

To respond to the COVID-19 pandemic and to protect the safety of our employees, we follow the Tokyo Metropolitan Government’s policy on controlling COVID-19, encourage masking wearing even within the office, ventilate the office regularly, and have suspended large group events.

Research and Development

In addition to research and development related to our sales projects, we also conduct independent research and development with dedication to innovation. Our research and development team members work with our external engineers on a monthly basis to improve GLS.

We design, implement, and review a comprehensive set of rules governing our independent research and development projects. To start a R&D project, an inventor must make an application where the inventor must specify certain information including the content to be developed, development schedule, delivery date, required resources, and estimated profitability. The relevant heads of department evaluate the project. To determine whether to approve the project, they consider factors such as the availability of resources and profitability. After they approve the project, they select and appoint a project manager. The project manager supervises the progress of the project and reports to the relevant heads of department at least once a month. At the end of the project, the relevant heads of department review and inspect the final product. When the product passes the inspection, the project will be considered completed.

Besides independent research and development, we also conduct joint research and development projects with academia and business partners. One such joint project to develop an ultra-high-speed next-generation hybrid database called “SmokeDB,” which is expected to facilitate the introduction of blockchain into non-financial fields. Applying blockchain to non-financial fields incur various issues such as low processing speeds and technical difficulties in development and maintenance. We aim to resolve these challenges by combining our blockchain technology and our business partner’s network expertise. For more information on our research and development projects, see “Prospectus Summary—Overview” and elsewhere in this prospectus.

Intellectual Property

We seek to protect our intellectual property rights by relying on a Japanese intellectual property laws and on contractual measures. It is our practice to enter into confidentiality, non-disclosure, and invention assignment agreements with our employees and contractors, and into confidentiality and non-disclosure agreements with other third parties, in order to limit access to our confidential information and proprietary technology. In addition to these contractual measures, we also rely on a combination of trademarks, registered domain names, and patent rights to protect our brand and our intellectual property. As of the date of this prospectus, we have registered 2 patents, 14 trademarks and 9 domain names. Our pending intellectual property applications include 1 patent. The chart below presents information about some intellectual property that we have registered or applied for.


Type	Name	Issuing authority	Application date	Status	Expiration date
Trademark		Japan Patent Office	August 12, 2022	registered	April 28, 2033
	データキャナル	Japan Patent Office	October 14, 2021	registered	April 04, 2032
	Data Canal	Japan Patent Office	October 13, 2021	registered	April 04, 2032
		Japan Patent Office	February 25, 2021	registered	August 12, 2031
	APO	Japan Patent Office	February 27, 2020	registered	June 22, 2031
	SmokeDB	Japan Patent Office	January 22, 2020	registered	January 28, 2031
		Japan Patent Office	November 25, 2019	registered	December 15, 2030
	アーリーワークス	Japan Patent Office	November 25, 2019	registered	December 15, 2030
		Japan Patent Office	July 01, 2019	registered	June 23, 2030
	Grid Ledger System	Japan Patent Office	May 14, 2019	registered	June 25, 2030


Type	Name	Issuing authority	Application date	Status	Expiration date
Patent	Information processing equipment and program (GLS)	Japan Patent Office	October 27, 2020	registered	October 27, 2040
Patent	Information processing equipment and program (reservation management system)	Japan Patent Office	January 25, 2021	in progress
	Information processing equipment and program	Japan Patent Office	December 2, 2020	registered	December 2, 2040

Property, Plants and Equipment

Our principal executive office is located in Tokyo, Japan. Our office space is leased from an independent third party with an area of 184.12 square meters and a monthly rent of JPY 696,250 (US$4,684) starting from October 1, 2019. Our CEO Satoshi Kobayashi is the guarantor on the lease agreement. The lease agreement automatically renews for another two years, unless either party notifies the other party of its intention to the contrary no later than six months before the expiration of the current term. The lease agreement may be terminated on six months’ notice of the intention to terminate. The expiration date for the lease agreement is on September 30, 2023. We do not hold title or interest in any other property, plants, or equipment.

We believe that the current office facilities are adequate for the time being until the end of October 2023. There will be a need to secure additional office space as the business grows.

Human capital

We strive to attract, recruit, and retain talents through our compensation and benefit programs, as well as learning and development opportunities that support career advancement. In addition to salaries, we offer complementary benefits including bonuses, communications allowance, commuting allowance, overtime allowance, employment insurance, health insurance, and employee pension.

In the selection of team members, we consider whether the candidates empathize with our mission and vision, and whether the candidates can flexibly endure changes in a rapidly evolving environment. In the selection of engineers, we consider whether the candidates have sufficient experience in designing databases.

We enter into employment agreements with each of our employees. The employment agreements typically contain certain restrictions, including non-compete covenants for a period of one year following the termination of employment, and confidentiality restrictions through the time period the information remains confidential, among other covenants. The employment agreements typically last for indefinite terms. There is no labor union or collective agreement that covers any of our employees.

