SCHEDULE: RYOJBABA CEO Solidifies 71.32% Stake Post-Split

Ryoji Baba, CEO of RYOJBABA CO., LTD., and his wholly-owned entity, Miracle Exploration Technologies Ltd., collectively hold 71.32% of the company's common shares following a 1,000-for-1 stock split.

Summary

• Ryoji Baba, Chief Executive Officer and Board member of RYOJBABA CO., LTD., along with Miracle Exploration Technologies Ltd., a company 100% owned by Mr. Baba, are the reporting persons.
• Mr. Baba beneficially owns 8,024,000 common shares, representing approximately 71.32% of the 11,250,000 issued and outstanding common shares.
• This ownership includes 4,813,000 shares directly owned by Mr. Baba and 3,211,000 shares held by Miracle Exploration Technologies Ltd.
• The shares were originally acquired from Masataka Sakai on October 23, 2021, for JPY4,813 (US$42.39) by Mr. Baba and JPY3,211 (US$28.28) by Miracle Exploration Technologies Ltd.
• A 1,000-for-1 share split was effected on October 15, 2024, increasing Mr. Baba's direct holdings from 4,813 to 4,813,000 shares and Miracle Exploration Technologies' holdings from 3,211 to 3,211,000 shares.
• The reporting persons have not been involved in any criminal or civil proceedings related to securities laws in the last five years.

Sentiment

Score: 6

Explanation: The filing is primarily a factual disclosure of beneficial ownership and a past share split. The high insider ownership suggests stability and alignment of interests, but also potential governance considerations for minority shareholders. No new financial performance data is presented to significantly alter sentiment.

Positives

• High insider ownership by the CEO indicates strong alignment of interests between management and shareholders.
• Significant control by the CEO can provide stability and a clear strategic direction for the company.

Negatives

• The highly concentrated ownership (71.32%) by the CEO and his entity may limit the influence of minority shareholders.
• A 12-month lock-up agreement restricts the reporting persons from selling or transferring a significant portion of their shares, potentially limiting liquidity for these large holders.

Risks

• Mr. Baba's substantial ownership and dual role as CEO and director grant him significant control over the Issuer's business and corporate activities, including potential extraordinary corporate transactions like mergers, reorganizations, or delisting.
• The lock-up agreement restricts the ability of the reporting persons to dispose of their shares for a 12-month period, which could impact their personal liquidity or ability to react to market changes.

Future Outlook

The reporting persons intend to periodically review their investments in the Issuer based on various factors, including the company's business, financial condition, and market conditions. They may acquire additional securities or dispose of existing holdings in the open market or privately negotiated transactions. They may also engage in discussions with management and the Board regarding potential extraordinary corporate transactions, such as mergers, reorganizations, or changes to capitalization or management.

Management Comments

• As a substantial owner of shares and a director and officer, Mr. Baba is able to control the Issuer's business and may have influence over its corporate activities.

Industry Context

The high level of insider ownership, particularly by the CEO, is characteristic of many founder-led companies, especially in their early stages as publicly traded entities. This structure can provide strong leadership and a clear vision, but also raises considerations regarding corporate governance and the influence of minority shareholders.

Comparison to Industry Standards

• Ryoji Baba's beneficial ownership of 71.32% is a significantly higher concentration of control compared to the average public float of most mature publicly traded companies, where institutional and retail investors typically hold a larger percentage.
• This level of control is more akin to companies where founders or key figures maintain dominant voting power, such as Meta Platforms (Mark Zuckerberg) or Berkshire Hathaway (Warren Buffett), rather than widely held corporations.
• The lock-up agreement is a standard practice in public offerings to ensure stability post-IPO, similar to agreements seen in other newly listed companies.

Stakeholder Impact

• Shareholders: High insider ownership may lead to strong strategic direction but could limit the influence of minority shareholders on corporate decisions. The lock-up agreement restricts immediate selling by major holders, providing some short-term stability.
• Management: The CEO maintains significant control over the company's operations and strategic direction.

Next Steps

• Reporting persons will continue to review their investments in the Issuer.
• Potential future acquisitions or dispositions of common shares in the open market or privately negotiated transactions.
• Possible discussions with management and the Board regarding extraordinary corporate transactions or changes to the Issuer's business or corporate structure.

Key Dates

Recommendation

The filing primarily discloses a significant beneficial ownership stake by the CEO and his wholly-owned entity, which, while indicating strong insider commitment and control, does not provide new financial performance data or strategic shifts to warrant a 'buy' or 'sell' recommendation. The existing high concentration of ownership suggests limited public float and potential governance considerations for minority shareholders. The lock-up agreement restricts immediate insider sales, providing some stability.

Keywords

RYOJBABA, Ryoji Baba, Miracle Exploration Technologies, Schedule 13D, beneficial ownership, stock split, corporate control, insider ownership, lock-up agreement, Japan, Micronesia