F-1/A: rYojbaba Co. Ltd. Eyes NYSE American or Nasdaq Listing with $5 Million IPO

rYojbaba Co., Ltd., a Japanese corporation specializing in labor consulting and health services, is seeking to list its common shares on the NYSE American or Nasdaq through an initial public offering of 1,250,000 shares, aiming to raise approximately $5 million.

Summary

• rYojbaba Co., Ltd. is planning an IPO to list on the NYSE American or Nasdaq under the ticker symbol RYOJ.
• The company is offering 1,250,000 common shares with an expected initial price between $4.00 and $5.00 per share.
• The IPO also includes warrants for the underwriter to purchase 87,500 common shares at $4.00 per share.
• Ryoji Baba, the CEO, currently controls approximately 80.2% of the voting power and will control approximately 71.3% after the offering.
• The company is engaged in labor consulting and health services, operating 28 osteopathic clinics and two osteopathic beauty salons.
• For the fiscal year 2024, rYojbaba Co., Ltd. reported revenues of $11.58 million and net income of $1.33 million.
• The company intends to use the net proceeds from this offering to fund working capital and general corporate purposes, which may include implementation and development of an information technology (IT) platform for our labor consulting services, hiring of additional consultants and an expansion abroad of consulting business as well as an expansion of our osteopathic clinics and osteopathic beauty salons through mergers and acquisitions and franchising.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with increasing revenue and net income. However, there are risks associated with the company's structure, potential future capital needs, and the competitive landscape.

Positives

• The company has shown revenue growth, increasing from $10.96 million in 2023 to $11.58 million in 2024.
• Net income has also increased significantly, from $770,571 in 2023 to $1,332,399 in 2024.
• The company operates in two distinct business segments, providing diversification.
• The company has a high repeat customer rate of over 80% in its osteopathic clinics.
• The company has a skilled and experienced CEO with expertise in Japanese labor law.

Negatives

• The CEO will retain significant control after the offering, which may limit the influence of other shareholders.
• The company is considered an emerging growth company and a foreign private issuer, which allows for reduced reporting requirements.
• The company's osteopathic clinic and osteopathic beauty salon base is geographically concentrated in the Kyusyu area of Japan.
• The company may need to raise additional capital in the future, which could dilute current shareholders ownership interests.

Risks

• The company may need to raise additional capital in the future, and such capital raising may be costly or difficult to obtain and could dilute current shareholders ownership interests.
• There is a risk that the company will be a passive foreign investment company (PFIC) for the current or any future taxable year, which could result in material adverse U.S. federal income tax consequences if you are a U.S. holder.
• It may not be possible for investors to effect service of process within the United States upon all of our directors (except for Ferdinand Groenewald), corporate auditors and executive officers, or to enforce against us or those persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States.
• Rights of shareholders under Japanese law may be different from rights of shareholders in other jurisdictions.
• Substantially all of our revenues are generated in Japan, but an increase of our international presence could expose us to fluctuations in foreign currency exchange rates, or a change in monetary policy may harm our financial results.
• Risks related to our expansion into new geographic markets could adversely affect our business, financial condition, and operating results.
• As a foreign private issuer we are permitted, and intend, to follow certain home country corporate governance and other practices instead of otherwise applicable SEC and the NYSE American or the Nasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic U.S. issuers.
• If we fail to obtain necessary funds for our operations, we will be unable to maintain and improve our services, other businesses, and technology, and we will be unable to develop and commercialize our services, other businesses, and technologies.
• We are exposed to the risk of natural disasters, unusual weather conditions, pandemic outbreaks such as COVID-19, political events, war, and terrorism that could disrupt business and result in lower sales, increased operating costs and capital expenditures.
• Public health epidemics or outbreaks could adversely impact our business.

Future Outlook

The company intends to expand its consulting services, grow its customer base, implement an IT platform, hire additional consultants, and pursue strategic acquisitions. It also plans to expand its osteopathic services nationwide, promote franchising, optimize costs, and selectively pursue acquisitions.

Management Comments

• The company believes that work-induced stress is a serious and growing problem.
• The company believes that it has significant experience with the potential causes of problems that could occur among laborers.
• The company believes the significant difference between our Company and our competitors is our ability to provide impartial services that are not tailored specifically to the employer or the employee.

Industry Context

The labor consulting industry is experiencing increased demand due to complex labor laws and the Japanese government's Work Style Reform initiative. The osteopathic industry in Japan is growing, with an increasing number of clinics and a need for differentiation to attract customers.

Comparison to Industry Standards

• The company's osteopathic clinics have a repeat customer rate of over 80%, which is a strong indicator of customer satisfaction.
• The company's osteopathic clinics have a higher number of insurance claims per clinic compared to the average in the Kyushu area.
• The company's osteopathic beauty salons have a higher number of reservations per month compared to the national average.

Related Party Transactions

• The company paid rent to Runbridge Inc., of which the CEO/director is a shareholder.
• The company recorded commission expenses from Global HR Technology Co., Ltd. (GHRT), of which the CEO/director was a shareholder until January 1, 2024.
• The company acquired contracts from Global HR Technology Co., Ltd. (GHRT), of which the CEO/director was a minority shareholder at the time of the acquisition.

Stakeholder Impact

• Shareholders will experience dilution due to the issuance of new shares.
• Employees may benefit from the company's plans to improve the working environment and provide training.
• Customers may benefit from the company's plans to expand its services and improve its IT platform.

Next Steps

• The company intends to apply to list its common shares on the NYSE American or the Nasdaq.
• The company intends to use the net proceeds from this offering to fund working capital and general corporate purposes, which may include implementation and development of an information technology (IT) platform for our labor consulting services, hiring of additional consultants and an expansion abroad of consulting business as well as an expansion of our osteopathic clinics and osteopathic beauty salons through mergers and acquisitions and franchising.

Key Dates

Keywords

rYojbaba Co., IPO, Initial Public Offering, Labor Consulting, Health Services, Osteopathic Clinics, NYSE American, Nasdaq, Japanese Company, Ryoji Baba