As of the date of this prospectus, we have a headcount of 14 full-time employees (excluding our directors and company auditors) at our principal executive office in Japan. As of October 31, 2022, we had 15 full-time employees, 0 part-time employees, and 0 contract employees. The chart below presents the number of our employees as of the fiscal years of 2020, 2021, and 2022.


Fiscal year	Number of employees
Fiscal year	Full-time		Part-time		Contract
2020		8		1		0
2021		10		1		2
2022		15		0		0

We also enter into outsourcing contracts with external engineers from time to time, which enables us to have access to additional engineers as needed.

Material contracts

Within the preceding two years from the date of this prospectus, we have entered into no material contracts, excluding the contracts entered into in the ordinary course of our business, other than as described in this prospectus.

Insurance

We currently maintain insurance coverage against the risk of property damage caused by fires, lightning strikes, explosions, riots, vehicle collisions, thefts, flooding and certain other damaging accidents. We also maintain earthquake insurance coverage. We plan to obtain directors and officers liability insurance at the time of our listing. We review and renegotiate our premiums, coverage limits, and other terms of insurance policies on an annual basis. We do not hold major tangible assets and our assets are predominantly intangible and intellectual. We believe our insurance coverage is sufficient for our business practice and consistent with the customary industry practice in Japan.

Seasonality

Our business is not subject to seasonal fluctuations. We enter into business contracts with our customers throughout the year.

Legal proceedings

From time to time, we may become a party to various legal or administrative proceedings arising in the ordinary course of our business, including actions with respect to intellectual property infringement, breach of contract, and labor and employment claims. As of the date of this prospectus, we are not a party to any material lawsuits and we are not aware of any threats of lawsuits against our company that are anticipated to have a major impact on our business.

REGULATION

This section sets forth a summary of applicable laws, rules, regulations, government and industry policies and requirements that have a significant impact on our business in Japan. This summary does not purport to be a complete description of all the laws and regulations that apply to our business. Investors should note that the following summary is based on relevant laws and regulations in force as of the date of this prospectus, which may be subject to change.

Company Laws

The formation, organization, operation and management of companies are governed by the Companies Act (Act No. 86 of July 26, 2005, as amended) and other related laws. Our Company is categorized as “Company with a Board of Company Auditors” provided by this Act.

According to our Japanese legal counsel, as of the date of this prospectus, we comply with these laws and regulations.

Intellectual Property Protection Laws

There are various intellectual property laws in Japan, including the Patent Act (Act No. 121 of April 13, 1959, as amended), the Utility Model Act (Act No. 123 of April 13, 1959, as amended), the Design Act (Act No. 125 of April 13, 1959, as amended), the Trademark Act (Act No. 127 of April 13, 1959, as amended), the Copyright Act (Act No. 48 of May 6, 1970). The Patent Act provides patent right and regulates protection and utilization of inventions. The Utility Model Act provides utility model right and regulates protection and utilization of devices. The Design Act provides design rights. The Trademark Act provides trademark rights. The Copyright Act provides provide for authors’ rights and neighboring rights.

According to our Japanese legal counsel, as of the date of this prospectus, we have registered 2 patents, 14 trademarks and 9 domain names in Japan. Our pending intellectual property applications in Japan include 1 patent.

Labor Laws

There are various labor-related laws in Japan, including the Labor Standards Act (Act No. 49 of April 7, 1947, as amended), the Industrial Safety and Health Act (Act No. 57 of June 8, 1972, as amended), and the Labor Contracts Act (Act No. 128 of December 5, 2007). The Labor Standards Act regulates, among others, minimum standards for working conditions such as working hours, leave period, and leave days. The Industrial Safety and Health Act requires, among others, the implementation of measures to secure employee safety and protect the health of workers in the workplace. The Labor Contracts Act regulates, among others, the change of terms of employment contracts and working rules, and dismissal and disciplinary action.

According to our Japanese legal counsel, as of the date of this prospectus, we comply with these laws and regulations.

Environmental Regulations

There are various environmental-related laws in Japan, including the Air Pollution Control Act (Act No. 97 of June 10, 1968, as amended), Water Pollution Prevention Act (Act No. 138 of December 25, 1970, as amended), Soil Contamination Countermeasures Act (Act No. 53 of May 29, 2002, as amended), and Noise Regulation Act (Act No. 98 of June 10, 1968, as amended).

According to our Japanese legal counsel, as of the date of this prospectus, we do not operate any type of business which is specifically subject to these environmental regulations.

Regulations on Lease Agreements

Our lease agreements are generally subject to the Civil Code (Act No. 89 of April 27, 1896, as amended) and Act on Land and Building Leases (Act No. 90 of October 4, 1991, as amended).

