F-1: PicoCELA Inc. Seeks to Raise Additional Capital Through Best-Efforts ADS Offering

Sentiment:

Prospectus 13 March 2025 6:18 AM

PicoCELA Inc. announces a best-efforts offering of up to 6,100,000 American Depositary Shares (ADSs) at an assumed price of $0.73 per ADS to raise capital for working capital, general corporate purposes, product development and research.

Capital raisePicoCELA Inc. is offering up to 6,100,000 American Depositary Shares (ADSs) in a best-efforts offering.The assumed public offering price is $0.73 per ADS.The company intends to use the net proceeds primarily for working capital, general corporate purposes, product development and research.Benjamin Securities, Inc. is acting as the exclusive placement agent for the offering.

Worse than expectedThe company is conducting a follow-on offering shortly after its IPO, which may indicate a need for additional capital due to ongoing losses.The company has an accumulated deficit of JPY2,202,668 thousand (approximately $15,376 thousand) as of September 30, 2024.The company recorded a net loss of JPY479,921 thousand (approximately $3,350 thousand) for the fiscal year ended September 30, 2024.

Summary

PicoCELA Inc., a Japanese company specializing in enterprise wireless mesh solutions, is offering up to 6,100,000 American Depositary Shares (ADSs) in a best-efforts offering.
The assumed public offering price is $0.73 per ADS, but the actual price will be determined at the time of pricing.
The company intends to use the net proceeds primarily for working capital, general corporate purposes, product development and research.
Benjamin Securities, Inc. is acting as the exclusive placement agent for the offering.
There is no minimum offering amount required for the closing of this offering.
The offering is expected to close by [*], 2025, but may be extended.
PicoCELA is an emerging growth company and a foreign private issuer, which allows it to take advantage of reduced reporting requirements.
The ADSs are listed on the Nasdaq Capital Market under the symbol PCLA.
The company's revenue for the fiscal year ended September 30, 2024, was JPY784,403 thousand (approximately $5,476 thousand).
The company recorded a net loss of JPY479,921 thousand (approximately $3,350 thousand) for the fiscal year ended September 30, 2024.
As of September 30, 2024, the Company had net operating loss carryforwards in Japan of approximately JPY2,354 million (approximately $16 million).

Sentiment

Score: 4

Explanation: The sentiment is neutral to slightly negative. While the company is pursuing growth strategies and has some competitive strengths, it is currently unprofitable and faces several risks related to its business and the offering itself. The follow-on offering shortly after the IPO raises concerns about the company's financial stability.

Positives

PicoCELA has competitive strengths including specialty and experience in industrial-use mesh Wi-Fi networks, extensive product offerings, and a founder-led management team.
The company intends to grow its business by integrating enterprise edge-computing software, expanding its SaaS model, offering cost-effective alternatives, and pursuing global expansion.
The company has net operating loss carryforwards in Japan of approximately JPY2,354 million (approximately $16 million) as of September 30, 2024, which can be used to offset future taxable income.

Negatives

The company recorded a net loss of JPY479,921 thousand (approximately $3,350 thousand) for the fiscal year ended September 30, 2024.
The company has an accumulated deficit of JPY2,202,668 thousand (approximately $15,376 thousand) as of September 30, 2024.
The company's revenue has been uncertain and volatile, subject to the condition of its supply chain of Wi-Fi Chips.

Risks

The offering is on a best-efforts basis, and there is no guarantee that the company will raise the amount of capital it believes is required.
An active trading market for the ADSs may not be maintained, and the trading price may fluctuate significantly.
The company may not maintain the listing of the ADSs on Nasdaq, which could limit investors' ability to make transactions.
Short selling may drive down the market price of the ADSs.
Purchasers of the ADSs will experience immediate and substantial dilution in the net tangible book value.
The company may use the proceeds of the offering in ways with which investors may not agree.
The company's business is geographically concentrated in Japan, making it subject to greater risks from changes in local economic conditions.
The company relies on third parties to manufacture its products and is subject to risks if these manufacturers do not provide the expected quality and performance.
The company has not been profitable and has incurred negative cash flows in operating activities, which may continue in the future.

Future Outlook

The company intends to use the net proceeds of this offering primarily for working capital and general corporate purposes, and product development and research.

Industry Context

The document does not provide specific details on how this announcement relates to broader industry trends or competitors beyond mentioning that there is competition in the enterprise mesh Wi-Fi access points market.