According to our Japanese legal counsel, as of the date of this prospectus, the terms and conditions of our lease agreements are consistent with these laws and are valid and enforceable as provided for in these agreements.

Regulations on Privacy Protection

The Act on the Protection of Personal Information (Act No. 57 of May 30, 2003, as amended) aims to protect an individual’s rights and interests and establishes obligations that a personal information handling business operator shall fulfill.

According to our Japanese legal counsel, as of the date of this prospectus, we comply with these laws and regulations.

Additionally, the European Commission has adopted the adequacy decision on the basis of article 45 of Regulation (EU) 2016/679 (GDPR) on Japan on 23 January, 2019. Based on this decision and related mutual agreement, transfer of personal data between Japan and the EU is allowed without the adequate safeguards required by GDPR.

Regulations on Whistleblower Protection

The Whistleblower Protection Act No. 122 of June 18, 2004 (Act No. 122 of June 18, 2004, as amended) provides prohibition of disadvantageous treatment of whistleblowers on the grounds of whistleblowing and the measures that a business operator and administrative organ should take concerning whistleblowing to protect whistleblowers.

According to our Japanese legal counsel, as of the date of this prospectus, we comply with these laws and regulations.

Taxation Regulations

The taxes levied in Japan on income generated by the activities of a corporation include corporate tax (national tax), local corporate tax (national tax), corporate inhabitant tax (local tax), enterprise tax (local tax), and special local corporate tax (a national tax). According to tax-related laws and regulations, including the Corporation Tax Act (Act No. 34 of March 31, 1965, as amended) and the Local Corporation Tax Act (Act No.11 of March 31, 2014, as amended), the scope of income subject to the taxes is determined and the taxable income is calculated. Corporate inhabitant taxes are levied on income and a per capita basis using the corporation’s capital and the number of its employees as the tax base. Business transaction is levied consumption tax which is a type of value-added tax.

According to our Japanese legal counsel, as of the date of this prospectus, we comply with these laws and regulations.

Foreign Exchange Regulations

The Foreign Exchange and Foreign Trade Act of Japan (Gaikoku Kawase oyobi Gaikoku Boueki Hou) (the “FEFTA”) and related cabinet orders and ministerial ordinances, which we refer to collectively as the Foreign Exchange Regulations, govern certain aspects relating to the acquisition and holding of shares by “exchange non-residents” and by “foreign investors” (as these terms are defined below). It also applies in some cases to the acquisition and holding of ADSs representing our Ordinary Shares acquired and held by non-residents of Japan and by foreign investors. In general, the Foreign Exchange Regulations currently in effect do not affect transactions between exchange non-residents to purchase or sell Ordinary Shares or ADSs outside Japan using currencies other than Japanese yen.

Exchange residents are defined in the Foreign Exchange Regulations as:

(i)

individuals who reside within Japan; or

(ii)

corporations whose principal offices are located within Japan.

Exchange non-residents are defined in the Foreign Exchange Regulations as:

(i)

individuals who do not reside in Japan; or

(ii)

corporations whose principal offices are located outside Japan.

Generally, branches and other offices of non-resident corporations located within Japan are regarded as exchange residents. Conversely, branches and other offices of Japanese corporations located outside Japan are regarded as exchange non-residents.

Foreign investors are defined in the Foreign Exchange Regulations as:

(i) individuals who are exchange non-residents;

(ii) corporations or other entities organized under the laws of foreign countries or whose principal offices are located outside Japan;

(iii) corporations of which 50% or more of the total voting rights are held, directly or indirectly, by individuals and/or corporations falling within (i) and/or (ii) above;

(iv) investment partnerships and limited liability partnerships for investment, etc. (including foreign partnerships) in which the ratio of capital contribution from exchange non-residents is 50% or more of the total amount of capital contribution by all partners, or in which a majority of the managing partners are exchange non-residents; or

(v) corporations or other entities having a majority of either (A) directors or other persons equivalent thereto or (B) directors or other persons equivalent thereto having the power of representation who are non-resident individuals.

Acquisition of Shares

Acquisition by a foreign investor of shares of a Japanese corporation from a non-foreign investor requires pre or post facto reporting by the foreign investor through an exchange resident to the Minister of Finance of Japan through the Bank of Japan. No such reporting requirement is imposed, however, if:

(i) shares are acquired due to the occurrence of an event of inheritance, bequest, gratis allotment of shares, or acquisition of shares with a call provision; or

(ii) both the investment ratio and the voting right ratio (total of closely related parties) of all shares held after the share acquisition are less than 10% (provided that the nationality of the foreign investor is that of the listed country or Japan, and the business purpose of the issuing company under its articles of incorporation falls under the category of post facto reporting industry); or

(iii) the acquisition falls under any other case prescribed in Article 55-5 of the FEFTA, Article 3.1 of the Cabinet Order on Inward Direct Investment, etc., and Articles 3.2 and 3.3 of the Order on Inward Direct Investment, etc.

Dividends and Proceeds of Sale

Under the Foreign Exchange Regulations, dividends paid on, and the proceeds from sales in Japan of, shares held by exchange non-residents of Japan may generally be converted into any foreign currency and repatriated abroad.

MANAGEMENT

The following sets forth information regarding members of our board of directors and our executive officers as of the date of this prospectus.


Name	Age		Position(s)
Satoshi Kobayashi		37	Chief Executive Officer, and Director
Hiroki Yamamoto		32	Chief Technology Officer, and Director
Caspia Lin		34	Chief Financial Officer
Ryotaro Namba		29	Executive Officer
Masahiro Tominaga		44	Independent Director
Kiyomitsu Takayama		47	Independent Director
Shozo Kaneko*		68	Company Auditor
Masaaki Aono*		39	Company Auditor
Kohichi Goto*		56	Company Auditor

*	Company auditors are not members of our board of directors.

Satoshi Kobayashi has served as our Chief Executive Officer and Director since our inception. He co-founded our Company in May 2018. From August 2016 to December 2018, Mr. Satoshi Kobayashi served as the representative director with FEELO.Co. to oversee that company’s entire merchandising business. From January 2013 to December 2015, he acted as a manager of Pasona Inc., where he was in charge of temporary staff management and consulting.

Hiroki Yamamoto has served as our Chief Technology Officer and Director since our inception. Mr. Hiroki Yamamoto co-founded our Company with Mr. Satoshi Kobayashi in May 2018. From August 2015 to May 2018, he was in charge of software development at arl-Y. From April 2013 to July 2015, he acted as a software developer at Sunplan Soft Co. He studied Robotics Creation and obtained an Associate Degree from Nagoya College of Engineering in March 2013.

Caspia Lin has served as our Chief Financial Officer since May 2023. Ms. Caspia Lin has served as a director of OneStep Consulting Pte Ltd where she leads the overall execution across a variety of workstreams since April 2018. She served as the finance manager of SIG Tax & Accounting Pte Ltd from August 2021 to September 2022 and from June 2019 to May 2020. She served as an accountant of Barramundi Group Ltd from June 2020 to July 2021. She was the assistant team leader at Margin Wheeler Pte Ltd where she was responsible for reviewing the clients’ accounts from May 2015 to April 2018. She obtained her Association of Chartered Certified Accountants qualification in 2017 and her designation of Chartered Accountant of Singapore from the Institute of Singapore Chartered Accountants in 2018.

Ryotaro Namba has served as our Executive Officer since May 2021. Mr. Ryotaro Namba worked as a freelance engineer after graduating from college and worked on various system development projects since 2021. He joined our company as an employee in August 2018. He studied at the School of Materials Science and Engineering of Tokyo Institute of Technology starting from 2012 and obtained a Master’s degree from the university in March 2018.

Masahiro Tominaga has served as our Independent Director since July 2019. Since January 2016, he has served as the representative director of Dizzy Co., which is engaged in the business of management consulting and web-related consulting. From January 2003 to December 2015, he was the executive vice president of UNIMEDIA INC., a company dedicated to digital innovation. He studied economics and obtained a Bachelor’s degree from Musashi University in March 2001.

Kiyomitsu Takayama has served as our Independent Director since February 2021. Since November 2020, he has served as the global vice president and Japan country manager at Pendo.io Japan, which is a product management company. From February 2014 to October 2020, he was the vice president, the global general manager of channel sales division, and the general manager of renewal sales department of Box, Inc., a digital solution provider. From July 2012 to February 2014, he was senior sales manager with Cloudera, Inc., a data management company. He studied business administration and obtained a Bachelor’s degree from Aoyama College University in March 2001.

Shozo Kaneko has served as our Company Auditor since July 2019. From March 1998 to February 2000, he served as Director and General Manager of the System Division at Sunkus & Associates, Inc., where he gained extensive knowledge and experience in corporate information security. From March 2001 to March 2005, he served as Executive Officer of Circle K Sunkus Co. From April 2005 to September 2007, he worked as a senior manager at Japan Post.

Masaaki Aono has served as our Company Auditor since September 2022. He practiced law at Nagashima Ohno & Tsunematsu from December 2009 to March 2022 and at Mayer Brown from September 2015 to July 2016 in the U.S. Since October 2022, he has served as an outside director, and audit and supervisory committee member at Halmek Holdings Inc. Since April 2022, he has been a partner at CrossOver Law Offices in Japan. He graduated from the University of Tokyo School of Law in March 2008 and from the University of Chicago School of Law (LL.M.) in June 2015.