Related Party Transactions

EXEO Group, a holder of more than 5% of the Companys outstanding share capital, purchased mesh Wi-Fi access points PCWL devices from the Company for a total amount of JPY78,142 thousand (approximately $545 thousand) during the fiscal year ended September 30, 2024.
SHIMIZU CORPORATION, a holder of more than 5% of the Companys outstanding share capital, purchased mesh Wi-Fi access points PCWL devices from the Company for a total amount of JPY1,856 thousand (approximately $13 thousand) during the fiscal year ended September 30, 2024.
The Company incurred guarantee fees of JPY132 thousand (approximately $[*]) during the fiscal year ended September 30, 2024 and had prepaid expenses of JPY660 thousand (approximately $[*]) and unpaid guarantee fees of JPY792 thousand (approximately $[*]) as of September 30, 2024 to Hiroshi Furukawa, the Companys CEO and Representative Director.
MCC Venture Capital Limited Liability Company, a holder of more than 5% of the Companys outstanding share capital during such fiscal year, entered into a convertible bond agreement with the Company in the amount of JPY199,998 thousand (approximately $[*]) during the fiscal year ended September 30, 2024.

Stakeholder Impact

Shareholders will experience dilution as a result of the offering.
The company's ability to execute its business plan depends on the success of the offering.
Employees' job security and compensation may be affected by the company's financial performance.
Customers may be impacted by the company's ability to invest in product development and support.
Suppliers and creditors may be affected by the company's financial stability.

Next Steps

The company will proceed with the best-efforts offering of ADSs.
The company will determine the actual public offering price at the time of pricing.
The company will use the net proceeds for working capital, general corporate purposes, product development and research.
The company expects to hold an initial closing of the offering on [*], 2025, but the offering will be terminated by [*], 2025, but may be extended.

Key Dates

Date	Description
2008	PicoCELA was incorporated in Tokyo, Japan.
April 1, 2014	Date of the License Agreement by and between Kyushu University and the Registrant.
June 15, 2018	Effective date of the Regulations of the Audit and Supervisory Committee of the Company.
August 24, 2018	Effective date of the Regulations of the Board of Directors of the Company.
October 1, 2018	Effective date of the Basic Sales Agreement by and between Kaga (Taiwan) Electronics Co., Ltd. and the Registrant.
February 28, 2022	Date of the amendment to the License Agreement by and between Kyushu University and the Registrant.
June 17, 2022	Date of the Original Design & Manufacturing Services Agreement by and between Compex Systems Pte Ltd and the Registrant.
January 31, 2023	Date of the Lease Agreement by and between Fukuoka Research Park Corporation and the Registrant.
March 31, 2023	Date of the Consulting and Services Agreement between PicoCELA and Spirit Advisors.
June 20, 2023	Effective date of the ODM Service Agreement by and between Emplus Technologies, Inc. and the Registrant.
October 6, 2023	Date of the Convertible Bond Agreement by and between the Registrant and MCC Venture Capital Limited Liability Company and You Planning Limited Liability Company.
February 14, 2024	Date of the Lease Agreement by and between Handa Hiroyuki and the Registrant.
June 17, 2024	Date of the Lease Agreement by and between SANO CORPORATION and the Registrant.
July 5, 2024	Conversion of all preferred shares to Common Shares.
July 17, 2024	Elimination of all classes of preferred shares from authorized share capital.
July 24, 2024	Date of the Lease Agreement by and between SANO CORPORATION and the Registrant.
August 30, 2024	Date of the amendment to the Convertible Bond Agreement by and between the Registrant and MCC Venture Capital Limited Liability Company and You Planning Limited Liability Company.
September 13, 2024	Effective date of the Share Handling Regulations of the Company.
September 30, 2024	Date of the end of the fiscal year for financial data presented.
October 6, 2024	Board of directors approved a forward split of Common Shares at a ratio of 60-for-1.
November 29, 2024	Effective date of the Articles of Incorporation of the Company.
January 16, 2025	ADSs commenced trading on the Nasdaq Capital Market under the symbol PCLA.
January 20, 2025	Company announced the closing of its initial public offering (IPO) at $4.00 per ADS.
January 27, 2025	The bond in the amount of JPY199,998 along with accumulated interest of JPY8,547 (approximately $[*]) were paid off.
January 28, 2025	Date of the capital markets advisory agreement with the placement agent.
February 14, 2025	Filing date of the 2024 Annual Report on Form 20-F with the SEC.
March 12, 2025	Date of the legal opinion regarding the validity of the Common Shares being registered.
May 14, 2025	Termination date of the Subject Shareholder Lockup.
July 14, 2025	End of the Company Lockup period.
[*], 2025	Expected date of the initial closing of the offering.
[*], 2025	Termination date of the offering.

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