Koichi Goto has served as our Company Auditor since July 2019. From April 2022 to November 2022, he served as an auditor of Sakura Exchange Bitcoin, Inc., which is an agency for the purchase and sale of crypto assets. Since October 2020, he has served as a company auditor of Walklog Inc., which develops and operates the O2O solution platform. Since July 2020, he has served as an auditor of KakaoPiccoma Inc., which operates the electronic comic and novel service “Piccoma.” Since April 2016, he has served as an auditor of WAKUWAKU Corporation, which is engaged in a renovation platform. He graduated from the Faculty of Economics at Keio University in March 1990.

Family Relationships

None of our directors, senior management, or company auditors have a family relationship as defined in Item 401 of Regulation S-K.

Corporate Governance Practices

We are a “foreign private issuer” as defined under the federal securities laws of the U.S. and the Nasdaq listing standards. Under the federal securities laws of the U.S., foreign private issuers are subject to different disclosure requirements than U.S.-domiciled public companies. We intend to take all actions necessary for us to maintain our status as a foreign private issuer under the applicable corporate governance requirements of the Sarbanes-Oxley Act of 2002, the Exchange Act, and other applicable rules adopted by the SEC, and the Nasdaq listing standards. Under the SEC rules and the Nasdaq listing standards, a foreign private issuer is subject to less stringent corporate governance requirements. Subject to certain exceptions, the SEC and the Nasdaq permit a foreign private issuer to follow its home country practices in lieu of their respective rules and listing standards. In general, our articles of incorporation and the Companies Act of Japan (the “Companies Act”) govern our corporate affairs.

As a foreign private issuer, we will follow Japanese law and corporate practices in lieu of the corporate governance provisions set out under Nasdaq Rule 5600. The following rules under Nasdaq Rule 5600 differ from Japanese law requirements:

•

Nasdaq Rule 5605(b)(1) requires that at least a majority of a listed company’s board of directors be independent directors, and Nasdaq Rule 5605(b)(2) requires that independent directors regularly meet in executive session, where only independent directors are present. Under our current corporate structure, the Companies Act does not require independent directors. Our board of directors, however, is currently comprised of four directors, two of which are considered “independent,” as determined in accordance with the applicable Nasdaq rules. We expect our independent directors to regularly meet in executive sessions, where only the independent directors are present;

•

Nasdaq Rule 5605(c)(2)(A) requires a listed company to have an audit committee composed entirely of not less than three directors, each of whom must be independent. Under Japanese law, a company may have a statutory auditor or a board of auditors. We currently have a three-member board of company auditors. See “—Company auditors” below for additional information;

•

Nasdaq Rule 5605(d) requires, among other things, that a listed company’s compensation committee be comprised of at least two members, each of whom is an independent director as defined under such rule. Our board of directors will collectively participate in the discussions and determination of compensation for our executive officers and directors, and other compensation related matters;

•

Nasdaq Rule 5605(e) requires that a listed company’s nomination and corporate governance committee be comprised solely of independent directors. Our board of directors will not have a standalone nomination and corporate governance committee. Our board of directors will collectively participate in the nomination process of potential directors and oversee our corporate governance practices; and

•

Nasdaq Rule 5620(c) sets out a quorum requirement of 33_1/3%applicable to meetings of shareholders. In accordance with Japanese law and generally accepted business practices, our articles of incorporation provide that there is no quorum requirement for a general resolution of our shareholders. Under the Companies Act and our articles of incorporation, however, a quorum of not less than one-third of the total number of voting rights is required in connection with the election of directors and statutory auditors and certain other matters.

Controlled Company

Upon completion of this offering, Mr. Satoshi Kobayashi, our chief executive officer and representative director, will beneficially own approximately 52.35% of the aggregate voting power of our outstanding Ordinary Shares, assuming no exercise of the underwriters’ over-allotment option, or 51.84% assuming full exercise of the underwriters’ over-allotment option, in each case, excluding 48,000 and 55,200 Ordinary Shares, respectively, underlying the Representative’s Warrants and based on an assumed initial public offering price of US$5.00 per ADS. As a result, we will be a “controlled company” within the meaning of the Nasdaq listing rules. As a controlled company, we are permitted to elect to rely on certain exemptions from the obligations to comply with certain corporate governance requirements, including the requirements that:

•

a majority of our board of directors consist of independent directors;

•

our director nominees be selected or recommended solely by independent directors; and

•

intend to follow home country practice as permitted by Nasdaq rather than rely on the “controlled company” exception to the corporate governance rules. See “Risk Factors—Risks Relating to this Offering and the Trading Market—Because we are a foreign private issuer and intend to take advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.” Accordingly, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

Board of Directors

Our board of directors has the ultimate responsibility for the administration of our affairs. Under the Companies Act and our articles of incorporation, we are required to have no fewer than three but not more than ten directors. Directors are elected at general meetings of shareholders. The normal term of office of any director expires at the close of the annual general meeting of shareholders held with respect to the last fiscal year ended within two years after such company auditor’s election to office.

The board of directors appoints from among its members one or more representative directors, who have the authority individually to represent us in the conduct of our affairs. Satoshi Kobayashi is currently the representative director of our Company. The board of directors may appoint from among its members a chairperson and a president, or one or more vice-presidents, senior managers, and executive managers of the board.

Our board of directors consists of four directors. Our board of directors has determined that our outside directors, Masahiro Tominaga and Kiyomitsu Takayama, satisfy the “independence” requirements of the Nasdaq corporate governance rules and the rules and regulations of the SEC.

Company auditors (kansayaku)

We currently have three company auditors. As permitted under the Companies Act, we have elected to structure our corporate governance system as a company with a board of company auditors instead of board committees. Under the Companies Act and our articles of incorporation to be amended on or prior to listing of the ADSs, we will be required to have at least three but no more than 5 company auditors. Company auditors are elected at general meetings of shareholders. The normal term of office of any company auditor expires at the close of the annual general meeting of shareholders held with respect to the last fiscal year ended within four years after such company auditor’s election to office. Our company auditors may, however, serve any number of consecutive terms. Company auditors may be removed by a special resolution of a general meeting of shareholders.

Our company auditors are not required to be certified public accountants. Our company auditors may not at the same time be directors, employees, or accounting advisors (kaikei sanyo) of our Company.

The function of company auditors is similar to that of independent directors, including those who are members of the audit committee, of a U.S. company. Each company auditor has a statutory duty to supervise the administration by the directors of our affairs, to examine the financial statements and business reports to be submitted by a representative director at the general meetings of shareholders and to prepare an audit report. They are obligated to participate in meetings of the board of directors and, if necessary, to express their opinion at such meetings, but are not entitled to vote. Our company auditors must inspect the proposals, documents, and any other materials to be submitted by our board of directors to the shareholders at the shareholders’ meeting. If a company auditor finds a violation of statutory regulations or our articles of incorporation, or another significant improper matter, such auditor must report those findings to the shareholders at the shareholders’ meeting.

Furthermore, if a company auditor believes that a director has engaged in, or is likely to engage in, misconduct or acts that are significantly improper, or that there has been a violation of statutory regulations or our articles of incorporation, the company auditor: (i) must report that fact to our board of directors; (ii) can demand that a

director convene a meeting of our board of directors; and (iii) if no such meeting is convened in response to the demand, can convene the meeting under the company auditor’s own authority. If a director engages in, or is likely to engage in, an activity outside the scope of the objectives of our Company or otherwise in violation of laws or regulations or our articles of incorporation, and such act is likely to cause significant damage to our Company, then a company auditor can demand that the director cease such activity.

Our board of company auditors has a statutory duty to prepare an audit report based on the audit reports issued by the individual company auditors and submit such audit reports to a relevant director and, in the case of audit reports related to financial statements, the independent auditors of our Company each year. A company auditor may note an opinion in an audit report issued by our board of company auditors, if the opinion expressed in such company auditor’s individual audit report is different from the opinion expressed in the audit report issued by our board of company auditors. Our board of company auditors is empowered to establish the audit principles, the method of examination by our company auditors of our affairs and financial position, and any other matters relating to the performance of our company auditors’ duties.

Additionally, our company auditors must represent our Company in: (i) any litigation between our Company and a director; (ii) dealing with shareholders’ demands seeking a director’s liability to our Company; and (iii) dealing with notices of litigation and settlement in a derivative suit seeking a director’s liability to our Company. A company auditor can file court actions relating to our Company within the authority of our company auditors, such as an action to nullify the incorporation of our Company, the issuance of shares, or a merger, or to cancel a resolution at a shareholders’ meeting.

Compensation

In accordance with the Companies Act, compensation for our directors, including bonuses, retirement allowances, and incentive stock options, must be approved at our general meeting of shareholders, unless otherwise specified in our articles of incorporation. The shareholders’ approval may specify the upper limit of the aggregate amount of compensation or calculation methods, but if compensation includes benefits in kind, the shareholders’ approval must include the description of such benefits. Compensation for a director is fixed by our board of directors in accordance with our internal regulations and practice and, in the case of retirement allowances, generally reflects the position of the director or executive officer at the time of retirement, length of service as a director and contribution to our performance.

For the fiscal year ended April 30, 2022, we paid an aggregate of JPY64,400,000 (US$433,291) as compensation to our executive officers and directors. For the fiscal year ended April 30, 2022, we did not grant stock options or provide discretionary bonuses. We have not set aside or accrued any amount to provide pension, retirement, or other similar benefits to our directors and senior management.

Stock Options

We have granted stock options to purchase our Ordinary Shares, as authorized by our shareholders on February 5, 2019, under the share option plan, and on July 1, 2019, under the 2019 Trust-type Plan. The purpose of these grants is to enable our directors, senior management, and employees to share in our success and to reinforce a corporate culture that aligns employee interests with those of our shareholders. Our stock option grants generally prohibit transfers of options. A stock option holder generally forfeits such stock options if they are no longer a director, company auditor, or employee of our Company, except under limited circumstances or as otherwise determined by our board of directors. A stock option holder can generally exercise stock options only if our Company’s Ordinary Shares are listed on any financial instrument exchanges. The following table summarizes the stock options we have issued.

Name of Issuance

Issuance Date

Beginning of
Exercise
Period

End of
Exercise
Period

Exercise Price
(per share)

Number of
Ordinary
Shares Granted

Share option plan

2/28/2019

3/1/2021

2/28/2029

JPY2

1,095,000

⁽¹⁾

2019 Trust-type Plan

7/4/2019

7/3/2029

JPY50

2,000,000

Notes:

(1)	Stock options to acquire 60,000 of our Ordinary Shares have expired, and stock options to acquire 1,035,000 of our Ordinary Shares remain outstanding as of October 31, 2022.

Of the stock options granted pursuant to the above-mentioned grants, stock options to acquire an aggregate of 60,000 of our Ordinary Shares have been extinguished, and stock options to acquire an aggregate of 3,035,000 of our Ordinary Shares remain outstanding as of October 31, 2022.

The following table summarizes the outstanding stock options with respect to our Ordinary Shares that we have granted to our directors and senior management:

Name

Grant Date

Beginning of
Exercise
Period

End of
Exercise
Period

Exercise Price
(per share)

Total
Number of
Stock
Options
Granted

Total
Number of
Ordinary
Shares
Underlying
Stock
Options

Hiroki Yamamoto

2/28/2019

3/1/2021

2/28/2029

JPY2

200

1,000,000

Ryotaro Namba

2/28/2019

3/1/2021

2/28/2029

JPY2

15,000

Limitation of Liability of Directors

Under the Companies Act and our articles of incorporation we may exempt, by resolution of the board of directors, our directors from liabilities to us arising in connection with their failure to execute their duties in good faith and without gross negligence, within the limits stipulated by applicable laws and regulations. In addition, our articles of incorporation provide that we may enter into agreements with our directors (excluding executive directors) to limit their respective liabilities to us arising in connection with a failure to execute their duties in good faith and without gross negligence to an amount stipulated in laws and regulations. We plan to obtain directors and officers liability insurance, which covers expenses, capped at a certain amount, that our directors and officers may incur in connection with their conduct as our directors or executive officers.

Code of Business Conduct and Ethics

We expect that prior to the closing of this offering, our board of directors will adopt a code of business conduct and ethics, which will be applicable to all of our directors and employees. We will file a copy of such code of business conduct and ethics as an exhibit to the Registration Statement on Form F-1, of which this prospectus forms a part, and make it publicly available on our website upon adoption.

PRINCIPAL SHAREHOLDERS

The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our Ordinary Shares as of the date of this prospectus, and as adjusted to reflect the sale of 1,200,000 Public Offering ADSs representing 1,200,000 Ordinary Shares being offered in this offering, based on an assumed initial public offering price of US$5.00 per ADS, for:

•

each of our directors and executive officers;

•

all directors and executive officers as a group; and

•

each person known to us to own beneficially more than 5% of our Ordinary Shares.

Beneficial ownership includes voting or investment power with respect to the Ordinary Shares. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Ordinary Shares shown as beneficially owned by them. Percentage of beneficial ownership of each listed person prior to this offering is based on 13,839,400 Ordinary Shares outstanding as of the date of this prospectus and 3,035,000 Ordinary Shares subject to options that are currently exercisable as of the date of this prospectus. Percentage of beneficial ownership of each listed person after this offering is based on 13,839,400 Ordinary Shares outstanding as of the date of this prospectus, 3,035,000 Ordinary Shares subject to options that are currently exercisable as of the date of this prospectus, and the issuance of 1,200,000 ADSs representing 1,200,000 Ordinary Shares, assuming no exercise of the underwriters’ over-allotment option, and based on the assumed initial public offering price of $5.00 per ADS.

Information with respect to beneficial ownership has been furnished by each director, executive officer, or beneficial owner of 5% or more of our Ordinary Shares. Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power with respect to securities. In computing the number of Ordinary Shares beneficially owned by a person listed below and the percentage ownership of such person, Ordinary Shares underlying options, warrants, or convertible securities held by each such person that are exercisable or convertible within 60 days of the date of this prospectus are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person. As of the date of this prospectus, we have 55 holders of Ordinary Shares, none of whom are located in the United States. We will be required to have at least 300 round lot shareholders at closing in order to satisfy the Nasdaq listing rules.


	Ordinary Shares Beneficially Owned Prior to this Offering					Ordinary Shares Beneficially Owned After this Offering (Over-allotment option not exercised)
	Number		Percent			Number		Percent
Directors and Executive Officers⁽¹⁾:
Satoshi Kobayashi⁽²⁾		9,462,265		56.07	%		9,462,265		52.35	%
Hiroki Yamamoto⁽³⁾		1,000,000		5.93	%		1,000,000		5.53	%
Caspia Lin		—		—			—		—
Ryotaro Namba⁽⁴⁾		15,000		*			15,000		*
Masahiro Tominaga		—		—			—		—
Kiyomitsu Takayama		—		—			—		—
Shozo Kaneko		—		—			—		—
Masaaki Aono		—		—			—		—
Kohichi Goto		—		—			—		—
All directors and executive officers as a group (ten individuals):		10,477,265		62.09	%		10,477,265		57.97	%


	Ordinary Shares Beneficially Owned Prior to this Offering					Ordinary Shares Beneficially Owned After this Offering (Over-allotment option not exercised)
	Number		Percent			Number		Percent

5% Shareholders:
Satoshi Kobayashi⁽²⁾		9,462,265		56.07	%		9,462,265		52.35	%
Hiroki Yamamoto⁽³⁾		1,000,000		5.93	%		1,000,000		5.53	%
Themis Capital GK⁽⁵⁾		4,000,000		23.70	%		4,000,000		22.13	%

*	Represents less than 1% of the number of Ordinary Shares outstanding.

Notes:

(1)	Unless otherwise indicated, the business address of each of the individuals is 5-7-11, Ueno, Taito-ku, Tokyo, Japan.

(2)	Represents (i) 5,462,265 Ordinary Shares held personally, and (ii) 4,000,000 Ordinary Shares held by Themis Capital GK (合同会社テミスキャピタル), which is 100% owned by Satoshi Kobayashi.

(3)	The aggregate number of Ordinary Shares beneficially owned by Hiroki Yamamoto represents 1,000,000 Ordinary Shares that may be issued upon exercise of stock options, held by Hiroki Yamamoto.

(4)	The aggregate number of Ordinary Shares beneficially owned by Ryotaro Namba represents 15,000 Ordinary Shares that may be issued upon exercise of stock options, held by Ryotaro Namba.

(5)	Represents 4,000,000 ordinary shares held by Themis Capital GK (合同会社テミスキャピタル), which is 100% owned by Satoshi Kobayashi. Its business address is 5-7-11, Ueno, Taito-ku, Tokyo, Japan.

As of the date of this prospectus, none of our outstanding Ordinary Shares are held by record holders in the United States.

We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our Company.

RELATED PARTY TRANSACTIONS

The relationship and the nature of related party transactions are summarized as follows:


Name of Related Party		Relationship to Our Company
Satoshi Kobayashi		Our Chief Executive Officer

Mr. Satoshi Kobayashi provided interest-free advances for working capital purposes to our Company. During the fiscal year ended April 30, 2019, he extended advances in the aggregate amount of JPY59,278,475 (US$398,833). Such amount was fully paid as of April 2020.

On October 1, 2019, our Company entered into an office space lease agreement with a third party, pursuant to which our Company promised to pay JPY696,250 (US$4,684) to lease our office space. Mr. Satoshi Kobayashi was a guarantor for the rental payment. The expiration date for the lease agreement is on September 30, 2023.

On May 26, 2020, our Company entered into a company housing lease agreement with a third party to provide lodging for our employees. To guarantee the rental payment for company housing, our Company paid JPY101,000 (US$680) to engage a third-party guarantee company. Mr. Satoshi Kobayashi was a joint guarantor for the payment of such guarantee fee. The company housing lease agreement was terminated in November 2021.

On November 13, 2019, our Company entered into a loan agreement with Kiraboshi Bank, pursuant to which our Company borrowed JPY35,000,000 (US$235,484) at an annual interest rate of 1.6%. Mr. Satoshi Kobayashi was a guarantor for the loan. The maturity date for such loan is on November 12, 2024. As of April 30, 2022 and October 31, 2022, the outstanding principal balance of such loan was JPY18,676,000 (US$125,654) and JPY14,595,000 (US$98,197), respectively. As of the date of this prospectus, the outstanding principal balance of such loan is JPY10,514,000 (US$70,739).

On April 16, 2020, our Company entered into a second loan agreement with Kiraboshi Bank, pursuant to which our Company borrowed JPY50,000,000 (US$336,406) at an annual interest rate of 1.6%. Mr. Satoshi Kobayashi was a guarantor for the loan. The maturity date for such loan is on March 31, 2030. As of April 30, 2022 and October 31, 2022, the outstanding principal balance of such loan was JPY39,992,000 (US$269,071) and JPY37,073,000 (US$249,431), respectively. As of the date of this prospectus, the outstanding principal balance of such loan is JPY34,154,000 (US$229,792).

On August 31, 2022, our Company entered into an overdraft agreement with Resona Bank, Ltd. The maximum borrowing amount is JPY100 million (US$672,812). We borrowed JPY100 million on September 29, 2022 at an annual interest rate of 1.475%. The maturity da